Moneycontrol
Get App
Close Ad
SENSEX NIFTY
Moneycontrol.com India | Notes to Account > Power - Generation & Distribution > Notes to Account from Suzlon Energy - BSE: 532667, NSE: SUZLON
YOU ARE HERE > MONEYCONTROL > MARKETS > POWER - GENERATION & DISTRIBUTION > NOTES TO ACCOUNTS - Suzlon Energy

Suzlon Energy

BSE: 532667|NSE: SUZLON|ISIN: INE040H01021|SECTOR: Power - Generation & Distribution
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Jun 17, 16:00
4.07
-0.06 (-1.45%)
VOLUME 2,276,555
LIVE
NSE
Jun 17, 15:59
4.05
-0.05 (-1.22%)
VOLUME 26,081,674
Mar 16
Notes to Accounts Year End : Mar '17

1. Company information

Suzlon Energy Limited (‘SEL’ or ‘the Company’) having CIN: L40100GJ1995PLC025447 is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognised stock exchanges in India. The registered office of the Company is located at “Suzlon”, 5 Shrimali Society, Near Shree Krishna Complex, Navrangpura, Ahmedabad - 380 009, India. The principal place of business is its headquarters located at One Earth, Hadapsar, Pune-411028, India.

The Company is primarily engaged in the business of manufacturing of wind turbine generators (‘WTGs’) and related components of various capacities.

The financial statements were authorised for issue in accordance with a resolution of the directors on August 11,2017, refer Note 5 for details related to updation in financial statement approved by the directors on May 19,2017.

2. Basis of preparation and significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“the Rules”).

For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP or ‘IGAAP’). These financial statements for the year ended March 31, 2017 are the first financial of the Company that have been prepared in accordance with Ind AS. Refer to Note 4 for information on how the Company adopted Ind AS.

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:

- Derivative financial instruments and

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),

The financial statements are presented in Indian Rupees and all values are rounded to the nearest Crore (INR0,000,000) up to two decimals, except when otherwise indicated.

2.2 Recent accounting developments Standards issued but not yet effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and has amended the following standards:

Amendment to Ind AS 7: Statement of cash flows

The amendments to Ind AS 7 requires an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 April 2017. Application of this amendments will not have any recognition and measurement impact. However, it will require additional disclosure in the financial statements.

Amendment to Ind AS 102: Share-based payment

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. Since the Company does not have cash settled awards or awards with net settlement features, this amendment does not have any effect on the financial statements of the Company.

3. Significant accounting judgements, estimates and assumptions

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

a. Significant judgements in applying the Company’s accounting policy

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

Financial guarantee

The Company, its three Indian subsidiaries and a jointly controlled entity have given stand by letter of credit which has been recognised as financial guarantee by the Company. The Company believes that the relevant overseas subsidiary (in whose favour SBLC has been issued) will able to refinance the obligation and meet its financial obligations. Please refer to Note 6forfurtherdetails.

Operating lease commitments- Company as a lessor

The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

Revenue recognition and presentation

The Company assesses its revenue arrangements against specific criteria, i.e. whether it has exposure to the significant risks and rewards associated with the sale of goods or the rendering of services, in order to determine if it is acting as principal or as an agent. When deciding the most appropriate basis for presenting revenue or costs of revenue, both the legal form and substance of the agreement between the Company and its business partners are reviewed to determine each party’s respective role in the transaction.

b. Significant accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Uncertainty about these assumption and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Allowance for trade receivables

Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances for expected credit loss. The Company recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. The carrying value of allowance for doubtful debts is Rs 89.91 Crore, Rs 62.69 Crore and Rs 56.11 Crore as of March 31, 2017, March 31,2016 and April 1,2015 respectively. Refer Note 14

Share-based payments

Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 39.

Taxes

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, future tax planning strategies. The company has unabsorbed depreciation, unabsorbed business loss, unutilised MAT credit and capital loss details which are given in Note 35. The unabsorbed depreciation can be carried forward indefinitely. The business loss can be carried forward for 8 years, MAT credit for 15 years and capital loss for 8 years. Majority of business losses will expire in between March 2020 to March 2022, MAT credit in between March 2022 to March 2023 and capital loss in between March 2024 to March 2025. As there are not certain taxable temporary differences or tax planning operations, the Company has not recognised deferred tax assets on conservative basis. Refer Note 35

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The estimates of future salary increases take into account the inflation, seniority, promotion and other relevant factors. Further details about gratuity obligations are given in Note 38.

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 49 for further disclosures.

Intangible asset under development

The Company capitalises intangible asset under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits.

Refer Note 2.3 i for the estimated useful life of intangible assets. The carrying value of intangible assets has been disclosed in Note 9.

Property, plant and equipment

Refer Note 2.3 g for the estimated useful life of property, plant and equipment. The carrying value of property, plant and equipment has been disclosed in Note 8.

Recompense liability

The Company is in negotiation with CDR lenders for a voluntary exit from CDR scheme. The Company has recognised recompense liability payable to CDR lenders based on reasonable estimate which is derived considering possibility certain scenarios and assumptions in relation to interest rate, waiver in recompense, timing of loan repayment and CDR exit etc. The amount payable by the Company as recompense is dependent on various factors and also on discussions and negotiations with the CDR lenders. Refer Note 23.

4. First-time adoption of Ind AS

These financial statements, for the year ended March 31,2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP or ‘IGAAP’).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31,2017, together with the comparative period data as at and for the year ended March 31,2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet is prepared as at April 1, 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP (‘IGAAP’) financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31,2016.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

- Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its property, plant and equipment, intangible assets and investment property as recognised in its IGAAP financials as deemed cost at the transition date.

- Ind AS 102 share-based payment has not been applied to equity instruments in share-based payment transactions that vested before April 1,2015.

- Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

- The Company has applied the requirements for de-recognition of financial instruments, as required in Ind AS 109 Financial Instruments prospectively for financial transactions occurring on or after April 1,2015, the date of transition to Ind AS.

- The Company has elected to continue with the policy of accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the financial statements prepared as per IGAAP for the year ended March 31, 2016. Accordingly, exchange differences arising on other long-term foreign currency monetary items (existing as at March 31, 2016) are accumulated in the “Foreign Currency Monetary Item Translation Difference Account” and amortised over the remaining life of the concerned monetary item.

- The Company has elected the policy of accounting for investment in equity of associate, jointly controlled entities and its subsidiaries at previous GAPP carrying amount.

- The company has applied classification and measurement of financial assets on the basis of facts and circumstances that existed on the date of transition to Ind AS.

Estimates

The estimates at April 1,2015 and at March 31,2016 are consistent with those made for the same dates in accordance with IGAAP (after adjustments to reflect any differences in accounting policies):

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015, the date of transition to Ind AS and as of March 31,2016.

