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Accounting Policies of CESC Ltd. Company
Mar 31, 2025
note-2A material accounting policies
The standalone financial statements have been prepared
to comply in all material aspects with Indian Accounting
Standards (Ind AS) notified under the Companies (Indian
Accounting Standards) Rules, 2015 (as amended) under
Section 133 and other provisions of the Companies Act,
2013 and the regulations under the Electricity Act, 2003 to
the extent applicable. A summary of material accounting
policies which have been applied consistently are set out
below.
(a) Basis of Accounting
The financial statements have been prepared on the
historical cost convention except for the following:
i. Investments, except investment in subsidiaries
and Joint venture, are carried at fair value.
ii. Certain financial assets and liabilities are
measured at fair value.
(b) Use of estimates
As required under the provisions of Ind AS for
preparation of financial statements in conformity
thereof, the management has made judgements,
estimates and assumptions that affect the application
of accounting policies, and the reported amount
of assets, liabilities, income, and expenses and
disclosures. Actual results may differ from these
estimates. Estimates and underlying assumptions are
reviewed on a periodic basis. Revisions to accounting
estimates are recognized in the period in which the
estimates are revised and future periods affected.
(c) Property, plant and equipment (PPE) and
Depreciation
Tangible Assets are stated either at deemed cost as
considered on the date of transition to Ind- AS or
at cost of acquisition / construction together with
any incidental expenses related to acquisition and
appropriate borrowing costs, less accumulated
depreciation and accumulated impairment loss, if any.
An impairment loss is recognized where applicable,
when the carrying value of tangible assets of cash
generating unit exceed its fair value or value in use,
whichever is higher.
In terms of applicable Regulations under the
Electricity Act, 2003, depreciation on tangible assets,
other than freehold land is provided on straight line
method on a pro rata basis at the useful life specified
therein, the basis of which is considered by the West
Bengal Electricity Regulatory Commission (WBERC/
Commission) in determining the tariff for the year
of the Company. Leasehold land is amortised over
the unexpired period of the lease as appropriate.
Additional charge of depreciation for the year on
increase in value arising from fair valuation on date
of transition to Ind AS, is recouped from Retained
Earnings. Leasehold improvement is amortised over
the unexpired period of the lease.
As per amended Tariff Regulations, Advance against
Depreciation (AAD) relating to years, in respect of
which loans are fully repaid at the beginning of the
year, is determined and adjusted with the block of
asset for computation of net amount of depreciation
claimable by the Company under the Tariff setting
mechanism.
(d) Investment properties
Property that is held for long term rental yields is
classified as investment property. Carrying amount as
per previous GAAP has been considered as deemed
cost as on date of transition to Ind AS.
(e) Intangible Assets and amortisation
I ntangible assets comprising computer software and
mining rights, expected to provide future enduring
economic benefits are stated either at deemed cost
as considered on date of transition to Ind AS or at
cost of acquisition / implementation / development
less accumulated amortisation. The present value of
the expected cost of restoration of the coal mine is
included in its cost. An impairment loss is recognized
where applicable, when the carrying value of
intangible assets of cash generating unit exceed its
fair value or value in use, whichever is higher.
Cost of intangible assets, comprising computer
software related expenditure, are amortised over the
estimated useful life of three years. Mining rights are
amortised over the estimated useful life of the assets
of twenty years based on management''s internal
assessment.
(f) Lease
Company as a lessee
The Company''s lease asset classes primarily consist
of leases for land, plant & equipment, buildings and
offices. The Company assesses whether a contract
contains a lease, at the inception of a contract.
At the date of commencement of the lease, the
Company recognizes a right of use asset (ROU) and a
corresponding lease liability for all lease arrangements,
in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases), non lease
components (like maintenance charges, etc.) and
leases of low value assets.
For these short-term leases, non lease components
and lease of low value assets, the Company recognizes
the lease rental payments as an operating expense.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term, that are factored when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to
the commencement date of the lease plus any initial
direct costs. They are subsequently measured at
cost less accumulated depreciation and impairment
losses, if any. An impairment loss is recognised where
applicable, when the carrying value of ROU assets of
cash generating units exceeds its fair value or value in
use, whichever is higher.
Right-of-use assets are depreciated on a straight-line
basis over the lease term.
The lease liabilities are initially measured at the present
value of the future lease payments.
Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms of
the lease transfer substantially all the risks and rewards
of ownership to the lessee, the contract is classified
as a finance lease. All other leases are classified as
operating leases.
(g) Financial asset
The financial assets are classified in the following
categories:
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through
profit and loss.
3) Equity instruments.
The classification of financial assets depends on the
Company''s business model for managing financial
assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured
at their fair value.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash
flows and where those cash flows represent solely
payments of principal and interest are measured
at amortised cost. After initial measurement, such
financial assets are subsequently measured at
amortised cost using the effective interest rate
method. The losses arising from impairment are
recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through
profit and loss (FVTPL)
Financial instruments included within fair value
through profit and loss category are measured
initially as well as at each reporting period at fair
value plus transaction costs as applicable. Fair value
movements are recorded in Statement of Profit and
Loss. Investments in mutual funds are measured at fair
value through profit and loss.
Equity instruments
Equity investments in scope of Ind AS 109 are
measured at fair value. At initial recognition, the
Company makes an irrevocable election to present
in other comprehensive income subsequent changes
in the fair value. If the Company decides to classify
an equity instrument as at fair value through other
comprehensive income (FVTOCI), then all fair value
changes on the instrument, excluding dividends, are
recognized in the other comprehensive income (OCI).
Investment in subsidiaries and joint ventures are
carried at cost or at deemed cost as considered
on the date of transition to IndAS less provision
for impairment loss, if any. Investments are tested
for impairment 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 asset''s carrying amount
exceeds its recoverable amount.
In terms of applicable Indian Accounting Standard,
Interest free long term loans to wholly owned
subsidiaries engaged in infrastructural activity are
bifurcated into loan receivables and deemed equity
contribution based on terms of the contract. On
the transaction date, the fair value of loan given
is determined using a market rate. The amount
is classified as a loan (financial asset) measured
at amortised cost including notional interest. The
remainder of the proceeds is allocated to interest
free component that is recognised and included
in Investments. The carrying amount of the above
Investments is not remeasured in subsequent years.
impairment of financial assets
The Company assesses on a forward looking basis the
expected credit losses associated with its unsecured
a ssets carried at a mortised cost. The impairment
methodology applied depends on whether there has
been a significant increase in credit risk.
For trade receivables the simplified approach of
expected life time losses has been used from initial
recognition of the receivables as required by Ind AS
109 Financial Instruments.
(h) Financial liabilities
Financial liabilities are measured at amortised cost
using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries are
recognised as a liability at the time such commitment
is issued. The liability is initially measured at fair value
and subsequently at the amount initially recognised
less cumulative amortisation.
(i) Derivatives
The Company uses derivative financial instruments
such as forward currency contracts and interest
rate swaps to hedge its foreign currency risks and
interest rate risks respectively. Such derivative financial
instruments are recognised at fair value. Derivatives
are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value
is negative. Gains or losses arising from such fair
valuation of derivatives also give rise to regulatory
income or expense which is recognised through
Statement of Profit and Loss and would be considered
in determining the Company''s future tariff as per the
tariff regulations.
(J) inventories
Inventories of stores, fuel and traded goods are valued
at lower of cost and net realizable value. Cost is
calculated on weighted average basis and comprises
expenditure incurred in the normal course of business
in bringing such inventories to their present location
and condition.
Obsolete and slow moving inventories are identified
at the time of physical verification and provided for,
where necessary.
(k) Foreign Currency Transactions
The Company''s financial statements are presented
in INR which is also the functional currency of the
Company. Transactions in foreign currency, if any, are
accounted for at the exchange rate prevailing on the
date of transactions. Transactions remaining unsettled
are translated at the exchange rate prevailing at the
end of the financial year. Exchange gain or loss arising
on settlement/ translation of monetary items is
recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency,
if any, are restated at the year-end exchange rate.
Exchange gain or loss arising in respect of such
restatement also gives rise to regulatory income
or expense which is recognised as refundable or
recoverable, which will be taken into consideration in
determining the Company''s future tariff in respect of
amount settled duly considering impact of derivative
contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cash at banks, cash on hand and term
deposits with original maturity of three months or
less.
For the purpose of presentation in the Cash Flow
Statement, cash and cash equivalents includes cash,
cheques and draft on hand or Balances with banks
which are unrestricted for withdrawal/usages and
highly liquid financial investments that are readily
convertible to known amounts of cash which are
subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in
current liabilities in the balance sheet.
(m) Revenue from Operations
Revenue from contracts with customers is recognised
on supply of electricity or when services are rendered
to the customers at an amount that reflects the
consideration to which the Company is entitled under
appropriate regulatory framework.
Revenue to be earned from sale of electricity is
regulated based on parameters set out in tariff
regulations issued from time to time.
Earnings from sale of electricity are net of discount for
prompt payment of bills and do not include electricity
duty collected from consumers and payable to the
State Government.
The Company receives contribution from consumers
in accordance with the applicable Regulation,
that is being used to construct or acquire items of
property, plant and equipment in order to connect
the consumer to the Company''s distribution network.
The Company recognises revenue in respect of such
contributions when the performance obligations are
met.
I ncome from meter rent is accounted for as per the
approved rates.
(n) Other Income
Income from investments and deposits, User fee
income from investment property, etc is accounted
on accrual basis as per contractual terms. Delayed
Payment Surcharge, as a general practice, is
determined and recognised on receipt of overdue
payment from consumers. Interest income arising
from financial assets is accounted for using amortised
cost method. Dividend Income is recognised when
the right to receive is established.
(o) Employee Benefits
The Company recognises contributions to provident
fund and pension funds on an accrual basis. Provident
Fund contributions are made to a fund administered
through duly constituted approved independent
trust. The interest rate payable to the members of
the trust shall not be lower than the statutory rate of
interest declared by the Central Government under
the Employees'' Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made
good by the Company, impact of which is ascertained
by way of actuarial valuation as at the year end.
The Company, as per its schemes, extends employee
benefits current and/or post retirement which are
accounted for on accrual basis, based on actuarial
valuation as at the Balance Sheet date in respect
of gratuity, leave encashment and certain other
retiral benefits. Actuarial gains and losses, are
recognised through Other Comprehensive Income.
Compensation in respect of voluntary retirement
scheme is charged as an expense.
(p) Finance Costs
Finance Costs comprise interest expenses applicable
gain / loss on foreign currency borrowings in
appropriate cases and other borrowing costs. Finance
costs attributable to acquisition and / or construction
of qualifying assets are capitalized as a part of cost of
such assets up to the date such assets are ready for
their intended use. Finance Costs in case of foreign
currency borrowings is accounted for as appropriate,
duly considering the impact of the derivative contracts
entered into for managing risks thereof. Interest
expense arising from financial liabilities is accounted
for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on
computation as per prevailing taxation laws under the
Income Tax Act, 1961.
Provision for deferred taxation is made using liability
method on temporary difference arising between the
tax bases of assets and liabilities and their carrying
amounts in the financial statements using tax rates
(and laws) that have been enacted or substantially
enacted by the end of the reporting period and are
expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.
Deferred Tax Assets are recognized subject to the
consideration of prudence and are periodically
reviewed to reassess realization thereof. Deferred Tax
Liability or Asset will give rise to actual tax payable or
recoverable at the time of reversal thereof.
Current and Deferred tax relating to items
recognised outside profit or loss, that is either in
other comprehensive income (OCI) or in equity, is
recognised along with the related items.
The Company reviews the MAT credit entitlement at
each reporting date and recognises the credit against
the tax payable to the extent that it is probable that
it will be able to utilise the same against normal tax
during the specified period.
Since tax on profits forms part of claimable expenditure
under the applicable regulations, current tax liability
and deferred tax liability or asset is recoverable or
payable, through future tariff. Hence, recognition of
current tax liability and deferred tax asset or liability
is done with corresponding recognition of regulatory
liability or asset, to the extent applicable.
Mar 31, 2024
NOTE-2A MATERIAL ACCOUNTING POLICIES
The standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 and other provisions of the Companies Act, 2013 and the regulations under the Electricity Act, 2003 to the extent applicable. A summary of material accounting policies which have been applied consistently are set out below.
(a) Basis of Accounting
The financial statements have been prepared on the historical cost convention except for the following:
i. Investments, except investment in subsidiaries and Joint venture, are carried at fair value.
ii. Certain financial assets and liabilities are measured at fair value.
(b) Use of estimates
As required under the provisions of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies, and the reported amount of assets, liabilities, income, and expenses and disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods affected.
(c) Property, plant and equipment (PPE) and Depreciation
Tangible Assets are stated either at deemed cost as considered on the date of transition to Ind AS or at cost of acquisition / construction together with any incidental expenses related to acquisition and appropriate borrowing costs, less accumulated
depreciation and accumulated impairment loss, if any. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets, other than freehold land is provided on straight line method on a pro rata basis at the useful life specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (WBERC/ Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease as appropriate. Additional charge of depreciation for the year on increase in value arising from fair valuation on date of transition to Ind AS, is recouped from Retained Earnings. Leasehold improvement is amortized over the unexpired period of the lease.
As per amended Tariff Regulations, Advance against Depreciation (AAD) relating to years, in respect of which loans are fully repaid at the beginning of the year, is determined and adjusted with the block of asset for computation of net amount of depreciation claimable by the Company under the Tariff setting mechanism.
(d) Investment properties
Property that is held for long term rental yields is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as on date of transition to Ind AS.
(e) Intangible Assets and amortisation
Intangible assets comprising computer software and mining rights, expected to provide future enduring economic benefits are stated either at deemed cost as considered on date of transition to Ind AS or at cost of acquisition / implementation / development
less accumulated amortisation. The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
Cost of intangible assets, comprising Computer Software related expenditure, are amortised over the estimated useful life of three years. Mining rights are amortised over the estimated useful life of the assets of twenty years based on management''s internal assessment.
(f) Lease
Company as a lessee
The Company''s lease asset classes primarily consist of leases for land, plant & equipment, buildings and offices. The Company assesses whether a contract contains a lease, at the inception of a contract.
At the date of commencement of the lease, the Company recognizes a right of use asset (ROU) and a corresponding lease liability for all lease arrangements, in which it is a lessee, except for leases with a term of twelve months or less (short-term leases), non lease components (like maintenance charges, etc.) and leases of low value assets.
For these short-term leases, non lease components and lease of low value assets, the Company recognizes the lease rental payments as an operating expense.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term, that are factored when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. An impairment loss is recognised where applicable, when the carrying value of ROU assets of cash generating units exceeds its fair value or value in use, whichever is higher.
Right-of-use assets are depreciated on a straight-line basis over the lease term.
The lease liabilities are initially measured at the present value of the future lease payments.
Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
(g) Financial asset
The financial assets are classified in the following categories:
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through profit and loss.
3) Equity instruments.
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at their fair value.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows and where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FVTPL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in mutual funds are measured at fair value through profit and loss.
Equity instruments
Equity investments in scope of Ind AS 109 are measured at fair value. At initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value. If the Company decides to classify an equity instrument as at fair value through other comprehensive income (FVTOCI), then all fair value
changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). Investment in subsidiaries and joint ventures are carried at cost or at deemed cost as considered on the date of transition to Ind-AS less provision for impairment loss, if any. Investments are tested for impairment 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 asset''s carrying amount exceeds its recoverable amount.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its unsecured a ssets carried at a mortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the simplified approach of expected life time losses has been used from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
(h) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries are recognised as a liability at the time such commitment is issued. The liability is initially measured at fair value and subsequently at the amount initially recognised less cumulative amortisation.
(i) Derivatives
The Company uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives also give rise to regulatory income or expense which is recognised through Statement of Profit and Loss and would be considered in determining the Company''s future tariff as per the tariff regulations.
(j) Inventories
Inventories of stores, fuel and traded goods are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition.
Obsolete and slow moving inventories are identified at the time of physical verification and provided for, where necessary.
(k) Foreign Currency Transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company. Transactions in foreign currency, if any, are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement/ translation of monetary items is recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency, if any, are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement also gives rise to regulatory income or expense which is recognised as refundable or recoverable, which will be taken into consideration in determining the Company''s future tariff in respect of amount settled duly considering impact of derivative contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and term deposits with original maturity of three months or less.
For the purpose of presentation in the Cash Flow Statement, cash and cash equivalents includes cash, cheques and draft on hand or Balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(m) Revenue from Operations
Revenue from contracts with customers is recognised on supply of electricity or when services are rendered to the customers at an amount that reflects the consideration to which the company is entitled under appropriate regulatory framework.
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time.
Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity duty collected from consumers and payable to the State Government.
The Company receives contribution from consumers in accordance with the applicable Regulation, that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Company''s distribution network. The Company recognises revenue in respect of such contributions when the performance obligations are met.
I ncome from meter rent is accounted for as per the approved rates.
(n) Other Income
Income from investments and deposits, User fee income from investment property, etc is accounted on accrual basis as per contractual terms. Delayed Payment Surcharge, as a general practice, is determined and recognised on receipt of overdue payment from consumers. Interest income arising from financial assets is accounted for using amortised cost method. Dividend Income is recognised when the right to receive is established.
(o) Employee Benefits
The Company recognises contributions to provident fund and pension funds on an accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end.
The Company, as per its schemes, extends employee benefits current and/or post retirement which are accounted for on accrual basis, based on actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits. Actuarial gains and losses, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged as an expense.
(p) Finance Costs
Finance Costs comprise interest expenses applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Finance costs attributable to acquisition and / or construction of qualifying assets are capitalized as a part of cost of such assets up to the date such assets are ready for their intended use. Finance Costs in case of foreign
currency borrowings is accounted for as appropriate, duly considering the impact of the derivative contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on computation as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof.
Current and Deferred tax relating to items recognised outside profit or loss, that is either in other comprehensive income (OCI) or in equity, is recognised along with the related items.
The Company reviews the MAT credit entitlement at each reporting date and recognises the credit against the tax payable to the extent that it is probable that it will be able to utilise the same against normal tax during the specified period.
Since tax on profits forms part of claimable expenditure under the applicable regulations, current tax liability and deferred tax liability or asset is recoverable or payable, through future tariff. Hence, recognition of current tax liability and deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, to the extent applicable.
Mar 31, 2023
NOTE-1 The operations of the Company are governed by the Electricity Act, 2003 and various Regulations and / or Policies framed thereunder by the appropriate authorities. Accordingly, in preparing the financial statements the relevant provisions of the said Act, Regulations etc. have been duly considered.
NOTE-2A SIGNIFICANT ACCOUNTING POLICIES
The standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 and other provisions of the Companies Act, 2013 and the regulations under the Electricity Act, 2003 to the extent applicable. A summary of important accounting policies which have been applied consistently are set out below.
The financial statements have been prepared on the historical cost convention except for the following:
i. Investments, except investment in subsidiaries and Joint venture, are carried at fair value.
ii. Certain financial assets and liabilities (including derivative instruments) are measured at fair value.
As required under the provisions of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies, and the reported amount of assets, liabilities, income and expenses and disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods affected.
(c) property, plant and equipment (ppE)tangible Assets and Depreciation
Tangible Assets are stated either at deemed cost as considered on the date of transition to Ind- AS or at cost of acquisition / construction together with any incidental expenses related to acquisition and appropriate borrowing costs, less accumulated depreciation and accumulated impairment loss, if any. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets, other than freehold land is provided on straight line method on a pro rata basis at the useful life specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (WBERC/ Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease as appropriate. Additional charge of depreciation for the year on increase in value arising from fair valuation on date of transition to Ind AS, is recouped from Retained Earnings. Leasehold improvement is amortized over the unexpired period of the lease.
useful Life of Tangible Assets is as follows:
|
particulars |
useful Life of Assets |
|
Buildings and Structures |
25-50 Years |
|
Plant and Equipment |
5-25 Years |
|
Distribution System |
25-35 Years |
|
Meters |
7-15 Years |
|
River Tunnel |
50 Years |
|
Furniture and Fixtures |
15 Years |
|
Office Equipment |
5-15 Years |
|
Vehicles |
5 Years |
|
Railway Sidings |
50 Years |
Property that is held for long term rental yields is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as on date of transition to Ind AS.
(e) Intangible Assets and amortisation
I ntangible assets comprising computer software and mining rights, expected to provide future enduring economic benefits are stated either at deemed cost as considered on date of transition to Ind AS or at cost of acquisition / implementation / development less accumulated amortisation. The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
Cost of intangible assets, comprising Computer Software related expenditure, are amortised in three years over its estimated useful life. Mining rights are amortised over the estimated useful life of the assets
of twenty years based on management''s internal assessment.
The Company''s lease asset classes primarily consist of leases for land, plant & equipment, buildings and offices. The Company assesses whether a contract contains a lease, at the inception of a contract.
At the date of commencement of the lease, the Company recognizes a right of use asset (ROU) and a corresponding lease liability for all lease arrangements, in which it is a lessee, except for leases with a term of twelve months or less (short-term leases), non lease components (like maintenance charges, etc.) and leases of low value assets.
For these short-term leases, non lease components and lease of low value assets, the Company recognizes the lease rental payments as an operating expense.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term, that are factored when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. An impairment loss is recognised where applicable, when the carrying value of ROU assets of cash generating units exceeds its fair value or value in use, whichever is higher.
Right-of-use assets are depreciated on a straight-line basis over the lease term.
The lease liabilities are initially measured at the present value of the future lease payments.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
The financial assets are classified in the following categories:
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through profit and loss.
3) Equity instruments
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at their fair value.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows and where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FvtpL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in mutual funds are measured at fair value through profit and loss.
Equity investments in scope of Ind AS 109 are measured at fair value. At initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value. If the Company decides to classify an equity instrument as at fair value through other comprehensive income (FVTOCI), then all fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI).
Investment in subsidiaries and joint ventures are carried at cost or at deemed cost as considered on the date of transition to Ind-AS less provision for impairment loss, if any. Investments are tested for impairment 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 asset''s carrying amount exceeds its recoverable amount.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its unsecured assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the simplified approach of expected life time losses has been used from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
Financial liabilities are measured at amortised cost using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries are recognised as a liability at the time such commitment is issued. The liability is initially measured at fair value and subsequently at the amount initially recognised less cumulative amortisation.
The Company uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives also give rise to regulatory income or expense which is recognised through Statement of Profit and Loss and would be considered in determining the Company''s future tariff as per the tariff regulations.
Inventories of stores, fuel and traded goods are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition.
Obsolete and slow moving inventories are identified at the time of physical verification and provided for, where necessary.
(k) Foreign Currency Transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company. Transactions in foreign currency, if any, are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement/ translation of monetary items is recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency, if any, are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement also gives rise to regulatory income or expense which is recognised as refundable or recoverable, which will be taken into consideration in determining the Company''s future tariff in respect of amount settled duly considering impact of derivative contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and term deposits with original maturity of three months or less.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash, cheques and draft on hand or Balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(m) Revenue from Operations
Revenue from contracts with customers is recognised on supply of electricity or when services are rendered to the customers at an amount that reflects the consideration to which the company is entitled under appropriate regulatory framework.