Notes to the reconciliation of equity as at April 1,2015 and March 31,2016 and profit and loss for the year ended March 31, 2016:

a) Investments

Under IGAAP, investments in mutual funds were classified as current investments. Current investments were carried at lower of cost and fair value. Under Ind AS, the Company has designated such instruments as financial assets at fair value through profit or loss. The resulting fair value changes of these investments have been recognised in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31,2016.

b) Trade receivables

Under IGAAP, the Company has created provision for impairment of receivables only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on expected credit loss model (‘ECL’). Due to ECL model, the Company impaired its trade receivable which has been adjusted against retained earnings.

c) Defined benefit obligations

Both under IGAAP and Ind AS, the Company recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under IGAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

d) Share-based payments

Under IGAAP, the Company recognised only the intrinsic value for the employee stock option plan as an expense. Ind AS requires the fair value of the share options to be determined using an appropriate pricing model recognised over the vesting period. Share options which were granted before and still vesting at April 1, 2015, have been recognised as a separate component of equity in share option outstanding account against retained earnings at April 1,2015.

e) Borrowings

Under IGAAP, transaction costs incurred in connection with borrowings are amortised upfront and charged to profit or loss for the period. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

f) Provisions

Under I GAAP, the Company has accounted for provisions, including long-term provision, at the undiscounted amount. In contrast, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The discount rate(s) should not reflect risks for which future cash flow estimates have been adjusted. Ind AS 37 also provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as borrowing cost.

g) Other comprehensive income

Under IGAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled IGAAP profit or loss to profit or loss as per Ind AS. Further, IGAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

h) Statement of cash flows

The transition from IGAAP to Ind AS has not had a material impact on the statement of cash flows.

i) Other financial assets

Under I GAAP, interest free security deposit given is initially measured at the transaction price and no consideration is given to the fair value at the time of initial measurement. Under Ind AS, interest free security deposit is to be initially measured at fair value. As at the date of transition, the interest free security deposit has been recognised at fair value based on the facts and circumstances which existed at the date of initial measurement by giving corresponding effect to retained earnings for the period from initial measurement to the date of transition and to other current assets (pre-paid expense) for remaining period of deposit post the date of transition.

j) Deferred revenue

Under IGAAP, the Company used to recognise the provision for free O&M given as part of WTG supply contract on dispatch of WTG. Under Ind AS, free O&M given in excess of 2 years is recognised as cost and revenue over the period of service which exceeds 2 years. Transitional adjustment in regard to free O&M as at the date of transition have been made by debiting retained earnings with a corresponding credit to the deferred income.

k) Foreign currency convertible bond (‘FCCB’)

The FCCB has been classified as compound instrument. This instrument has been split between equity and liability by primarily valuing the liability portion without equity conversion options. The balance between instrument value and liability component has been the value of equity conversion options. On the date of transition the amount of FCMITDA has been recomputed under Ind AS. The difference in the value as a result has been transferred to retained earnings.

l) Recompense liability

The Company is in negotiation with CDR lenders for a voluntary exit from CDR scheme. The Company has recognised recompense liability payable to CDR lenders based on reasonable estimate which is derived considering possibility certain scenarios and assumptions in relation to interest rate, waiver in recompense, timing of loan repayment and CDR exit etc. The amount payable by the Company as recompense is dependent on various factors and also on discussions and negotiations with the CDR lenders. The Company has recognised the present value of estimated recompense liability on the date of transition and the unwinding cost has been recognised as part of finance cost in subsequent periods.

m) Compulsory convertible debentures (‘CCD’) and redeemable cumulative preference shares (‘RCPS’)

CCD:

The Company has invested in compulsory convertible debentures in jointly controlled entities. Under I GAAP, the Company has carried these investment at cost. Under Ind AS, as per the terms of the debentures, such instruments have been classified as financial asset at amortised cost. Ind AS requires financial assets to be measured initially at fair value. The resulting fair value changes have been recognised as investment in equity component and the interest element is recognised as finance income using effective rate of interest as at March 31,2016.

RCPS:

The Company has invested in redeemable cumulative preference shares. Under IGAAP, the Company has carried these investment at cost. Under Ind AS, as per the terms of the preference shares, such instruments have been classified as financial asset at fair value through profit or loss. Ind AS requires financial assets to be measured initially at fair value. The resulting fair value changes have been recognised as equity component and the interest element is recognised as finance income using effective rate of interest as at March 31,2016.

n) Forward contracts

Under I GAAP, the premium or discount arising at the inception of forward exchange contract is amortised and recognised as an expense or income over the life of the contract. Exchange differences on such contracts, foreign currency monetary items, are recognised in the statement of profit and loss in the period in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognised as income or expense for the period.

Under Ind AS, these contracts have been classified as FVTPL instruments and corresponding fair value is recorded. Accordingly, the reversal of IGAAP accounting and recording of MTM on these instruments has led to an increase inequity as at March 31,2016. Also, the same has resulted into increase in profit for the year ended March 31,2016.

o) Restructuring cost

The Company had restructured its outstanding loans under the Corporate Debt Restructuring (‘CDR’) Scheme approved by CDR Empowered Group. In connection of this restructuring, the Group incurred certain costs such as consultancy fees, legal fees etc. Under IGAAP these costs were debited to prepaid expenses and were amortised on a quarterly basis. Thus, on transition date, the transaction costs which were recorded as a prepaid asset under previous GAAP has been derecognised as it does not meet the asset recognition criteria under Ind AS.

p) Reclassification of loans and advances and other assets

Loans and advances under IGAAP has been primarily reclassified as Loans (Non-current: March 31,2016-Rs 645.94 Crore, April 1,2015 - Rs 1,472.34Crore. Current: March 31,2016-Rs 1.348.65, April 1,2015- Rs 3,431.44).

Other assets under IGAAP has been primarily reclassified to other financial assets as non-current bank balance (Noncurrent: March 31, 2016 - Rs 224.02 Crore, April 1, 2015 - Rs 96.95 Crore), as receivable towards sale of OMS business undertaking (Current: March 31, 2016- Rs 1,246.57 Crore, April 1, 2015 - Rs 1,836.50 Crore) and as receivable towards share application money (Current: March 31,2016-Rs Nil, April 1,2015-Rs 1,800 Crore)

Other liabilities has been primarily reclassified to other financial liabilities as current maturity of borrowing (Current: March 31, 2016 - Rs 225.38 Crore, April 1, 2015 - Rs 1,926.61 Crore) and other liabilities as advance from customers (Current: March 31,2016-Rs 936.58 Crore, April 1,2015- Rs 731.37 Crore)

5. Updated books after approval of Scheme

The financial statements of the Company for the year ended March 31,2017 were earlier approved by the Board of Directors at its meeting held on May 19, 2017 and reported upon by the statutory auditors vide their report dated May 19, 2017. The said accounts did not include the effect of the composite scheme of amalgamation and arrangement for merger of SE Blades Limited (‘SEBL’), SE Electricals Limited (‘SEEL’), Suzlon Wind International Limited (‘SWIL’), [SEBL, SEEL and SWIL together referred to as ‘merged entities’] and de-merger of tower business of Suzlon Structures Limited (now known as Suzlon Global Services Limited) (‘tower business’) (‘Scheme’), into the Company, which were then pending for approval of the Honourable National Company Law Tribunal, Ahmedabad Bench (‘NCLT’), which the Company has since received on May 31, 2017. As a result, the Scheme has become effective on June 1,2017, and hence financial information has been incorporated in the books of the Company from the appointed date (January 1,2016 in case of merged entities and April 1,2016 in case of de-merger of tower business). The Board of Directors have decided to update the accounts of the Company for the year ended March 31,2017 to incorporate the effect of the Scheme and accordingly these financial statements have been updated forgiving consequential effect to the Scheme.

6. SBLC facility and security given to AERot or Holding B.V.(‘AERH’)

Suzlon Energy Limited and its identified domestic subsidiaries (collectively ‘the Group’) and Suzlon Generators Limited, ajointly controlled entity (‘SGL’) are obligors under the Onshore Stand by letter of credit (‘SBLC’) Facility Agreement and have provided security under the ‘Offshore SBLC Facility Agreement in connections with a SBLC issued by State Bank of India of USD 655 Million for securing the credit facility and covered bonds availed by AE Rotor Holding B.V. (AERH), a step-down wholly owned subsidiary of the Company. The Group has classified the Onshore facility availed amounting to USD 538 million as a financial guarantee contract. AERH has a borrowing of USD 626 million as at March 31,2017, which is due for repayment in March 2018, as per original schedule. The Group has obtained No Objection Certificate from the SBLC lenders as well as approval from Reserve Bank of India for extension of SBLC from April 2018 to April 2023. The Group believes that based on the strength of extended SBLC, the outstanding borrowing of AERH can be extended/refinanced by the existing lenders or by new lenders. AERH and its subsidiaries are engaged in dealing of WTGs in international markets and the cash-flows generated from these business activities will be used for serving the finance cost as well as towards part repayment of outstanding debt of AERH. The ability of AERH to repay the outstanding debt is primarily dependent on generation of cash-flows from business operations in overseas market. The Company management believes that AERH has reasonable business forecast over the next few years and estimates that AERH will be able to refinance the outstanding debt, if required and meet the debt obligations as and when they fall due and hence they believe that the financial guarantee obligation of USD 538 million is not required to be recognised in financial statements and it has been disclosed as contingent liability.

7. Composite scheme of amalgamation and arrangement

On April 27, 2016, the board of directors of the Company had approved a composite scheme which comprised of merger of its three wholly owned subsidiaries, namely, SE Blades Limited (‘SEBL’), SE Electricals Limited (‘SEEL’) and Suzlon Wind International Limited (‘SWIL’) in the Company, with effect from January 1, 2016 (being the appointed date for merger) and demerger of tower business from wholly owned subsidiary, Suzlon Structures Limited (‘SSL’) (now known as Suzlon Global Services Limited) (‘Scheme’) with the Company, with effect from April 1,2016 (being the appointed date for demerger).

This Scheme has been approved by the Honourable National Company Law Tribunal, Ahmedabad Bench on May 31,2017 and the Company has incorporated the accounting effects in its books of accounts as per the accounting treatment prescribed in the Scheme which is in compliance and accordance with the accounting standards applicable to the Company as of the appointed date of the Scheme. Accounting standards currently applicable to the Company are Ind AS. Had the Company applied the accounting treatment in accordance with Ind AS 103, Business Combination the following would have been the accounting treatment:

(a) The assets and liabilities of transferor companies would have been taken over at carrying amount in the books of transferor company and not at fair value;

(b) Retained earnings appearing in the books of transferor companies would have been aggregated with the books of the Company. The total amount of retained earnings would have been Rs (11,236.30) Crore.

(c) No new assets/ liabilities would have been recognised and no adjustments would have been made to reflect fair values of assets or liabilities of the transferor companies. As a result of acquisition of transferor companies, the Company has recognised Goodwill of Rs 1,059.80 Crore which shall be amortised over five years in accordance with the Scheme.

(d) Financial statements in respect of prior period would have been restated as if business combination had occurred from the transition date. The Company has accounted for the business combination of transferor companies as well as demerged business from the appointed dates defined in the Scheme.

(e) Business combinations which are effected after the balance sheet date but before approval of financial statements, the business combinations are not incorporated in the financial statements but only disclosures required by Ind AS 10 Events after the reporting period are made. In current case, the Company has recorded the business combination on the appointed date defined in the Scheme.

(f) The Company has not recognised deferred tax asset or liabilities arising out of assets acquired or liabilities assumed.

Goodwill acquired pursuant through the Scheme has been allocated to the cash generating units based in special economic zone. These CGUs form part of the WTG operating segment, for impairment testing. The carrying amount of goodwill of Rs 643.36 Crore as at March 31,2017 and Rs 814.92 Crore as at March 31,2016, has been allocated to single CGU.

The Company performed its annual impairment test for years ended March 31, 2017 and March 31, 2016, respectively. The Company considers the relationship between its market capitalisation and its book value, among other factors, when reviewing for indicators of impairment.

The recoverable amount of the CGU as at March 31,2017 is Rs 1,236.40 Crores (March 31,2016- Rs 923.20 Crores) and it has been determined based on a value in use calculation using cash flow projections from financial projections approved by senior management covering a five-year period. The pre-tax discount rate applied to cash flow projections for impairment testing during the current year is 26.2% (March 31,2016:25.3%) and cash flows beyond the five-year period are extrapolated using a 5% growth rate (March 31,2016: 5%). It was concluded that the carrying value of the net assets of CGU exceeded the value in use as at March 31,2016. As a result of this analysis, the management has recognised an impairment charge of Rs 191.89 Crore in addition to amortisation of Rs 52.99 Crore during the year ended March 31,2016 against goodwill of Rs 1,059.80 Crore, determined as on the appointed date. The impairment charge is recorded in the statement of profit and loss under depreciation and amortisation expense. The Company is also amortising the goodwill over a period of five full year’s period.

Key assumptions used for value in use calculations

The calculation of value in use for the CGU is most sensitive to the following assumptions:

Discount rates - Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived by applying capital asset pricing model and considering equity premium of 7% for Indian market and 5.5% for overseas market. The cost of debt is based on current average borrowing cost that a market participant would expect to pay to obtain its debt financing assuming the target capital structure. Weight age of equity and debt are considered based on the average capital structure of public companies in the wind industry. The beta factors are evaluated annually based on publicly available market data of companies in wind industry. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

Gross margins - The management expects to earn a stable margin over the five year period. The rate used by management is comparable to other comparable CGUs owned by the Company.

Sensitivity to changes in assumptions

The implications of the key assumptions for the recoverable amount are discussed below:

- Gross margins-A decreased demand can lead to a decline in gross margin. A decrease in gross margin to 3% would result in impairment.

- Discount rates-A rise in pre-tax discount rate to 8% would result in impairment.

8. Capital work-in-progress

Capital work-in-progress as at March 31, 2017, Rs 72.73 Crore (March 31, 2016: Rs 176.99 Crore; April 1 2015: Rs 19.83 Crore), primarily includes building and plant and machineries under construction.