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time.
Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity
duty collected from consumers and payable to the State Government.
The Company receives contribution from consumers in accordance with the applicable Regulation, that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Company''s distribution network. The Company recognises revenue in respect of such contributions when the performance obligations are met.
Income from meter rent is accounted for as per the approved rates.
Income from investments and deposits, User fee income from investment property, etc is accounted on accrual basis as per contractual terms. Delayed Payment Surcharge, as a general practice, is determined and recognised on receipt of overdue payment from consumers. Interest income arising from financial assets is accounted for using amortised cost method. Dividend Income is recognised when the right to receive is established.
(o) Employee Benefits
The Company recognises contributions to provident fund and pension funds on an accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end.
The Company, as per its schemes, extends employee benefits current and/or post retirement which are accounted for on accrual basis, based on actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits. Actuarial gains and losses, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged as an expense.
(p) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Finance
costs attributable to acquisition and / or construction of qualifying assets are capitalized as a part of cost of such assets up to the date such assets are ready for their intended use. Finance Costs in case of foreign currency borrowings is accounted for as appropriate, duly considering the impact of the derivative contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on computation as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof.
Current and Deferred tax relating to items recognised outside profit or loss, that is either in other comprehensive income (OCI) or in equity, is recognised along with the related items.
The Company reviews the MAT credit entitlement at each reporting date and recognises the credit against the tax payable to the extent that it is probable that it will be able to utilise the same against normal tax during the specified period.
Since tax on profits forms part of claimable expenditure under the applicable regulations, current tax liability and deferred tax liability or asset is recoverable or payable, through future tariff. Hence, recognition of current tax liability and deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, to the extent applicable.
(r) provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
Business combination involving entities or businesses under common control are accounted for using the pooling of interest method whereby the assets and liabilities of the combining entities / business are reflected at their carrying value and necessary adjustments , if any, have been given effect to as per the scheme approved by National Company Law Tribunal, as applicable.
(t) Regulatory deferral account balances
The Company is a rate regulated entity and follows Ind AS 114, Regulatory Deferral Accounts. Expenses/ Income are recognized as Regulatory Income/ Expenses in the Statement of Profit and Loss to the extent recoverable or payable in subsequent periods based on the Company''s understanding of the provision of the applicable regulations framed by the West Bengal Electricity Regulatory Commission (WBERC/ Commission) and/or their pronouncements/orders, with corresponding balances shown in the Balance Sheet as Regulatory Deferral Account balances, at their present value duly considering appropriate discounting methodology in consonance with the applicable regulations and prudence. Regulatory Deferral Account balances being estimates are revised based on factual developments, including impact of regulatory orders.
NOTE-2B SuMMARY OF SIGNIFICANT juDGEMENTS AND ASSumpTIONS
The preparation of financial statements requires the use of accounting estimates, judgements and assumptions. Management also needs to exercise judgement in applying the Company''s accounting policies.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
The areas involving critical estimates or judgements are :-
⢠Estimate of useful life of Intangible Assets -Note -2A (e)
⢠Fair Valuation/Impairment assessment of certain Investments -Note-7 & Note-2 A (g)
⢠Estimation of Regulatory Deferral Account - Note -18 & 39
⢠Estimation of Restoration Liability- Note- 2A (e)
⢠Impairment of Trade Receivables -Note - 2A (g)
⢠Estimates used in Actuarial Valuation of Employee benefits -Note-35
⢠Estimates used in Lease liabilities -Note-50
note-3 changes in existing ind as
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022, to amend the following Ind AS which are effective from April 01, 2022, but do not have any significant impact on the Standalone Financial Statements.
(i) Onerous Contracts - Costs of Fulfilling a Contract -Amendments to Ind AS 37
(ii) Reference to the Conceptual Framework -
Amendments to Ind AS 103
(iii) Property, Plant and Equipment: Proceeds before
Intended Use - Amendments to Ind AS 16
(iv) Ind AS 101 First-time Adoption of Indian Accounting Standards - Subsidiary as a first-time adopter
(v) Ind AS 109 Financial Instruments - Fees in the ''10 per cent'' test for derecognition of financial liabilities
(vi) Ind AS 41 Agriculture - Taxation in fair value
measurements
The Company has not early adopted any standards
or amendments that have been issued but are not yet effective.
Mar 31, 2022
NOTE-2A SIGNIFICANT ACCOUNTING POLICIES
The standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) under Section 133 of the Companies Act, 2013 and other provisions of the Companies Act, 2013 and the regulations under the Electricity Act, 2003 to the extent applicable. A summary of important accounting policies which have been applied consistently are set out below.
(a) Basis of Accounting
The financial statements have been prepared on the historical cost convention except for the following:
i. Investments, except investment in subsidiaries and joint ventures, are carried at fair value.
ii. Certain financial assets and liabilities (including derivative instruments) are measured at fair value.
(b) Use of estimates
As required under the provisions of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies, and the reported amount of assets, liabilities, income, and expenses and disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
(c) Property, Plant and Equipment (PPE)
Tangible Assets and Depreciation
Tangible Assets are stated either at deemed cost as considered on the date of transition to Ind- AS or at cost of acquisition / construction together with any incidental expenses related to acquisition and appropriate borrowing costs, less accumulated depreciation and accumulated impairment loss, if any. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets, other than freehold land is provided on straight line method on a pro rata basis at the useful life specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (WBERC/ Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease as appropriate. Additional charge of depreciation for the year on increase in value arising from fair valuation on date of transition to Ind AS, is recouped from Retained Earnings. Leasehold improvement is amortized over the unexpired period of the lease.
|
Useful Life of Tangible Assets is as follows: |
|
|
Particulars |
Useful Life of Assets |
|
Buildings and Structures |
25-50 Years |
|
Plant and Equipment |
5-25 Years |
|
Distribution System |
25-35 Years |
|
Meters |
7-15 Years |
|
River Tunnel |
50 Years |
|
Furniture and Fixtures |
15 Years |
|
Office Equipment |
5-15 Years |
|
Vehicles |
5 Years |
|
Railway Sidings |
50 Years |
(d) Investment properties
Property that is held for long term rental yields is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as on date of transition to Ind AS.
(e) Intangible Assets and Amortisation
Intangible assets comprising computer software and mining rights, expected to provide future enduring economic benefits are stated either at deemed cost as considered on date of transition to Ind AS or at cost of acquisition / implementation / development less accumulated amortisation. The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
Cost of intangible assets, comprising computer software related expenditure, are amortised in three years over its estimated useful life. Mining rights are also amortised over the estimated useful life of the assets of twenty years based on management''s internal assessment.
(f) Lease
Company as a lessee
The Company''s lease asset classes primarily consist of leases for land, plant & equipment, buildings and offices. The Company assesses whether a contract contains a lease, at the inception of a contract.
At the date of commencement of the lease, the Company recognizes a right of use asset (ROU) and a corresponding lease liability for all lease arrangements, in which it is a lessee, except for leases with a term of twelve months or less (short-term leases), non lease components (like maintenance charges, etc.) and leases of low value assets.
For these short-term leases, non lease components and lease of low value assets, the Company recognizes the lease rental payments as an operating expense.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. An impairment loss is recognised where applicable, when the carrying value of ROU assets of cash generating units exceeds its fair value or value in use, whichever is higher.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the lease term.
The lease liabilities are initially measured at the present value of the future lease payments.
Company as a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
(g) Financial Asset
The financial assets are classified in the following categories:
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through profit and loss.
3) Equity instruments
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at their fair value Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows and where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at
amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FVTPL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in mutual funds are measured at fair value through profit and loss.
Equity instruments
Equity investments in scope of Ind AS 109 are measured at fair value. At initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value. If the Company decides to classify an equity instrument as at fair value through other comprehensive income (FVTOCI), then all fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). Investment in subsidiaries and joint ventures are carried at cost or at deemed cost as considered on the date of transition to Ind-AS less provision for impairment loss, if any. Investments are tested for impairment 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 asset''s carrying amount exceeds its recoverable amount.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk (refer Note 41).
For trade receivables the simplified approach of expected life time losses has been used from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
(h) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries are recognised as a liability at the time such commitment is issued. The liability is initially measured at fair value and subsequently at the amount initially recognised less cumulative amortisation.
(i) Derivatives
The Company uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives also give rise to regulatory income or expense which is recognised through Statement of Profit and Loss and would be considered in determining the Company''s future tariff as per the tariff regulations.
(j) Inventories
Inventories of stores, fuel and traded goods are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, adjustment is made for such items.
(k) Foreign Currency Transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company. Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement/ translation of monetary items is recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement also gives rise to regulatory income or expense which is recognised as refundable or recoverable, which will be taken into consideration in determining the Company''s future tariff in respect of the amount settled duly considering as appropriate, the impact of the derivative contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks, cash on hand and term deposits with original maturity of three months or less.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents includes cash, cheques and draft on hand, Balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the Balance Sheet.
(m) Revenue from Operations
Revenue from contracts with customers is recognised on supply of electricity or when services are rendered to the customers at an amount that reflects the consideration to which the company is entitled under appropriate regulatory framework.
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time.
Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity duty collected from consumers and payable to the State Government.
The Company receives contribution from consumers in accordance with the Regulation, that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Company''s distribution network. The Company recognises revenue in respect for such contributions so received from consumers in the year they are connected to the distribution network.
Income from meter rent is accounted for as per the approved rates.
(n) Other Income
Income from investments and deposits etc. is accounted for on accrual basis inclusive of related tax deducted at source, wherever applicable. Delayed Payment Surcharge, as a general practice, is determined and recognised on receipt of overdue payment from consumers. Interest income arising from financial assets is accounted for using amortised cost method. Dividend Income is recognised when the right to receive is established.
(o) Employee Benefits
The Company recognises contributions to provident fund, pension funds on an accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end. The Company, as per its schemes, extends employee benefits current and/or post retirement which are accounted for on accrual basis, and includes actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits, to the extent applicable, done by independent actuary. Actuarial gains and losses, where applicable, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged to revenue.
(p) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Such finance costs attributable to acquisition and / or construction of qualifying assets are capitalized as a part of cost of such assets up to the date, where such assets are ready for their intended use. The balance finance costs is charged off to Statement of Profit and Loss. Finance Costs in case of foreign currency borrowings is accounted for as appropriate, duly considering the impact of the derivative contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof.
Current and Deferred tax relating to items recognised outside profit or loss, that is either in other comprehensive income (OCI) or in equity, is recognised along with the related items.
The Company reviews the MAT credit entitlement at each reporting date and recognises the credit against the tax payable to the extent that it is probable that it will be able to utilise the same against normal tax during the specified period.
Since tax on profits forms part of chargeable expenditure under the applicable regulations, current tax liability and deferred tax liability or asset is recoverable or payable, as applicable through future tariff. Hence, recognition of current tax liability and deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, to the extent applicable.
(r) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(s) Business combination
Business combination involving entities or businesses under common control are accounted for using the pooling of interest method whereby the assets and liabilities of the combining entities / business are reflected at their carrying value and necessary adjustments , if any, have been given effect to as per the scheme approved by National Company Law Tribunal, as applicable.
(t) Regulatory deferral account balances
The Company is a rate regulated entity and has elected to adopt Ind AS 114, Regulatory Deferral Accounts. Expenses/Income are recognized as Regulatory Income/Expenses in the Statement of Profit and Loss to the extent recoverable or payable in subsequent periods based on the Company''s understanding of the provision of the applicable regulations framed by the West Bengal Electricity Regulatory Commission (WBERC/ Commission) and/or their pronouncements/orders, with corresponding balances shown in the Balance Sheet as Regulatory Deferral Account balances, at their present value duly considering discounting methodology using such rates in consonance with the applicable regulations and prudence. Regulatory Deferral Account balances are adjusted from the year in which these crystallise.
NOTE-2B Summary of significant judgements and assumptions
The preparation of financial statements requires the use of accounting estimates, judgements and assumptions which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
The areas involving critical estimates or judgements are Estimated useful life of Intangible Assets -Note -2A (e)
Estimated Fair Valuation/Impairment assessment of certain Investments -Note-7 & Note-2 A (g)
Estimation of Regulatory Items - Note -18 & 39 Estimation of Restoration Liability- Note- 2A (e)
Impairment of Trade Receivables -Note - 2A (g)
Estimates used in Actuarial Valuation of Employee benefits -Note-35 Estimates used in Lease liabilities -Note-50
NOTE-3A Changes in existing Ind AS
Amendments and interpretations as outlined below apply for the year ended 31 March, 2022, but do not have an impact on the Standalone Financial Statements.
a. Interest Rate Benchmark Reform - Phase 2: Amendments to Ind AS 109, Ind AS 107, Ind AS 104 and Ind AS 116
b. Ind AS 116: COVID-19 related rent concessions
c. Ind AS 103: Business combinations
d. Amendment to Ind AS 105, Ind AS 16 and Ind AS 28
The Company has not early adopted any standards or amendments that have been issued but are not yet effective.
NOTE-3B The Ministry of Corporate Affairs (MCA) through a notification, amended Schedule III of the Companies Act, 2013 and the amendments are effective from 1 April, 2021. These amendments require certain regroupings in the Schedule III format of Balance Sheet. The Company has given effect of such regroupings in these standalone financial statements including figures for the corresponding previous year wherein:
a) Current maturities of long term debts has been regrouped from "Other Financial Liabilitiesâ in the Standalone Financial Statements for FY 2020-2021 to "Current Borrowingsâ in these Standalone Financial Statements.
b) Lease Liabilities are presented separately as "Lease Liabilitiesâ in these Standalone Financial Statements and not grouped under "Other Financial Liabilitiesâ as presented in the Standalone Financial Statements for FY 2020-2021.
c) Security Deposits has been regrouped from "Loansâ in the Standalone Financial Statements for FY 2020 - 2021 to "Other Financial Assetsâ in these Standalone Financial Statements.
Mar 31, 2019
NOTE-1A SIGNIFICANT ACCOUNTING POLICIES
The standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) under Section 133 of the Companies Act, 2013 and other provisions of the Companies Act, 2013 and the regulations under the Electricity Act, 2003 to the extent applicable. A summary of important accounting policies which have been applied consistently are set out below.
(a) Basis of Accounting
The financial statements have been prepared on the historical cost convention except for the following:
i. Investments, except investment in subsidiaries, associates and joint ventures, are carried at fair value.
ii. Certain financial assets and liabilities (including derivative instruments) are measured at fair value.
(b) Use of estimates
As required under the provisions of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies, and the reported amount of assets, liabilities, income and expenses and disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
(c) Property, plant and equipment (PPE)
Tangible Assets and Depreciation
Tangible Assets are stated either at deemed cost as considered on the date of transition to Ind- AS or at cost of acquisition / construction together with any incidental expenses related to acquisition and appropriate borrowing costs, less accumulated depreciation and accumulated impairment loss, if any. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its fairvalue or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets, other than freehold land is provided on straight line method on a pro rata basis at the useful life specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease as appropriate. Additional charge of depreciation for the year on increase in value arising from fair valuation on date of transition to Ind AS, is recouped from Retained Earnings. Leasehold improvement is amortized overthe unexpired period of the lease.
(d) Investment properties
Property that is held for long term rental yields is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as on date of transition to Ind AS.
(e) Intangible Assets and amortisation
Intangible assets comprising computer software and mining rights, expected to provide future enduring economic benefits are stated either at deemed cost as considered on date of transition to Ind AS or at cost of acquisition / implementation / development less accumulated amortisation. The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
Cost of intangible assets, comprising Computer Software related expenditure, are amortised in three years over its estimated useful life. Mining rights are also amortised over the estimated useful life of the assets of twenty years based on management''s internal assessment.
(f) Lease
A lease is classified as a finance or an operating lease as applicable.
Company as lessee Finance lease
Finance leases are capitalised at present value of the minimum lease payments at the lease''s inception and disclosed as leased property. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
A leased asset is depreciated over the useful life of the asset.
Operating lease
Lease payments under operating leases are recognised as an expense on a straight line basis in the Statement of Profit and Loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
Company as lessor Operating lease
Lease earnings under operating leases are recognised as an income on a straight line basis in the Statement of Profit and Loss over the lease term except where increase is in line with expected general inflation. The respective leased assets are included in the Balance Sheet based on their nature.
(g) Financial asset
The financial assets are classified in the following categories:
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through profit and loss.
3) Equity instruments.
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at their fair value.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows and where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FVTPL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in mutual funds are measured at fair value through profit and loss.
Equity instruments
Equity investments in scope of Ind AS 109 are measured at fair value. At initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value. If the Company decides to classify an equity instrument as at FVTOCI, then all fairvalue changes on the instrument, excluding dividends, are recognized in the OCI. Investment in subsidiaries, associates and joint ventures are carried at cost or at deemed cost as considered on the date of transition to Ind-AS less provision for impairment loss, if any. Investments are tested for impairment 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 asset''s carrying amount exceeds its recoverable amount.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk (refer Note 41).
For trade receivables the simplified approach of expected life time losses has been used from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
(h) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries/associates are recognised as a liability at the time such commitment is issued. The liability is initially measured at fairvalue and subsequently at the amount initially recognised less cumulative amortisation.
(i) Derivatives
The Company uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives also give rise to regulatory income or expense which is recognised through Statement of Profit and Loss and would be considered in determining the Company''s future tariff as per the tariff regulations.
(j) Inventories
Inventories of stores, fuel and traded goods are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, adjustment is made for such items.
(k) Foreign Currency Transactions
The Company''s financial statements are presented in I NR which is also the functional currency of the Company. Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement/ translation of monetary items is recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement also gives rise to regulatory income or expense which is recognised as refundable or recoverable, which will be taken into consideration in determining the Company''s future tariff in respect of the amount settled duly considering as appropriate, the impact of the derivative contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and term deposits.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalent includes cash, cheques and draft on hand. Balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amounts of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(m) Revenue from Operations
Revenue from contracts with customers is recognised on supply of electricity or when services are rendered to the customers at an amount that reflects the consideration to which the company is entitled under appropriate regulatory framework.
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time.
Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity duty collected from consumers and payable to the State Government.
The Company receives contribution from consumers in accordance with the Regulation, that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Company''s distribution network. The Company recognises revenue in respect for such contributions so received from consumers in the year they are connected to the distribution network.
Income from meter rent is accounted for as per the approved rates.
(n) Other Income
Income from investments and deposits etc. is accounted for on accrual basis inclusive of related tax deducted at source, wherever applicable. Delayed Payment Surcharge, as a general practice, is determined and recognised on receipt of overdue payment from consumers. Interest income arising from financial assets is accounted for using amortised cost method. Dividend Income is recognised when the right to receive is established.
(o) Employee Benefits
The Company recognises contributions to provident fund, pension funds on an accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end. The Company, as per its schemes, extends employee benefits current and/or post retirement which are accounted for on accrual basis, and includes actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits, to the extent applicable, done by independent actuary. Actuarial gains and losses, where applicable, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged to revenue.
(p) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Such Finance costs attributable to acquisition and/or construction of qualifying assets are capitalized as a part of cost of such assets upto the date, where such assets are ready for their intended use. The balance Finance Costs is charged off to Statement of Profit and Loss. Finance Costs in case of foreign currency borrowings is accounted for as appropriate, duly considering the impact of the derivative contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof.
Current and Deferred tax relating to items recognised outside profit or loss, that is either in other comprehensive income (OCI) or in equity, is recognised along with the related items.
Since tax on profits forms part of chargeable expenditure under the applicable regulations, deferred tax liability or asset is recoverable or payable through future tariff. Hence, recognition of deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, as applicable.
(r) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(s) Business combination
Business combination involving entities or businesses under common control are accounted for using the pooling of interest method whereby the assets and liabilities of the combining entities / business are reflected at their carrying value and necessary adjustments, if any, have been given effect to as per the scheme approved by National Company Law Tribunal.
(t) Regulatory deferral account balances
The Company is a rate regulated entity and has elected to adopt Ind AS 114, Regulatory Deferral Accounts. Expenses/Income are recognized as Regulatory Income/Expenses in the Statement of Profit and Loss to the extent recoverable or payable in subsequent periods based on the Company''s understanding of the provision of the applicable regulations framed by the West Bengal Electricity Regulatory Commission (WBERC) and/or their pronouncements/orders, with corresponding balances shown in the Balance Sheet as Regulatory Deferral Account balances. Regulatory Deferral Account balances are adjusted from the year in which these crystallise.
Mar 31, 2018
NOTE - 1A SIGNIFICANT ACCOUNTING POLICIES
The standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of the Companies Act, 2013 and other provisions of the Companies Act, 2013 and the regulations under the Electricity Act, 2003 to the extent applicable. A summary of important accounting policies which have been applied consistently are set out below.
(a) Basis of Accounting
The financial statements have been prepared on the historical cost convention except for the following :
i. Investments except investment in subsidiaries, associates and joint ventures are carried at fair value.
ii. Certain financial assets and liabilities (including derivative instruments) are measured at fair value.
(b) Use of estimate
As required under the provisions of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies, and the reported amount of assets, liabilities, income, and expenses and disclosures. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
(c) Property, plant and equipment (PPE)
Tangible Assets and Depreciation
Tangible Assets are stated either at deemed cost as considered on the date of transition to Ind- AS or at cost of acquisition / construction together with any incidental expenses related to acquisition and appropriate borrowing costs , less accumulated depreciation and accumulated impairment loss, if any. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets other than freehold land is provided on straight line method on a pro rata basis at the useful life specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease. Additional charge of depreciation for the year on increase in value arising from fair valuation at the transition date, is recouped from Retained Earnings. Leasehold improvement is amortized over the unexpired period of the lease.
(d ) Investment properties
Property that is held for long term rental yields is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as at transition date.
(e) Intangible Assets and amortisation
Intangible assets comprising computer software, brands and mining rights, expected to provide future enduring economic benefits are stated at cost of acquisition / implementation / development less accumulated amortisation which is as per previous GAAP and considered as deemed cost as on transition date . The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its fair value or value in use, whichever is higher.
Cost of intangible assets, comprising Computer Software related expenditure, are amortised in three years over its estimated useful life and those relating to brands in twenty years, based on useful life assessed by an independent valuer. Mining rights are also amortised over the estimated useful life of the assets of twenty years based on managementâs internal assessment.
(f) Lease
A lease is classified as a finance or an operating lease as applicable.
Company as lessee Finance lease
Finance leases are capitalised at present value of the minimum lease payments at the leaseâs inception and disclosed as leased property. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
A leased asset is depreciated over the useful life of the asset.
Operating lease
Lease payments under operating leases are recognised as an expense on a straight line basis in the Statement of Profit and Loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
Company as lessor
Operating lease
Lease earnings under operating leases are recognised as an income on a straight line basis in the Statement of Profit and Loss over the lease term. The respective leased assets are included in the Balance Sheet based on their nature.
(g) Financial asset
The financial assets are classified in the following categories :
1) Financial assets measured at amortised cost.
2) Financial assets measured at fair value through profit and loss.
3) Equity instruments
The classification of financial assets depends on the Companyâs business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at their fair value.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows and where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FVTPL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss.