The Company has classified certain office premises given on lease as investment property. For investment property existing as on April 1, 2015, i.e., its date of transition to Ind AS, the Company has used IGAAP carrying value as deemed costs. For details of investment property given as security to lenders refer Note 22(b).

The company’s investment property consist of two commercial properties.

As at March 31, 2016 and March 31,2017 the fair value of the properties are Rs 73.89 Crore and Rs 81.16 Crore respectively. The fair valuation is derived by management internally.

Description of valuation techniques used and key inputs to valuation on investment properties:

Under the DCF method, fair value is estimated using assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. This method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, a market-derived discount rate is applied to establish the present value of the income stream associated with the asset.

9. Intangible assets under development

Intangible assets underdevelopment as at March 31, 2017, Rs 55.53 Crore (March 31, 2016 : Rs 1.55 Crore; April 1 2015 : Rs Nil Crore), primarily includes design and drawings under development.

Other financial assets include deposits of Rs 3.53 Crore (March 31, 2016: Rs 3.53 Crore; April 1, 2015: Rs 3.53 Crore) from private companies in which director is a director or member.

a) The Company incurs expenditure on development of infrastructure facilities for power evacuation arrangements as per authorisation of the State Electricity Boards (‘SEB’) / Nodal agencies in Maharashtra and Tamil Nadu. The expenditure is reimbursed, on agreed terms, by the SEB / Nodal agencies. In certain cases, the Company recovers the cost from customers in the ordinary course of business. The cost incurred towards development of infrastructure facility inventory is reduced by the reimbursements received from SEB / Nodal agencies and the net amount is shown as ‘Infrastructure Development Asset’ under other financial assets. The excess of cost incurred towards the infrastructure facilities net of reimbursement received from SEB/Nodal agencies / customers is charged to statement of profit and loss as infrastructure development expenses. Other asset include Rs 278.53 Crore (March 31,2016: Rs 380.97 Crore; April 1,2015: 387.43 Crore)

For details of other assets given as security to lenders refer Note 22(b).

Other assets include advances recoverable of Rs 2.00 Crore (March 31, 2016: Rs 2.00 Crore; April 1, 2015: Rs 2.00 Crore) from private companies in which director is a director or member.

For details of cash and cash equivalents given as security to lenders refer Note 22(b).

There are no restrictions with regard to cash and cash equivalents at the end of the reporting period and prior period.

a) Disclosure on Specified Bank Notes

During the year, the Company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA Notification, G.S.R. 308(E), dated March 31, 2017. The details of SBNs held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification are as follows:

b. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs2 each. Each holder of equity shares is entitled to one vote per share except for the underlying depository shares held against the Global Depository Receipts (‘GDRs’).

Holders of the GDR have no voting rights with respect to the equity shares represented by the GDRs Deutsche Bank Trust Company Americas (the ‘Depository’), which is the shareholder on record in respect of the equity shares represented by the GDRs, will not exercise any voting rights in respect of the equity shares against which GDRs are issued, unless it is required to do so by law. Equity shares which have been withdrawn from the Depository facility and transferred on the Company’s register of members to a person other than the Depository, ICICI Bank Limited (the ‘Custodian’) or a nominee of either the Depository or the Custodian may be voted by the holders thereof.

As regard the shares which did not have voting rights as on March 31, 2017 are GDRs - 2,749,000 / (equivalent shares -10,996,000) and as on March 31,2016 are GDRs-2,710,731/(equivalent shares -10,842,924) as on April 1,2015 are GDRs 2,114,631/(equivalentshares-8,458,524)

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company on February 13, 2015 signed a Shareholder Agreement as amended by an Amendment Agreement dated December 11,2015 (collectively the “Agreement”) with the Investor Group in terms of which the Investor Group agreed to subscribe to 100 Crore equity shares at the rate of Rs 18 per shares aggregating to Rs 1,800.00 Crore, which were allotted on May 15, 2015. This is in addition to shares acquired under an Open Offer under SEBI Takeover Regulations. The key terms of the Agreement with the Investor Group are as follows;

- Appointment of one nominee director.

- Certain decisions by virtue of the agreement need shareholder approval.

- Investor group and Promoters of the Company shall be considered as Persons Acting in Concert under Regulation 2(1) (q) of the SEBI Takeover Regulations.

- If the Promoters decide to transfer any of their shareholding in the Company, they shall first offer these to the Investor Group. Also, if the Investor Group decide to transfer any of their shareholding in the Company, they shall first offer these to the Promoter Group.

- The Investor Group shares shall be subject to a lock-in period applicable under applicable regulations or one-year whichever is later.

- The Investor Group shall be consulted in accordance with the provisions of the Agreement.

c. Aggregate number of bonus shares issued, share issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:

The Company issued 10,095,000 shares (March 31,2016:10,095,000 shares and April 1,2015:10,095,000 shares) to employees under Employee stock purchase scheme, wherein part consideration was received in the form of employee services.

d. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, refer Note 39(b), under heading of “Closing balance”.

For details of shares reserved for issue on conversion of FCCBs, refer Note 22(c) (i) for terms of conversion / redemption.

For details of shares reserved for issue on conversion of Funded Interest Term Loan into equity shares or compulsory convertible debentures and issue of equity shares in lieu of sacrifice of the CDR Lenders, refer Note 22(a) (iv) for terms of conversion. There are no shares reserved for issue under options as at the balance sheet date.

Nature and purposes of various items in other equity:

(a) Securities premium

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(b) Share option outstanding account

The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

(c) Capital reserve

The Company recognises profit or loss on purchase/sale of the equity instruments in case of merger to capital reserve.

(d) Capital redemption reserve

The Company has transferred amount from statement of profit or loss to capital redemption reserve on redemption of preference shares issued by the company.

(e) Foreign currency monetary item translation difference account (FCMITDA)

The Company recognises FCMITDA for unamortised exchange difference pertains to long term foreign currency monetary items. (refer Note 4(k))

(f) General reserve

The Company has transferred a portion of the net profit of the company before declaring dividend or a portion of net profit kept separately for future purpose is disclosed as general reserve.

10. Borrowings

a) Corporate debt restructuring (CDR)

During the financial year ended March 31, 2013, Suzlon Energy Limited (‘SEL’) along with its identified domestic subsidiaries and a jointly controlled entity collectively referred to as the ‘Borrowers’ and individually as the ‘Borrower’, had restructured various financial facilities (restructured facilities) from the secured CDR lenders under the Corporate Debt Restructuring Proposal. Pursuant to approval of CDR Package by the CDR Empowered Group (‘CDR EG’), the implementation of the CDR package was formalised upon execution of Master Restructuring Agreement (MRA) between the CDR Lenders and Borrowers during the financial year ending March 31,2013. The MRA inter-alia covers the provisions to govern the terms and conditions of restructured facilities.