Equity instruments
Equity investments in scope of Ind AS 109 are measured at fair value. At initial recognition, the Company make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. Investment in subsidiaries, associates and joint ventures are carried at cost or at deemed cost as considered on the date of transition to Ind-AS less provision for impairment loss, if any. Investments are tested for impairment 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 assetâs carrying amount exceeds its recoverable amount. Investments in mutual funds are measured at fair value through profit and loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk (refer Note 41).
For trade receivables the simplified approach of expected life time losses has been used from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
(h) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method.
Cost of commitment for borrowings of subsidiaries/associates are recognised as a liability at the time such commitment is issued. The liability is initially measured at fair value and subsequently at the amount initially recognised less cumulative amortisation.
(i) Derivatives
The Company uses derivative financial instruments such as forward currency contracts, interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives also give rise to regulatory income or expense which is recognised through Statement of Profit and Loss and would be considered in determining the Companyâs future tariff as per the tariff regulations.
(j) Inventories
Inventories of stores, fuel and traded goods are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, adjustment is made for such items.
(k) Foreign Currency Transactions
The Companyâs financial statements are presented in INR which is also the functional currency of the Company. Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement/ translation of monetary items is recognized in the Statement of Profit and Loss.
The outstanding loans repayable in foreign currency are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement also gives rise regulatory income or expense which is recognised as refundable or recoverable, which will be taken into consideration in determining the Companyâs future tariff in respect of the amount settled duly considering as appropriate, the impact of the derivative contracts entered into for managing risks thereunder.
(l) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and term deposits
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalent includes cash, cheques and draft on hand, balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amount of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(m) Revenue from Operations
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time.
Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity duty collected from consumers and payable to the State Government.
The Company receives contribution from consumers in accordance with the Regulation, that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Companyâs distribution network. The Company recognises revenue in respect for such contributions so received from consumers in the year they are connected to the distribution network.
Income from meter rent is accounted for as per the approved rates.
(n) Other Income
Income from investments and deposits etc. is accounted for on accrual basis inclusive of related tax deducted at source, wherever applicable. Delayed Payment Surcharge as a general practice is determined and recognised on a receipt of overdue payment from consumer. Interest income arising from financial assets is accounted for using amortised cost method.
(o) Employee Benefits
The Company recognises contributions to provident fund, pension funds on an accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end. The Company, as per its schemes, extends employee benefits current and/or post retirement which are accounted for on accrual basis, and includes actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits, to the extent applicable, done by independent actuary. Actuarial gains and losses, where applicable, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged to revenue.
(p) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Such Finance costs attributable to acquisition and / or construction of qualifying assets are capitalized as a part of cost of such assets up to the date, where such assets are ready for their intended use. The balance Finance Costs is charged off to Statement of Profit and Loss. Finance Costs in case of foreign currency borrowings is accounted for as appropriate, duly considering the impact of the derivative contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for under effective interest rate method.
(q) Taxes
Current tax represents the amount payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof.
Current and Deferred tax relating to items recognised outside profit or loss, that is either in other comprehensive income (OCI) or in equity, is recognised along with the related items.
Since tax on profits forms part of chargeable expenditure under the applicable regulations, deferred tax liability or asset is recoverable or payable through future tariff. Hence, recognition of deferred tax asset or liability is done with corresponding recognition of regulatory liability or asset, as applicable.
(r) Provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
A disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.
(s) Business combination
Business combination involving entities or businesses under common control are accounted for using the pooling of interest method whereby the assets and liabilities of the combining entities / business are reflected at their carrying value and necessary adjustments, if any, have been given effect to as per the scheme approved by National Company Law Tribunal.
(t) Regulatory deferral account balances
The Company is a rate regulated entity and has elected to adopt Ind AS 114, Regulatory Deferral Accounts. Expenses/Income are recognized as Regulatory Income/Expenses in the Statement of Profit and Loss to the extent recoverable or payable in subsequent periods based on the Companyâs understanding of the provision of the applicable regulations framed by the West Bengal Electricity Regulatory Commission (WBERC) and/or their pronouncements/orders, with corresponding balances shown in the Balance Sheet as Regulatory Deferral Account balances. Regulatory Deferral Account balances are adjusted from the year in which these crystallise.
Mar 31, 2017
(a) Basis of Accounting
The financial statements have been prepared on the historical cost convention except for the following :
(a) Tangible assets and investments in certain subsidiaries are carried at fair value and treated as deemed cost as on transition date.
(b) certain financial assets and liabilities (including derivative instruments) is measured at fair value.
(c) defined benefit plans - plan assets measured at fair value.
(b) Use of estimate
As required under the provision of Ind AS for preparation of financial statements in conformity thereof, the management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
(c) Property, plant and equipment Tangible Assets and Depreciation
Tangible Assets have been adjusted for the effect of valuation made by an approved external valuer at the fair value after necessary adjustment for depreciation / amortisation and treated as deemed cost. Subsequent acquisition of these assets, are stated at cost of acquisition together with any incidental expenses related to acquisition and appropriate borrowing costs. An impairment loss is recognized where applicable, when the carrying value of tangible assets of cash generating unit exceed its market value or value in use, whichever is higher.
In terms of applicable Regulations under the Electricity Act, 2003, depreciation on tangible assets other than freehold land is provided on straight line method on a prorata basis at the rates specified therein, the basis of which is considered by the West Bengal Electricity Regulatory Commission (Commission) in determining the tariff for the year of the Company. Leasehold land is amortized over the unexpired period of the lease. Additional charge of depreciation for the year on increase in value arising from fair valuation is recouped from Surplus contained in Retained Earnings.
(d ) Investment properties
Property that is held for long term rental yields and that is not occupied by the Company is classified as investment property. Carrying amount as per previous GAAP has been considered as deemed cost as at transition date.
(e) Intangible Asset and amortisation
Intangible assets comprising computer software, brands and mining rights, expected to provide future enduring economic benefits are stated at cost of acquisition / implementation / development less accumulated amortisation, which is as per previous GAAP and considered as deemed cost as on transition date . The present value of the expected cost of restoration of the coal mine is included in its cost. An impairment loss is recognized where applicable, when the carrying value of intangible assets of cash generating unit exceed its market value or value in use, whichever is higher.
Amortisation cost of intangible assets, comprising computer software related expenditure, are amortised in three years over its estimated useful life and those relating to brands in twenty years, based on useful life assessed by an independent valuer. Mining rights are also amortised over the estimated useful life of the assets of twenty years based on managementâs internal assessment.
(f) Lease
A lease is classified as a finance or an operating lease as applicable.
Finance lease
Finance leases are capitalised along with the present value of the minimum lease payments at the leaseâs inception and disclosed as leased property. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
Operating lease
Lease payments under operating leases are recognised as an income on a straight line basis in the Statement of Profit and Loss over the lease term except where the lease payments are structured to increase in line with expected general inflation. The respective leased assets are included in the Balance Sheet based on their nature.
Lease payments under operating leases are recognised as an expense on a straight line basis in the Statement of Profit and Loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
(g) Financial asset
The financial assets are classified in the following categories :
1) financial assets measured at amortised cost.
2) financial assets measured at fair value through profit and loss.
The classification of financial assets depends on the Companyâs business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at fair value through profit and loss (FVTPL)
Financial instruments included within fair value through profit and loss category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk (Refer Note 42).
For trade receivables the simplified approach of expected lifetime losses has been recognised from initial recognition of the receivables as required by Ind AS 109 Financial Instruments.
(h) Investments
Investment in subsidiaries , associates and joint venture are carried at deemed cost at transition date and are tested for impairment 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 assets carrying amount exceeds its recoverable amount. Investments in mutual funds are measured at fair value through profit and loss.
(i) Inventories
Inventories of stores and fuel are valued at lower of cost and net realizable value. Cost is calculated on weighted average basis and comprises expenditure incurred in the normal course of business in bringing such inventories to their location and condition.
Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, adjustment is made for such items.
(j) Foreign Currency Transactions
The Companyâs financial statements are presented in INR which is also the functional currency of the Company.
Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rate prevailing at the end of the financial year. Exchange gain or loss arising on settlement / translation is recognized in the Statement of Profit and Loss. The outstanding loans repayable in foreign currency are restated at the year-end exchange rate. Exchange gain or loss arising in respect of such restatement is accounted for as a regulatory income or expense with recognition of the said amount as refundable or recoverable, which will be taken into consideration in determining the Companyâs future tariff in respect of the amount settled duly considering as appropriate, the impact of the contracts entered into for managing risks thereunder.
(k) Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalent includes cash, cheques and draft on hand, balances with banks which are unrestricted for withdrawal/usages and highly liquid financial investments that are readily convertible to known amount of cash which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(l) Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest rate method.
(m) Derivatives
The Company uses derivative financial instruments such as forward currency contracts, interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are recognised at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses arising from such fair valuation of derivatives is recognised as regulatory income or expense through Statement of Profit and Loss and would be considered in determining the Companyâs future tariff.
(n) Commitment for Financial Obligations
Cost of commitment for borrowings of subsidiaries/associates are recognised as a liability at the time such commitment is issued. The liability is initially measured at fair value and subsequently at the amount initially recognised less cumulative amortisation.
(o) Revenue from Operations
Revenue to be earned from sale of electricity is regulated based on parameters set out in tariff regulations issued from time to time. Earnings from sale of electricity are net of discount for prompt payment of bills and do not include electricity duty payable to the State Government.
The Company receives contribution from consumers in accordance with the Regulation that is being used to construct or acquire items of property, plant and equipment in order to connect the consumer to the Companyâs distribution network. The Company recognises revenue in respect for such contributions so received from consumers connected to the distribution network during the financial year.
Income from meter rent is accounted for as per the approved rates.
(p) Other Income
Income from investments and deposits etc. is accounted for on accrual basis inclusive of related tax deducted at source, where applicable. Delayed Payment Surcharge as a general practice is determined and recognised on a receipt of overdue payment from consumer. Interest income arising from financial assets is accounted for using amortised cost method.
(q) Employee Benefits
Contributions to Provident Fund and Contributory Pension Fund are accounted for on accrual basis. Provident Fund contributions are made to a fund administered through duly constituted approved independent trust. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952 and deficiency, if any, is made good by the Company, impact of which is ascertained by way of actuarial valuation as at the year end. The Company, as per its schemes, extend employee benefits current and/or post retirement, which are accounted for on accrual basis and includes actuarial valuation as at the Balance Sheet date in respect of gratuity, leave encashment and certain other retiral benefits, to the extent applicable, made by independent actuary. Actuarial gains and losses, where applicable, are recognised through Other Comprehensive Income. Compensation in respect of voluntary retirement scheme is charged off to revenue.
(r) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on foreign currency borrowings in appropriate cases and other borrowing costs. Such Finance Costs attributable to acquisition and / or construction of qualifying assets are capitalized as a part of cost of such assets upto the date, where such assets are ready for their intended use. The balance Finance Costs is charged off to revenue. Finance Costs in case of foreign currency borrowings is accounted for as appropriate, duly considering the impact of the contracts entered into for managing risks thereof. Interest expense arising from financial liabilities is accounted for in effective interest rate method.
(s) Taxes
Current tax represents the amount payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method on temporary difference arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred Tax Assets are recognized subject to the consideration of prudence and are periodically reviewed to reassess realization thereof. Deferred Tax Liability or Asset will give rise to actual tax payable or recoverable at the time of reversal thereof. Since tax on profits forms part of chargeable expenditure under the applicable regulations, deferred tax liability or asset is recoverable or payable through future tariff. Hence, recognition of deferred tax asset or liability is made with corresponding provision of liability or asset, as applicable.