The key features of the CDR package are as follows:

i. Repayment of Restructured Term Loans (‘RTL’) after moratorium of 2 years from cut-off date in 32 structured quarterly instalments commencing from December 2014 to September 2022. The moratorium period of 2 years has expired on September 30,2014.

ii. Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan (‘WCTL’) and the repayment terms of which are in similar to that of RTL with enabling mandatory prepayment obligations on realisation of proceeds from certain asset sale and capital infusion.

iii. Restructuring of existing fund based and non-fund based working capital facilities, subject to renewal and reassessment every year.

iv. Unpaid interest due on certain existing facilities on cut-off date, interest accrued during the moratorium period on RTL and WCTL and interest on fund based working capital facilities for certain period were to be converted into Funded Interest Term Loans (‘FITLs’) and which were to be converted into equity shares of the Company.

v. The rate of interest on RTL, WCTL, FITL and fund based working capital facilities were reduced to 11.00% per annum with reset option in accordance with MRA.

vi. Waiver of existing events of defaults, penal interest and charges etc. in accordance with MRA.

vii. Contribution of Rs 250.00 Crore in SEL by promoters, their friends, relatives and business associates as stipulated, conversion of existing promoter’s loan of Rs 145.00 Crore into equity shares / CCDs at the price determined in compliance with Securities and Exchange Board of India.

Other key features of the CDR Package are:

i. Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA and;

ii. SEL to issue equity shares in lieu of sacrifice of the CDR Lenders for the first three years from cut-off date at the price determined incompliance with Securities and Exchange Board of India, if exercised by CDR lenders.

Incase of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

During the financial year ended March 31,2015, the restructuring proposal with Power Finance Corporation (‘PFC’) which is a non-CDR lender was approved by CDR EG. As per the terms of restructuring, the PFC has converted certain portion of interest accrued into FITL I and FITL II. Repayment of outstanding term loan would be in accordance with terms and conditions similar to those of RTL, whereas repayment of FITL I would be made in 32 equal quarterly instalments and should be co-terminus with RTL. Repayment of FITL II would be made in 12 quarterly instalments from December 2022 to September 2025. To give effect to the restructuring a bilateral agreement between the Borrower and PFC was entered into on August 12,2015.

b) The details of security for the current and non-current secured loans are as follows:

i) In case of financial facilities from CDR lenders in accordance with MRA and non-CDR lenders, RTL, WCTL, FITL aggregating Rs 2,396.91 Crore (March 31, 2016: Rs 2,605.87 Crore; April 1, 2015: Rs 5,281.11 Crore) of which Rs 2,336.41 Crore (March 31, 2016: Rs 2,572.17 Crore; April 1, 2015: Rs 3,355.12 Crore) classified as long-term borrowings and Rs 60.50 Crore (March 31, 2016: Rs 33.70 Crore; April 1, 2015: Rs 1,925.99 Crore) classified as current maturities of long-term borrowings, fund based working capital facilities of Rs 1,512.03 Crore (March 31, 2016: Rs 1,646.73 Crore; April 1, 2015: Rs 2,013.65 Crore), and non-fund based working capital facilities are secured by first pari passu charge on all chargeable present and future tangible/intangible movable assets of each of the Borrowers, first charge on all chargeable present and future immovable assets (excluding the identified properties) of each of the Borrowers, first charge on all present and future chargeable current assets of each of the Borrowers, first charge over Trust and Retention Account (‘TRA’) and other bank accounts of the Borrowers, pledge of equity shares held by SEL in its identified domestic subsidiaries and a jointly controlled entity which are forming part of the Borrowers, negative lien over the equity shares held by SEL in SE Forge Limited, pledge on shares of Suzlon Energy Limited, Mauritius (‘SELM’) held by SEL, negative lien over the equity shares of certain overseas subsidiaries of SEL held by its step down overseas subsidiaries, pledge of certain equity shares of SEL held by its promoters, personal guarantee of the chairman and managing director of SEL and limited personal guarantee of an erst while director of a subsidiary.

ii) Rs 50.00 Crore (March 31, 2016: Rs 50.00 Crore; April 1, 2015: Rs Nil) secured by first pari passu charge on all the assets of the borrowers provided to the CDR lenders shown in long-term borrowings. This loan is repayable in 24 quarterly structured instalments starting from March 18 quarter.

iii) Rs 6.13 Crore (March 31,2016: Rs Nil; April 1,2015: Rs Nil) secured by first pari passu charge on all the assets of the borrowers provided to the CDR lenders shown in long-term borrowing. This loan is repayable in 15 quarterly structured instalments starting from September 18 quarter.

iv) Rs Nil (March 31, 2016 Rs Nil; April 1, 2015: Rs 174.78 Crore) secured byway of priority repayment against the specific receivables being financed by certain lenders along with sharing of securities under CDR Package and personal guarantee of the chairman and managing director of SEL and limited personal guarantee of an erstwhile director of a subsidiary.

v) Rs Nil (March 31, 2016: Rs Nil; April 1, 2015: Rs 408.53 Crore) secured by way of priority repayment against the specific receivables being financed by a lender along with sharing of securities under CDR Package and personal guarantee of the chairman and managing director of SEL.

vi) Rs Nil (March 31, 2016: Rs Nil; April 1, 2015: Rs 150.00 Crore) secured byway of priority repayment on pari passu basis against the specific receivables being financed by a lender and a pari passu charge on the stock and receivables pertaining to specific projects with the lenders for the facility mentioned in point (vii) below.

vii) Rs Nil (March 31, 2016: Rs Nil; April 1, 2015: Rs 681.00 Crore) secured byway of priority repayment on pari passu basis against the specific receivables being financed by a lender and a pari passu charge on the stock and receivables pertaining to specific projects with the lender for the facility mentioned in point (vi) above, pledge of shares and corporate guarantee of third parties.

viii) Rs 413.32 Crore (March 31, 2016: Rs Nil; April 1, 2015: Rs Nil) secured by way of exclusive charge on the stock, receivables and escrow bank account maintained for the identified projects with the lender, pledge of shares and corporate guarantee of third parties.

ix) Rs 50.35 Crore (March 31,2016: Rs 50.45 Crore; April 1,2015: Rs Nil) secured by first pari passu charge on all current assets (except for land considered as stock in trade) and first pari passu charge on all property, plant and equipment and this is shown in short-term borrowings.

x) Vehicle loan of Rs 1.10 Crore (March 31, 2016: Rs 1.43 Crore; April 1, 2015: Rs 0.62 Crore) of which Rs 0.66 Crore (March 31,2016: Rs 0.86 Crore; April 1,2015: Rs 0.62 Crore) classified as current portion of long-term borrowings is secured against vehicle under hire purchase contract.

c) Foreign currency convertible bonds (FCCBs)

i) Following are the key terms of the bonds post restructuring:

On April 14,2016, FCCBs worth USD 28.80 Million in principal amount, which was part of the original 5% April 2016 Series have been repaid along with the applicable premium and the said Series is now redeemed in full and cease to exist.

Since the date of issuance, bonds equivalent to USD 299.09 Million of July 2019 have been converted into shares by March 31, 2017. The bond holders have exercised their rights to convert bonds of USD 1.00 million (USD 80.29 Million) of July 2019 bonds during the year.

(ii) Redemption premium

During the year ended March 31, 2017, the Company provided for the proportionate redemption premium of Rs Nil Crore (Rs 4.59 Crore on phase IV). Redemption premium as of the year end date for Phase IV (5% April 2016) is Rs Nil (Rs 16.60Crore).

d) The details of repayment of long-term borrowing are as follows:

*The effective rate of interest on long term borrowings ranges between 11% p.a. to 15% p.a. and on short-term borrowing ranges between 8.75% to 14.00% during the year, depending upon the prime lending rate of the banks and financial institutions at the time of borrowing, wherever applicable, and the interest rate spread agreed with the banks.

e) A financial institution has converted interest of Rs 46.65 Crore (Rs 44.58 Crore) to long-term borrowings.

** Includes expenditure booked under various expenditure heads by their nature.

Performance guarantee (‘PG’) represents the expected outflow of resources against claims for performance shortfall expected in future over the life of the guarantee assured. The period of performance guarantee varies for each customer according to the termsofcontract.Thekeyassumptionsinarrivingattheperformanceguaranteeprovisionsarewind velocity, plant load factor, grid availability, load shedding, historical data, wind variation factor etc.

Operation, maintenance and warranty (‘O&M’) represents the expected liability on account of field failure of parts of WTG and expected expenditure of servicing the WTGs over the period of free operation, maintenance and warranty, which varies according to the terms of each sales order.

Liquidated damages (‘LD’) represents the expected claims which the Company may need to pay for non-fulfilment of certain commitments as per the terms of the respective sales / purchase contracts. These are determined on a case to case basis considering the dynamics of each contract and the factors relevant to that sale.

The figures shown against ‘Utilisation’ represent withdrawal from provisions credited to statement of profit and loss to offset the expenditure incurred during the year and debited to statement of profit and loss.

11. Exceptional items

a. During the year, the Company with an objective of rationalising the ownership structure for international business, has transferred its investment in SEAS to SELM and SRC to SEAS which resulted in a net loss of Rs 674.16 Crore and against which company has utilised an amount of Rs 674.16 Crore from provision for investments.

During the previous year ended March 31, 2016, the Company as a part of restructuring exercise, has transferred its investments in SGSL to SSL which resulted in a gain Rs 846.70 Crore and in SGWPL to SPIL which resulted in a loss of Rs 1,094.12 Crore after utilisation of impairment allowance of Rs 245.92 Crore. These transfers have been undertaken for considerations which are determined based on valuation reports of independent valuers. During the year ended March 31,2017 SGSL has been merged in SSL and SSL has been renamed as ’Suzlon Global Services Limited’.

b. On January 22, 2015 AE Rotor Holding B.V. a step down wholly owned subsidiary of the Company and its subsidiaries signed a binding agreement with Center bridge Partners LP, USA to sell 100% stake in Senvion SE. The closing was subject to customary closing condition which got concluded on April 29, 2015. Accordingly the Company has made an impairment provision of Rs 434.45 Crore towards this investment in the year ended March 312016.

The Company has made provision for investments, loans and other financial assets to subsidiaries of Rs 535.78 Crore (March 31,2016: reversal of Rs 623.30 Crore)

c. Details of carry forward losses and unused credit on which no deferred tax asset is recognised by the Company are as follows:

Unabsorbed depreciation can be carried forward indefinitely. Business loss and capital loss can be carried forward for period for 8 years from the year in which losses arose. MAT credit can be carried forward up to a period of 15 years.

Majority of the business loess will expire between March 2020 to March 2022. Majority of the capital loss will expire between March 2024 to March 2025. MAT credit will expire between March 2022 to March 2023.

12. Post-employment benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity. Gratuity is computed based on 15 days salary based on last drawn salary for each completed year of service. The scheme is partially funded with an insurance company in the form of a qualifying insurance policy.

For the year ending on March 31,2018 the Company expects to contribute Rs 5.38 Crore (March 31,2017: Rs2.87 Crore) towards its defined benefit plan.

The average duration of the defined benefit plan obligation at the end of the reporting period is 10 years (March 31,2016:15.46 years).

13. Share-based payments

Employees Stock Option Plan 2007

The Scheme shall be applicable to the Company, subsidiary and may be granted to the permanent Employees of the Company or its subsidiaries, as determined by the Compensation Committee. Once the Options vest as per the Schedule, they would be exercisable by the option holder and the shares arising on exercise of such Options shall not be subject to any lock-in period provided however that the shares allotted on such exercise cannot be sold fora period of 30 days from the date of allotment in terms of the Insider Trading Code of the Company. The exercise price for the purposes of the grant of options shall be the price of the equity shares of the Company on the Bombay Stock Exchange. The Employee Stock Options granted shall be capable of being exercised within a period of five years from the date of first vesting. Payment of the Exercise Price shall be made by a crossed cheque or a demand draft drawn in favour of the Company, or in such other manner as the Compensation Committee may decide.

Employees Stock Option Plan 2009

The Scheme shall be applicable to the Company, subsidiary companies and may be granted to the permanent Employees of the Company or its subsidiaries or its holding company, as determined by the Compensation Committee. Once the Options vest as per the Schedule, they would be exercisable by the option holder and the shares arising on exercise of such Options shall not be subject to any lock-in period provided however that the shares allotted on such exercise cannot be sold for a period of 30 days from the date of allotment in terms of the Insider Trading Code of the Company. The exercise price for the purposes of the grant of options shall be 20% discount to the closing price of the equity shares of the Company on the Bombay Stock Exchange on the date of the grant. The Employee Stock Options granted shall be capable of being exercised within a period of five years from the date of first vesting. Payment of the Exercise Price shall be made by a crossed cheque ora demand draft drawn in favour of the Company, or in such other manner as the Compensation Committee may decide.

Employees Stock Option Plan 2014

The Scheme shall be applicable to the Employees of the Company, its Subsidiary Companies in India and abroad, any successor company thereof and may be granted to the Employees of the Company and its Subsidiary Companies, as determined by the Nomination and Remuneration Committee. Options granted under this Scheme would vest in tranches not earlier than one year and not later than a maximum of three years (Revised to five years) from the date of grant of such options. Vesting of Options would be subject to continued employment with the Company or Subsidiary Companies, as the case may be, and thus the Options would vest on passage of time. The Options would be granted at an Exercise Price equal to the closing market price of the Shares of the Company or certain discount to the closing market price on the NSE on the date of grant or such other price as may be decided by the Nomination and Remuneration Committee. Once the Options vest as per the Schedule, they would be exercisable by the option holder and the shares arising on exercise of such Options shall not be subject to any lock-in period provided however that the shares allotted on such exercise cannot be sold fora period of 30 days from the date of allotment in terms of the Insider Trading Code of the Company. The Employee Stock Options granted shall be capable of being exercised within a period of three years (Revised to five years) from the date of first vesting. Payment of the Exercise Price shall be made by a crossed cheque or a demand draft drawn in favour of the Company, or in such other manner as the Nomination and Remuneration Committee may decide.