(t) Regulatory deferral account balances
The Company is a rate regulated entity and has elected to adopt Ind AS 114, Regulatory Deferral Accounts. Expenses/Income recognized as Regulatory Income/Expenses in the Statement of Profit and Loss to the extent recoverable or payable in subsequent periods based on the Companyâs understanding of the provision of the applicable regulations framed by the West Bengal Electricity Regulatory Commission (WBERC) and/or their pronouncements/orders, with corresponding balances shown in the Balance Sheet as Regulatory Deferral Account balances. Regulatory Deferral Account balances are adjusted from the year in which these crystalise.
Mar 31, 2015
(a) Accounting Convention
Pursuant to section 133 of the Companies Act, 2013 read with Rule 7 of
the Companies (Accounts) Rules, 2014 till the standard of accounting or
any addendum thereto prescribed by Central Government in consultation
and recommendation ofthe National Financial Reporting Authority, the
existing Accounting Standards notified under Companies Act, 1956 shall
continue to apply. Consequently, these financial statements have been
prepared to comply in all material aspects with Accounting Standards
notified under section 211(3C) [Companies (Accounting Standards) Rules,
2006, as amended] and other provisions of the Companies Act, 2013 and
the regulations under the Electricity Act, 2003 to the extent
applicable. A summary of important accounting policies which have been
applied consistently are set out below.
(b) BasisofAccounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under historical cost
convention, except for certain tangible assets which are being carried
at revalued amount.
(c) Tangible Assets
Tangible Assets other than furniture and vehicles acquired upto 31st
March, 2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation / amortisation. Subsequent
acquisition of these assets, furniture and vehicles are stated at cost
of acquisition together with any incidental expenses related to
acquisition and appropriate borrowing costs. In case of a project, cost
also includes pre-operative expenses and where applicable, expenses
during trial run after netting off of revenue earned during trial run
and income arising from temporary use of funds pending utilisation. An
impairment loss is recognized where applicable, when the carrying value
of tangible assets of cash generating unit exceed its market value or
value in use, whichever is higher.
(d) Intangible Assets
Intangible assets comprising computer software and brands/trademarks,
expected to provide future enduring economic benefits are stated at
cost of acquisition / implementation / development less accumulated
amortisation. An impairment loss is recognized where applicable, when
the carrying value of intangible assets of cash generating unit exceed
its market value or value in use, whichever is higher.
(e) Depreciation and Amortisation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on tangible assets other than freehold land is provided on
straight line method on a prorata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year ofthe Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortized over the unexpired period of the
lease.
Cost of intangible assets, comprising computer software related
expenditure, are amortised in three years and those relating to
brands/trademarks in twenty years, based on useful life assessed by an
independent valuer.
(f) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(g) Investments
Current Investments are stated at lower of cost and fair value and Non
Current Investments are stated at cost. Provision is made where there
is a decline, other than temporary, in the value of Non Current
Investments.
(h) Inventories
Inventories of stores and spares and fuel are valued at lower of cost
and net realizable value. Cost is calculated on weighted average basis
and comprises expenditure incurred in the normal course of business in
bringing such inventories to their location and condition. Obsolete,
slow moving and defective inventories are identified at the time of
physical verification of inventories and where necessary, adjustment is
made for such items.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Statement of Profit and Loss . The
outstanding loans repayable in foreign currency are restated at the
year-end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Company''s future tariff
in respect of the amount settled duly considering as appropriate, the
impact of the contracts entered into for managing risks thereunder.
(j) Revenue from Operations
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers'' account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the samein subsequent years, based
on due consideration by the authorities in the tariff determination
process.
Income from meter rent is accounted for as per the approved rates.
(k) Other Income
Income from investments and deposits etc. is accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
(l) Employee Benefits
Contributions to Provident Fund and Contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees'' Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made good by the
Company, impact of which is ascertained by way of actuarial valuation
as at the year end. The Company, as per its schemes, extend employee
benefits current and/or post retirement, which are accounted for on
accrual basis and includes actuarial valuation as at the Balance Sheet
date in respect of gratuity, leave encashment and certain other retiral
benefits, to the extent applicable, made by independent actuary.
Actuarial gains and losses, where applicable, are recognised in the
Statement of Profit and Loss. Compensation in respect of voluntary
retirement scheme is charged offto revenue.
(m) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(n) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on
foreign currency borrowings in appropriate cases and other borrowing
costs. Such Finance Costs attributable to acquisition and / or
construction of qualifying assets are capitalized as a part of cost of
such assets upto the date, where such assets are ready for their
intended use. The balance Finance Costs is charged off to revenue.
Finance Costs in case of foreign currency borrowings is accounted for
as appropriate, duly considering the impact of the contracts entered
into for managing risks therefor.
(o) Taxes on Income
Current tax represents the amount payable based on computation oftax as
per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred Tax
Assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Deferred Tax
Liability or Asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liability or asset, as applicable.
(g) Terms /rights attached to equity shares :
The Company has only one class of equity shares having a par value ofRs.
10 per share fully paid up. Holders of Equity Shares are entitled to
one vote per share. During the year ended 31st March, 2015 the amount
of dividend per share recommended by the Board of Directors as
distributions to equity shareholders is Rs. 9 (31.03.2014 - Rs. 8 ) subject
to declaration at the ensuing Annual General Meeting by the members. In
the event of liquidation of the Company, the holders of equity shares
will be entitled to receive sale proceeds from 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.
(B) Nature of Security :
Out of the Term Loans in (A) above, loans amounting to :
(a) Rs. 3436.40 crore (31.03.2014 - Rs. 3071.48 crore) are secured, ranking
pari passu inter se, by equitable mortgage/hypothecation of the fixed
assets of the Company including its land, buildings and any other
constructions thereon, plant and machinery, etc. as a first charge and,
as a second charge, by hypothecation of the Company''s current assets
comprising stock of stores, coal and other consumables, book debts,
monies receivable and bank balances. However, creation of the said
mortgage security in respect of five Rupee Loans (Previous year ten
Rupee Loans and one Foreign Currency Loan) aggregating Rs. 907.50 crore
(31.03.2014 - Rs. 1470.59 crore) is in process. User rights in respect of
a freehold land having a book value of Rs. 62.55 crore (31.03.2014 - Rs.
62.55 crore) have been offered as security for financial assistance
availed of by a subsidiary company to its lenders; and
(b) Rs. 656.91 (31.03.2014 - Rs. 382.56 crore) are secured, ranking pari
passu inter se, by hypothecation ofthe movable fixed assets and current
assets of the Company by way of a charge subservient to the charge of
the first and second charge holders on the said assets.
C. Nature of Security
Overdraft facilities from bank in (A) above are secured, ranking pari
passu inter se, by hypothecation of the Company''s current assets
comprising stock of stores, coal and other consumables, book debts,
monies receivable and bank balances as a first charge and, as a second
charge, by equitable mortgage / hypothecation of fixed assets of the
Company including its land, buildings and any other construction
thereon, where exists plant and machinery etc. However, creation of the
said mortgage security in respect of overdraft facilities from banks
aggregating Rs. 467 crore (31.03.2014 - Rs. 190 crore) is in process.
NOTE - 9 TRADE PAYABLES
Trade payables include Rs. 5.53 crore ( 31.3.2014 - Rs. 3.10 crore) due to
Micro and Small Enterprises, as defined in the Micro, Small and Medium
Enterprises Development Act, 2006, based on information available with
the Company.
Rs. Nil (31.3.2014 - Rs. 0.00 crore), Rs. 0.08 crore (31.3.2014 - Rs. 0.17
crore) and Rs. 0.64 crore ( 31.03.2014 - Rs. 0.57 crore ) representing
interest due on amount outstanding as at the year end, interest accrued
and due for the period of delay in making payment during the year and
interest accrued and remaining unpaid at the year end respectively.
NOTE - 23 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT
PROVIDED FOR)
(a) Claims against the Company not acknowledged as debts:
The West Bengal Taxation Tribunal had held meter rentals received by
the Company from consumers to be deemed sales under the provisions of
the Bengal Finance (Sales Tax) Act, 1941 and that sales tax was payable
on such rentals. Based on such findings the Commercial Taxes
Directorate assessed Rs. 0.69 crore as sales tax on meter rentals
received during the year ended 31st March, 1993 and raised a demand of
Rs. 0.36 crore on account of interest. Against the above demand, the
Company had deposited a sum ofRs. 0.75 crore with the sales tax
authorities and obtained a stay against the balance demand from the
Deputy Commissioner of Commercial Taxes. The sales tax authorities also
indicated their intention to levy such sales tax on meter rentals for
the subsequent years as well, against which, the Company filed a writ
petition in the Calcutta High Court and prayed for an interim order,
inter alia, restraining the sales tax authorities from proceeding with
the assessment for the subsequent years till disposal of the appeal.
An interim order has been issued by the High Court permitting the sales
tax authorities to carry out assessments but restraining them from
serving any assessment order on the Company. The disposal ofthe case is
still pending.
(b) Commitments of the Company on account of estimated amount of
contracts remaining to be executed on capital account and the same
towards borrowing / financing obligations of subsidiaries and a body
corporate from banks, not provided for amounting to Rs. 162.57 crore
(31.03.2014 : Rs. 161.89 crore), Rs.1597.48 crore ( 31.03.2014 : Rs. 150
crore) and Rs. 104.59 crore (31.03.2014 : Rs. 132.08 crore) respectively.
(Also refer note 38)
(c) Other money for which the Company is contingently liable :
(i) Municipal Tax : Rs. Nil (31.03.2014 : Rs. 1.12 crore) in respect of
certain properties, the rates of which are disputed by the Company.
(ii) Income tax matters : Rs. 12.74 crore (31.03.2014 : Nil) (iii) Other
matters : Rs. 20.50 crore (31.03.2014 : Nil) (refer note 34)
(d) The Company has ongoing commitment to extend support and provide
equity to the subsidiaries, in respect of various projects and
otherwise (where, in certain cases there are restriction on transfer of
investments).
The future cash outflow in respect of above cannot be ascertained at
this stage.
(e) For commitment relating to leasing arrangement, refer note 35.
(c) Earnings from sale of electricity are determined in accordance with
the relevant orders ofthe Commission, where appropriate, giving due
effect to the required adjustments which include a sum of Rs. 207.74
crore (previous year: Rs. (0.95) crore) in respect of the cost of
electrical energy purchased, fuel and related costs and also those
relating to revenue account, based on the Company''s understanding ofthe
applicable regulatory provisions on this count, after giving effect
ofthe impact arising from applicable orders in this regard for earlier
years and the net impact ofthe said adjustments has been included in
Other long term liabilities, to the extent applicable. The accurate
quantification and disposal of the matters are being given effect to,
from time to time, on receipt of necessary direction from the
appropriate authorities. The said earnings are also net of discount for
prompt payment of bills allowed to consumers on a net basis from month
to month and advance against depreciation amounting to Rs. 65.66 crore
(previous year: Rs. 62.41 crore) and Rs. 82.68 crore (previous year: Rs.
62.67 crore) respectively.
(B) Employee Benefits
The Company makes contributions for provident fund and pension
(including for superannuation) towards retirement benefit plans for
eligible employees. Under the said plans, the Company is required to
contribute a specified percentage of the employees'' salaries to fund
the benefits. During the year, based on applicable rates, the Company
has recognised Rs. 56.23 crore (previous year : Rs. 46.21 crore) on this
account in the Statement of Profit and Loss. The Company also makes
annual contribution to independent trust, who in turn, invests in the
Employees Group Gratuity Scheme of eligible agencies for qualifying
employees. Liabilities at the year-end for gratuity, leave encashment
and other retiral benefits including medical have been determined on
the basis of actuarial valuation carried out by an independent actuary,
based on the method prescribed in Accounting Standard 15 - "Employee
Benefits" ofthe Companies (Accounting Standard) Rules, 2006.
The estimates of future salary increase considered in the actuarial
valuation takes into account factors like inflation, seniority,
promotion and other relevant factors . The expected return on plan
assets is based on actuarial expectation of the average long term rate
of return expected on investments of the funds during the estimated
terms of the obligations. The contribution expected to be made by the
Company for the year ending 31st March, 2016 is not readily
ascertainable and therefore not disclosed.
(k) Miscellaneous expenses in (j) above include research and
development expense ofRs. 1.31 crore (previous year: Rs. 1.14 crore) and
adjustment of Rs. 16.26 crore (previous year - Rs. 29.91 crore) on account
of withdrawal of provision relating to non-executive directors''
commission, not being payable.
Mar 31, 2014
(a) Accounting Convention
Pursuant to circular 15^013 dated 13.09.2013 read with circular 08/2014
dated 04.04.2014, till the Standards of Accounting or any addendum
thereto are prescribed by Central Government in consultation and
recommendation of the National Financial Reporting Authority, the
existing Accounting Standards notified under the Companies Act, 1956
shall continue to apply. Consequently, these financial statements have
been prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) Companies (Accounting
Standards) Rules, 2006, as amended and the other relevant provisions of
the Companies Act, 1956 and the Regulations under the Electricity Act,
2003, to the extent applicable. A summary of important accounting
policies which have been applied consistently are set out below.
(b) Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified by revaluation of certain fixed assets as stated
in item V below.
(c) Tangible Assets
Tangible Assets other than furniture and vehicles acquired upto 31st
March, 2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation / amortisation. Subsequent
acquisition of these assets, furniture and vehicles are stated at cost
of acquisition together with any incidental expenses related to
acquisition and appropriate borrowing costs. In case of a project, cost
also includes pre-operative expenses and where applicable, expenses
during trial run after netting off of revenue earned during trial run
and income arising from temporary use of funds pending utilisation. An
impairment loss is recognized where applicable, when the carrying value
of tangible assets of cash generating unit exceed its market value or
value in use, whichever is higher.
(d) Intangible Assets
Intangible assets comprising computer software and brands/trademarks,
expected to provide future enduring economic benefits are stated at
cost of acquisition / implementation / development less accumulated
amortisation. An impairment loss is recognized where applicable, when
the carrying value of intangible assets of cash generating unit exceed
its market value or value in use, whichever is higher.
(e) Depreciation and Amortisation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on tangible assets other than freehold land is provided on
straight line method on a prorata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year of the Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortized over the unexpired period of the
lease.
Cost of intangible assets, comprising computer software related
expenditure, are amortised in three years and those relating to
brands/trademarks in twenty years, based on useful life assessed by an
independent valuer.
(f) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(g) Investments
Current Investments are stated at lower of cost and fair value and Non
Current Investments are stated at cost.Provision is made where there is
a decline, other than temporary, in the value of Non Current
Investment.
(h) Inventories
Inventories of stores and spares and fuel are valued at lower of cost
and net realizable value. Cost is calculated on weighted average basis
and comprises expenditure incurred in the normal course of business in
bringing such inventories to their location and condition. Obsolete,
slow moving and defective inventories are identified at the time of
physical verification of inventories and where necessary, adjustment is
made for such items.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Statement of Profit and Loss . The
outstanding loans repayable in foreign currency are restated at the
year-end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Company''s future tariff
in respect of the amount settled duly considering as appropriate, the
impact of the contracts entered into for managing risks thereunder.
(j) Revenue from Operations
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers'' account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the same in subsequent years,
based on due consideration by the authorities in the tariff
determination process.
Income from meter rent is accounted for as per the approved rates.
(k) Other Income
Income from investments and deposits etc. is accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
(I) Employee Benefits
Contributions to Provident Fund and Contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees'' Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made good by the
Company, impact of which is ascertained by way of actuarial valuation
as at the year end. The Company, as per its schemes, extend employee
benefits current and/or post retirement, which are accounted for on
accrual basis and includes actuarial valuation as at the Balance Sheet
date in respect of gratuity, leave encashment and certain other retiral
benefits, to the extent applicable, made by independent actuary.
Actuarial gains and losses, where applicable, are recognised in the
Statement of Profit and Loss. Compensation in respect of voluntary
retirement scheme is charged off to revenue.
(m) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(n) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on
foreign currency borrowings in appropriate cases and other borrowing
costs. Such Finance Costs attributable to acquisition and / or
construction of qualifying assets are capitalized as a part of cost of
such assets upto the date, where such assets are ready for their
intended use. The balance Finance Costs is charged off to revenue.
Finance Costs in case of foreign currency borrowings is accounted for
as appropriate, duly considering the impact of the contracts entered
into for managing risks therefor.
(o) Taxes on Income
Current tax represents the amount payable based on computation of tax
as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred Tax
Assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Deferred Tax
Liability or Asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liability or asset, as applicable.
Mar 31, 2013
(a) Accounting Convention
These financial statements have been prepared to comply in all material
aspects with the applicable accounting principles in India, including
Accounting Standards notified u/s 211 (3C) of the Companies Act, 1956
and the relevant provisions of the Companies Act, 1956 and the
Regulations under the Electricity Act, 2003, to the extent applicable.
A summary of important accounting policies which have been applied
consistently are set out below.
(b) Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified by revaluation of certain fixed assets as stated
in item ''c'' below.
(c) Tangible Assets
Tangible Assets other than furniture and vehicles acquired upto 31st
March, 2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation / amortisation. Subsequent
acquisition of these assets, furniture and vehicles are stated at cost
of acquisition together with any incidental expenses related to
acquisition and appropriate borrowing costs. In case of a project, cost
also includes pre-operative expenses and where applicable, expenses
during trial run after netting off of revenue earned during trial run
and income arising from temporary use of funds pending utilisation. An
impairment loss is recognized where applicable, when the carrying value
of tangible assets of cash generating unit exceed its market value or
value in use, whichever is higher.
(d) Intangible Assets
Intangible assets comprising computer software and brands/trademarks,
expected to provide future enduring economic benefits are stated at
cost of acquisition / implementation / development less accumulated
amortisation. An impairment loss is recognized where applicable, when
the carrying value of intangible assets of cash generating unit exceed
its market value or value in use, whichever is higher.
(e) Depreciation and Amortisation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on tangible assets other than freehold land is provided on
straight line method on a prorata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year of the Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortized over the unexpired period of the
lease.
Cost of intangible assets , comprising computer software related
expenditure, are amortised in three years and those relating to
brands/trademarks in twenty years, based on useful life assessed by an
independent valuer.
(f) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(g) Investments
Current Investments are stated at lower of cost and fair value and Non
Current Investments are stated at cost. Provision is made where there
is a decline, other than temporary, in the value of Non Current
Investment.
(h) Inventories
Inventories of stores and spares and fuel are valued at lower of cost
and net realizable value. Cost is calculated on weighted average basis
and comprises expenditure incurred in the normal course of business in
bringing such inventories to their location and condition. Obsolete,
slow moving and defective inventories are identified at the time of
physical verification of inventories and where necessary, adjustment is
made for such items.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Statement of Profit and Loss . The
outstanding loans repayable in foreign currency are restated at the
year-end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Company''s future tariff
in respect of the amount settled duly considering as appropriate, the
impact of the contracts entered into for managing risks thereunder.
(j) Revenue from Operations
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers'' account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the same in subsequent years,
based on due consideration by the authorities in the tariff
determination process.
Income from meter rent is accounted for as per the approved rates.
Delayed payment surcharge, as a general practice, is determined and
recognised on receipt of overdue payment from consumers.
(k) Other Income
Income from investments and deposits etc. is accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
(I) Employee Benefits
Contributions to Provident Fund and Contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees'' Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made good by the
Company, impact of which is ascertained by way of actuarial valuation
as at the year end. The Company, as per its schemes, extend employee
benefits current and/or post retirement, which are accounted for on
accrual basis and includes actuarial valuation as at the Balance Sheet
date in respect of gratuity, leave encashment and certain other retiral
benefits, to the extent applicable, made by independent actuary.
Actuarial gains and losses, where applicable, are recognised in the
Statement of Profit and Loss. Compensation in respect of voluntary
retirement scheme is charged off to revenue.
(m) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(n) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on
foreign currency borrowings in appropriate cases and other borrowing
costs. Such Finance Costs attributable to acquisition and/or
construction of qualifying assets are capitalized as a part of cost of
such assets upto the date, where such assets are ready for their
intended use. The balance Finance Costs is charged off to revenue.
Finance Costs in case of foreign currency borrowings is accounted for
as appropriate, duly considering the impact of the contracts entered
into for managing risks therefor.
(o) Taxes on Income
Current tax represents the amount payable based on computation of tax
as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred Tax
Assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Deferred Tax
Liability or Asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liability or asset, as applicable.
Mar 31, 2012
(a) Accounting Convention
These financial statements have been prepared to comply in all material
aspects with the applicable accounting principles in India, including
Accounting Standards notified u/s 211(3C) of the Companies Act, 1956
and the relevant provisions of the Companies Act, 1956 and the
Regulations under the Electricity Act, 2003, to the extent applicable.
A summary of important accounting policies which have been applied
consistently are set out below. During the year ended 31st March 2012
the Revised Schedule VI notified under the Companies Act, 1956, has
been applicable for preparation and presentation of its financial
statements and the same have been prepared in accordance with the
relevant presentation requirement of the aforesaid Revised Schedule VI
notified under Companies Act, 1956, with neccessary re-classification
for previous year's figures.
(b) Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified by revaluation of certain fixed assets as stated
in item 'C below.
(c) Tangible Assets
Tangible Assets other than furniture and vehicles acquired upto 31
March 2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation. Subsequent acquisition of these
assets, furniture and vehicles are stated at cost of acquisition
together with any incidental expenses related to acqusition and
appropriate borrowing costs. In case of a project, cost also includes
pre-operative expenses and where applicable, expenses during trial run
after netting off of revenue earned during trial run and income arising
from temporary use of funds pending utilisation. An impairment loss is
recognized where applicable, when the carrying value of tangible assets
of cash generating unit exceed its market value or value in use,
whichever is higher.
(d) Intangible Assets
Intangible Assets comprising software and brands/trademarks, expected
to provide future enduring economic benefits are stated at cost of
acquisition / implementation / development less accumulated
amortisation. An impairment loss is recognized where applicable, when
the carrying value of intangible assets of cash generating unit exceed
its market value or value in use, whichever is higher.
(e) Depreciation and Amortisation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on tangible assets other than freehold land is provided on
straight line method on a proata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year of the Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortised over the unexpired period of the
lease.
Cost of intangible assets, comprising software related expenditure, are
amortised in three years and those relating to brands/trademarks in
twenty years, based on useful life assessed by an independent valuer.
(f) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(g) Investments
Current Investments are stated at lower of cost and fair value and
Non-Current Investments are stated at cost. Provision is made where
there is a decline, other than temporary, in the value of Non-Current
Investment.
(h) Inventories
Inventories of stores and spare parts and fuel are valued at lower of
cost and net realizable value. Cost is calculated on weighted average
basis and comprises of expenditure incurred in the normal course of
business in bringing such inventories to their location and condition.
Obsolete, slow moving and defective inventories are identified at the
time of physical verification of inventories and where neccessary,
adjustment is made for such items.
(i) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Profit and Loss Statement. The
outstanding loans repayable in foreign currency are restated at the
year end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Company's future tariff
in respect of the amount settled. Foreign currency loans, availed of on
a fully hedged basis in Indian Rupee and where as per the terms of the
underlying contracts no exchange fluctuation is on the Company's
account, are accounted for in the currencies in which such loans have
been fully hedged.