The expense recognised for employee services received during the year is shown in the following table:

14. Operating leases

The Company has taken certain premises under operating leases.

Expenses under cancellable operating lease and rental contracts during the year is Rs 34.64 Crore (Rs 18.78 Crore).

Expenses under non-cancellable operating lease and rental contracts during the year is Rs 9.48 Crore (Rs 0.45 Crore).

Future minimum rentals payable under non-cancellable operating lease and rental contracts as per the respective agreements are as follows:

* includes demand from tax authorities for various matters. The Company / tax department has preferred appeals on these matters and the same are pending with various appellate authorities. Considering the facts of the matters, no provision is considered necessary by management.

Few customers of the Company has disputed certain amount as receivable which the Company believes is contractually not payable. These matters are pending for hearing before respective courts, the outcome of which is uncertain. The management has provided for an amount as a matter of prudence which it believes shall be the probable outflow of resources.

** The Group and SGL (refer Note 6) have provided securities to secure Stand-by Letter of Credit (‘SBLC’) facilities of USD 655 Million issued for securing covered bonds and foreign currency loan issued / availed by AERH. The outstanding balance of borrowing in AERH as on March 31,2017 is USD 626 Million (March 31,2016: USD 647 Million and April 1,2015: USD 647 Million) (refer Note 6).

The Company has stood as co-borrower for loans granted to the Company and its fellow subsidiaries for which certain securities defined in Note 22(b) are provided, the amount of which liability of each of parties is not ascertainable.

15. Disclosure required under Sec 186(4) of the Companies Act, 2013

For details of loans and guarantees given to related parties refer Note 45 and Note 42.

For details of securities provided on behalf of borrowers under the CDR package refer Note 22(a) and Note 22(b).

For details of investments made refer Note 13.

16. Segment information

As permitted by paragraph 4 of Ind AS-108, ‘Operating Segments’, 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 Ind AS-108 are given in consolidated financial statements.

i. The step down subsidiaries of the Company sold its 100% stake in Senvion SE and accordingly it ceased to be subsidiary from April 29,2015.

ii. During financial year ended March 31, 2016, the Company has acquired remaining stake of minority shareholders at a consideration of Rs 20.00 Crore.

iii. Merged during the year ended March 31,2017.

iv. Liquidated during the year ended March 31,2017.

v. Incorporated and sold during the year ended March 31,2017.

vi. During the year, 20.1% stake sold to Pivot Power LLC, USA.

vii. During financial year 2015-16, Suzlon entered in Solar sector and in order to execute the project, various special purpose vehicles (‘SPV’) were incorporated / acquired with an intend to dispose these to prospective buyers. Accordingly, under IGAAP, the same were classified as subsidiaries and treated as current investments. On transition to Ind AS the Company has assessed and determined that these companies is its jointly controlled entities under Ind AS 111 - Joint Arrangements. These entities were subsidiaries of the company during financial year 2015-16 and during the financial year 2016-17 reclassified as jointly controlled entities. As per Companies Act 2013,theseentitiesarestill subsidiaries of the company as at March 31,2017.

viii. The Company holds 75% interest in Suzlon Generators Limited (‘SGL’) and considered as subsidiary under IGAAP. On transition to Ind AS the Company has assessed and determined that SGL is its jointly controlled entity under Ind AS 111 - Joint Arrangements.

ix. Merged during the financial year 2015-16.

x. Refer Note 46.

xi. The company holds 25% interest in Suzlon Energy (Tianjin) Limited (‘SETL’) and considered it as joint venture under IGAAP. On transition to Ind AS the company has assessed and determined that SETL is an associate under Ind AS 28 Investment in associates and joint ventures.

xii. Liquidated during the year ended March 31,2016.

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 (EKMP)

Aspen Infrastructures Limited, PT Wind Energy, Salene Power Infrastructure Private Limited, Samanvaya Holdings Private Limited, Sandla Wind Project Private Limited, Sarjan Realities Limited, SE Freight & Logistics India Private Limited, Shubh Realty (South) Limited, Sugati Beach Resort Private Limited, Sugati Holdings Private Limited, Windforce Management Services Private Limited, Suzlon Foundation, Suzlon Green Power Private Limited, Synefra Infrastructures Private Limited, Tanti Holdings Private Limited, Skeiron Renewable Energy Private Limited, Skeiron Renewable Energy Amidyala Limited and Girish R. Tanti (HUF)

b. Key Management Personnel (KMP)

Tulsi R. Tanti, Vinod R. Tanti, Kirti J. Vagadia, J. P. Chalasani, Sanjay Baweja, Amit Agarwal*, Hemal Kanuga, Vaidhyanathan Raghuraman, Rajiv Ranjan Jha, Marc Desaedeleer, Ravi Uppal, Medha Joshi, Sunit Sarkar, Venkataraman Subramanian, Per Hornung Pedersen, Pratima Ram, Vijaya Sampathand Girish R.Tanti

c. Relatives of Key Management Personnel (RKMP)

Jitendra R. Tanti, Pranav T. Tanti, Sanyogita P. Tanti, Nidhi T. Tanti, Radha G. Tanti, Sangita V. Tanti and Rambhaben Ukabhai

d. Employee funds

Superannuation Fund Employees Group Gratuity Scheme *resigned w.e.f. August 01, 2015

Terms and conditions of transactions with related parties

Outstanding balances at the year-end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

17. Accounting for composite scheme of amalgamation and arrangement

On April 27,2016, the board of directors of the Company had approved a composite scheme (‘Scheme’) which comprised of:

(a) Merger of its three wholly owned subsidiary companies, namely, SE Blades Limited (‘SEBL’), SE Electricals Limited (‘SEEL’) and Suzlon Wind International Limited (‘SWIL’) in the Company, with effect from January 1, 2016 (being the appointed date for merger);

(b) Demerger of tower business from wholly owned subsidiary, Suzlon Structures Limited (‘SSL’) (renamed as Suzlon Global Services Limited (‘SGSL”)) with the Company, with effect from April 1,2016 (being the appointed date for demerger).

SEBL,SEEL,SWIL are herein after referred to as the ’transfer or companies’ and tower business of SSL is referred to as’ demerged business’.

Prior to merger, the transferor companies and tower business of SSL, were engaged in manufacturing components of wind turbine generators (WTGs).

The Scheme defined following accounting treatment for recording this transaction with transferor companies in the books of the Company

(a) Transfer of all assets and liabilities appearing in the books of transferor companies to the Company at their fair values as on the appointed date;

(b) The cost of equity and preference shares issued by transferor companies and held by the Company, shall be treated as consideration paid for acquisition of business of transferor companies;

(c) The Reserves (whether capital or revenue or on revaluation) of transferor companies should not be recorded in the financial statements of the Company;

(d) Loans and advances inter-se between the transferor companies and the Company, if any shall stand cancelled;

(e) Differences in accounting policy between the transferor companies and the Company will be quantified and adjusted in the balance in the statement of the profitand loss of the Company; and

(f) Difference between net assets value taken over from transferor companies and the cost of investments defined in (b) above, shall be debited to Goodwill account/credited to capital reserve account. Goodwill, if any, shall be amortised on a straight line basis over period of full five years (i.e. 60 months) and shall accordingly be amortised proportionately for a part of any financial year, if so required.