G) Revenue from Operations
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers' account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the same in subsequent years,
based on due consideration by the authorities in the tariff
determination process.
Income from hire of meters is accounted for as per the approved rates.
Delayed payment surcharge, as a general practice, is determined and
recognised on receipt of overdue payment from consumers.
(k) Other Income
Income from investments and deposits etc. is accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
(I) Employee Benefits
Contributions to Provident Fund and contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made good by the
Company, impact of which is ascertained by way of actuarial valuation
as at the year end. The Company, as per its schemes, extend employee
benefits current and/or post retirement, which are accounted for on
accrual basis and includes actuarial valuation as at the balance sheet
date in respect of gratuity, leave encashment and certain other retiral
benefits, to the extent applicable, made by independent actuary.
Actuarial gains and losses, where applicable, are recognised in the
Statement of Profit and Loss. Compensation in respect of voluntary
retirement scheme is charged off to revenue.
(m) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(n) Finance Costs
Finance Costs comprise interest expenses, applicable gain / loss on
foreign currency borrowings in appropriate cases and other borrowing
costs. Such Finance Costs attributable to acquisition and / or
construction of qualifying assets are capitalized as a part of cost of
such assets upto the date, where such assets are ready for their
intended use. The balance Finance Costs is charged off to revenue.
(o) Taxes on Income
Current tax represents the amount payable based on computation of tax
as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred tax
assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Deferred tax
liability or asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liablity or asset, as applicable.
Mar 31, 2011
(a) Accounting Convention
These financial statements have been prepared to comply in all material
aspects with the applicable accounting principles in India, including
standards notified u/s 211 (3C) of the Companies Act, 1956 and the
relevant provisions of the Companies Act, 1956 and the Regulations
under the Electricity Act, 2003, to the extent applicable. A summary of
important accounting policies which have been applied consistently are
set out below. The financial statements have also been prepared in
accordance with relevant presentational requirements of the Companies
Act, 1956 of India.
(b) Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified by revaluation of certain fixed assets as stated
in item 2C and Note 4 below.
(c) Fixed Assets
Fixed Assets other than furniture and vehicles acquired upto 31 March
2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation. Subsequent acquisition of these
assets, furniture and vehicles are stated at cost of acquisition
together with any incidental expenses related to acquisition and
appropriate borrowing costs. In case of a project, cost also includes
pre-operative expenses and where applicable, expenses during trial run
after netting off of revenue earned during trial run and income arising
from temporary use of funds pending utilisation An impairment loss is
recognized where applicable, when the carrying value of fixed assets of
cash generating unit exceed its market value or value in use, whichever
is higher. Capital Works in Progress include advances made in respect
of capital expenditure. Intangible assets comprising software and
trademarks, expected to provide future enduring economic benefits are
stated at cost of acquisition / implementation / development less
accumulated amortisation.
(d) Depreciation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on fixed assets other than freehold land is provided on
straight line method on a prorata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year of the Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortized over the unexpired period of the
lease.
Cost of intangible assets, comprising software related expenditure, are
amortised in three years and those relating to trademarks in twenty
years, based on useful life assessed by an independent valuer.
(e) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(f) Investments
Current Investments are stated at lower of cost and fair value and Long
Term Investments are stated at cost. Provision is made where there is a
decline, other than temporary, in the value of long term investment.
(g) Inventories
Inventories of stores and spare parts and fuel are valued at lower of
cost and net realizable value. Cost is calculated on weighted average
basis and comprises of expenditure incurred in the normal course of
business in bringing such inventories to their location and condition.
Obsolete, slow moving and defective inventories are identified at the
time of physical verification of inventories and where necessary,
adjustment is made for such items. (h) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Profit and Loss Account. The
outstanding loans repayable in foreign currency are restated at the
year-end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Companys future tariff
in respect of the amount settled. Foreign currency loans, availed of on
a fully hedged basis in Indian Rupee and where as per the terms of the
underlying contracts no exchange fluctuation is on the Companys
account, are accounted for in the currencies in which such loans have
been fully hedged.
(i) Sales
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the same in subsequent years,
based on due consideration by the authorities in the tariff
determination process.
0) Other Income
Income from hire of meters is accounted for as per the approved rates.
Income from investments and deposits etc. is accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
Delayed payment surcharge, as a general practice, is determined and
recognised on receipt of overdue payment from consumers.
(k) Employee Benefits
Contributions to Provident Fund and contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and deficiency, if any, is made good by the
Company. The Company, as per its schemes, extend employee benefits
(current and/or post retirement), which are accounted for on accrual
basis and includes actuarial valuation as at the balance sheet date in
respect of gratuity, leave encashment and certain medical benefits, to
the extent applicable, made by independent actuary. Actuarial gains and
losses, where applicable, are recognised in the Profit and Loss
Account. Compensation in respect of voluntary retirement scheme is
charged off to revenue.
(I) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(m) Borrowing Costs
Borrowing Costs attributable to acquisition and / or construction of
qualifying assets are capitalized as a part of cost of such assets upto
the date where such assets are ready for their intended use. Other
borrowing costs are charged to revenue.
(n) Taxes on Income
Current tax represents the amount payable based on computation of tax
as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred tax
assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Deferred Tax
liability or asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liability or asset, as applicable.
Mar 31, 2010
(a) Accounting Convention
These financial statements have been prepared to comply in all material
aspects with the applicable accounting principles in India, including
standards notified u/s 211 (3C) of the Companies Act, 1956 and the
relevant provisions of the Companies Act, 1956 and the Regulations
under the Electricity Act, 2003, to the extent applicable. A summary of
important accounting policies which have been applied consistently are
set out below. The financial statements have also been prepared in
accordance with relevant presentational requirements of the Companies
Act, 1956 of India.
(b) Basis of Accounting
The financial statements have been prepared under the historical cost
convention, modified by revaluation of certain fixed assets as stated
in item 2C and Note 4 below.
(c) Fixed Assets
Fixed Assets other than furniture and vehicles acquired upto 31 March
2005, have been adjusted for the effect of valuation made by an
approved external valuer at the then current replacement cost after
necessary adjustment for depreciation. Subsequent acquisition of these
assets and furniture and vehicles are stated at cost of acquisition
together with any incidental expenses related to acquisition and
appropriate borrowing costs. In case of a project, cost also includes
pre-operative expenses and where applicable, expenses during trial run
after netting off of revenue earned during trial run and income arising
from temporary use of funds pending utilisation An impairment loss is
recognized where applicable, when the carrying value of fixed assets of
cash generating unit exceed its market value or value in use, whichever
is higher. Capital Works in progress include advances made in respect
of capital expenditure. Intangible assets comprising software and
trademarks, expected to provide future enduring economic benefits are
stated at cost of acquisition / implementation / development less
accumulated amortisation.
(d) Depreciation /Amortisation
In terms of applicable Regulations under the Electricity Act, 2003,
depreciation on fixed assets other than freehold land is provided on
straight line method on a prorata basis at the rates specified therein,
the basis of which is considered by the West Bengal Electricity
Regulatory Commission (Commission) in determining the tariff for the
year of the Company. Additional charge of depreciation for the year on
increase in value arising from revaluation is recouped from Revaluation
Reserve. Leasehold land is amortized over the unexpired period of the
lease.
Intangible assets, comprising software related expenditure, are
amortised in three years and those relating to Trademarks in twenty
years, based on useful life assessed by an independent valuer.
(e) Leasing
Lease rentals in respect of assets taken under operating lease are
charged to revenue.
(f) Investments
Current Investments are stated at lower of cost and fair value and Long
Term Investments are stated at cost. Provision is made where there is a
decline, other than temporary, in the value of long term investment.
(g) Inventories
Inventories of stores and spares and fuel are valued at lower of cost
and net realizable value. Cost is calculated on weighted average basis
and comprises of expenditure incurred in the normal course of business
in bringing such inventories to their location and condition. Obsolete,
slow moving and defective inventories are identified at the time of
physical verification of inventories and where necessary, adjustment is
made for such items.
(h) Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rate
prevailing on the date of transactions. Transactions remaining
unsettled are translated at the exchange rate prevailing at the end of
the financial year. Exchange gain or loss arising on settlement /
translation is recognized in the Profit and Loss Account. The
outstanding loans repayable in foreign currency are restated at the
year-end exchange rate. Exchange gain or loss arising in respect of
such restatement is accounted for as an income or expense with
recognition of the said amount as refundable or recoverable, which will
be taken into consideration in determining the Companys future tariff
in respect of the amount settled. Foreign currency loans, availed of on
a fully hedged basis and where as per the terms of the underlying
contracts no exchange fluctuation is on the Companys account, are
accounted for in the currencies in which such loans have been fully
hedged.
(i) Sales
Earnings from sale of electricity are net of discount for prompt
payment of bills and do not include electricity duty payable to the
State Government. They also include, as per established practice,
consistently followed by the Company in the past, estimated sums
recoverable from / adjustable on consumers account, calculated on the
basis of rates approved / specified by the appropriate authorities
which are reflected in the subsequent bills. In terms of the applicable
regulations and tariff determination process followed by the
Commission, advance against depreciation forms part of tariff. Such
advance against depreciation of a year is adjusted against earning from
sale of electricity for inclusion of the same in subsequent years,
based on due consideration by the authorities in the tariff
determination process.
0) Other Income
Income from hire of meters is accounted for as per the approved rates.
Income from investments and deposits etc. are accounted for on accrual
basis inclusive of related tax deducted at source, where applicable.
Delayed payment surcharge, as a general practice, is determined and
recognised on receipt of overdue payment from consumers.
(k) Employee Benefits
Contributions to Provident Fund and contributory Pension Fund are
accounted for on accrual basis. Provident Fund contributions are made
to a fund administered through duly constituted approved independent
trust. The interest rate payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees Provident Funds and Miscellaneous
Provisions Act, 1952 and shortfall, if any, is made good by the
Company. The Company, as per its schemes, extend employee benefits
current and/or post retirement, which are accounted for on accrual
basis and includes actuarial valuation as at the balance sheet date in
respect of gratuity, leave encashment and certain medical benefits, to
the extent applicable, made by independent actuary. Actuarial gains and
losses, where applicable, are recognised in the Profit and Loss
Account. Compensation paid during the year in respect of voluntary
retirement scheme has been charged off to revenue.
(I) Miscellaneous expenditure to the extent not written off or adjusted
The erstwhile governing statute for the Company, viz., the Electricity
(Supply) Act, 1948 (ESA), provided for amortisation of preliminary
expenses and certain capital issue expenses over the unexpired period
of licence. The Company, as per the consistently applied accounting
policy continues with such amortisation of expenditure incurred upto
the year 2004-05. Thereafter, pursuant to repeal of ESA, such
expenditures are charged off to revenue.
(m) Borrowing Costs
Borrowing Costs attributable to acquisition and / or construction of
qualifying assets are capitalized as a part of cost of such assets upto
the date where such assets are ready for their intended use. Other
borrowing costs are charged to revenue.
(n) Taxes on Income
Current tax represents the amount payable based on computation of tax
as per prevailing taxation laws under the Income Tax Act, 1961.
Provision for deferred taxation is made using liability method at the
current rates of taxation on all timing differences to the extent it is
probable that a liability or asset will crystallize. Deferred tax
assets are recognized subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof. Carry forward
unabsorbed depreciation as per assessment orders / returns filed has
been recognised to the extent of deferred tax liability. Deferred Tax
liability or asset will give rise to actual tax payable or recoverable
at the time of reversal thereof. Since tax on profits forms part of
chargeable expenditure under the applicable regulations, deferred tax
liability or asset is recoverable or payable through future tariff.
Hence, recognition of deferred tax asset or liability is made with
corresponding provision of liability or asset, as applicable.
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