The Scheme defined following accounting treatment for recording this transaction with demerged business in the books of the Company

(a) Transfer of all assets and liabilities in the books of demerged business to the Company at their respective book values, as appearing in the books of SSL immediately preceding on the appointed date

(b) Intercompany balances, if any between the demerged business and the Company shall stand cancelled

(c) Amount of net assets/(liabilities) of demerged business transferred to the Company, shall be recorded as Capital Reserve / Goodwill respectively. This Goodwill / Capital Reserve shall be independent of Goodwill / Capital Reserve arising on merger of transfer or companies defined above.

This Scheme has been approved by the Honourable National Company Law Tribunal, Ahmedabad Bench on May 31, 2017 and the Company has incorporated the accounting effects in its books of accounts as per the accounting treatment prescribed in the Scheme which is in compliance and accordance with the accounting standards applicable to the Company as of the appointed date of the Scheme. Accounting standards currently applicable to the Company are Ind AS.

The details of Fair values of assets and liabilities taken over from transferor companies and book value of assets and liabilities taken over from demerged business in accordance with the Scheme are as follows:

Notes:

(a) Other financial liabilities of SSL includes an amount of Rs. 22.14 Crore, relating to amount payable by the tower business to other businesses included in SSL. As this in the nature of other financial liability, the same has been included in the computation of net assets of tower business.

(b) The Scheme states that since the entire share capital of transferor companies being SEBL, SEEL and SWIL is held by SEL, being wholly owned subsidiaries of SEL, no shares of SEL shall be allotted in respect of its holding in the transferor companies pursuant to amalgamation, due to operation of law. The value of investment in the shares of transferor companies held by SEL shall stands cancelled in the books of SEL, without further act or deed. The cost of acquisition of such equity and preference shares in the hands of SEL shall be treated as the consideration for the acquisition of business of transferor companies. As regards the de-merger of tower manufacturing division of SSL, the Scheme states that since the entire share capital of demerged company is held by SEL and its nominees, no shares of SEL shall be allotted in respect of its holding in the demerged company pursuant to demerger, due to operation of law.

** Asa result of merger the Company has recognised adjustment of Rs 69.15 Crore on account of cancellation of RCPs, Rs 111.90 Crore on account of accounting policy alignment including Ind AS adjustments.

18. Fair value measurements

Set out below is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments that are recognised in the financial statements.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

- Non-current investments

The fair value of investments in unquoted redeemable cumulative preference shares has been estimated using the discounted cash flow (‘DCF’) model. The valuation requires the management to make certain assumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted instruments.

- Current investments

The Company’s current investments consist of investment in units of mutual funds and unquoted investments in compulsory convertible debentures. The fair value of investments in mutual funds is derived from the NAV of the respective units in the active market at the measurement date. Investment in debentures have been classified as equity instruments measured at cost as per Ind AS 27.

19. Fair value hierarchy

There are no transfers between level 1 and level 2 during the year and earlier comparative periods. The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

20. Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk which may adversely impact the fair value of its financial instruments. The Company has constituted an internal Risk Management Committee (‘RMC’), which is responsible for developing and monitoring the Company’s risk management framework. The focus of the RMC is that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Risk Management Policy is approved by the Board of Directors.

a. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and price risk, such as commodity risk. The Company’s exposure to market risk is primarily on account of interest risk and foreign currency risk. Financial instruments affected by market risk include loans and borrowings, FVTPL investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at March 31,2017 and March 31,2016.

i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Recompense liability payable by the company to CDR lenders could be affected due to changes in market interest rate (refer Note 3(b)).

ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a foreign currency) and the Company’s borrowings and loans and investments in foreign subsidiaries.

The Company’s exposure to foreign currency risk as at the end of the reporting period expressed in INR are as follows:

Foreign currency sensitivity

The Company’s currency exposures in respect of monetary items at March 31, 2017, March 31, 2016 and April 1, 2015 that result in net currency gains and losses in the income statement and equity arise principally from movement in US Dollar and Euro exchange rates.

The following tables demonstrate the sensitivity to a reasonably possible change in USD and EURO exchange rates, with all other variables held constant. The Company’s exposure to foreign currency changes for all other currencies is not material. The other currencies includes Australian Dollar, Great Britain Pound, Danish Kroner etc.

b. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities (primarily loans). The Company consistently monitors the financial health of its customers and sales proceeds are being realised as per the milestone payment terms agreed to minimise the loss due to defaults or insolvency of the customer. Progressive liquidity management is being followed to de-risk the Company from any non-fulfilment of its liabilities to various creditors, statutory obligations, or any stakeholders.

i) Trade receivables

The Company’s exposure to trade receivables is limited due to diversified customer base. The Company consistently monitors progress under its contracts with customers and sales proceeds are being realised as per the milestone payment terms agreed to minimise the loss due to defaults or insolvency of the customer.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively.

Refer Note 2.3(p) for accounting policy on financial instruments.

ii) Financial instruments

Financial instruments that are subject to concentrations of credit risk primarily consist of cash and cash equivalents, term deposit with banks, investment in mutual funds, loans given to subsidiaries and other financial assets. Investments of surplus funds are made only with approved counterparties and within credit limits assigned.

The Company’s maximum exposure to credit risk as at March 31,2017 and as at March 31,2016 is the carrying value of each class of financial assets.

c. Liquidity risk

Liquidity risk refers to that risk where the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirement. In doing this, management considers both normal and stressed conditions. The Company manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring cash flow forecast and by matching the maturity profiles of financial assets and liabilities. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders.

The table below summarises the contractual maturity profile of the Company’s financial liabilities based on contractual undiscounted payment:

21. Capital management

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise shareholder value.

The capital structure of the Company is based on the management’s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence. The calculation of the capital for the purpose of capital management is as below.

22. The employee benefits expense and other expenses includes expenses of Rs 105.14 Crore (Rs 46.57 Crore) pertaining to research and development.

23. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to amortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46A of Accounting Standard 11. Accordingly, the Company has revised the amortisation period for such items to the maturity of the long term foreign currency monetary items (all before March 31,2020).

Net foreign exchange gain aggregating Rs 26.24 Crore (loss of Rs 118.65 Crore) on long term foreign currency monetary items have been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs45.86 Crore (Rs 63.99 Crore) have been amortised during the year.

24. Prior year amounts have been reclassified wherever necessary to confirm with current year presentation. Figures in the brackets are in respect of the previous year.

Source : Dion Global Solutions Limited
Quick Links for suzlonenergy
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.