Accounting Policies of Entegra Ltd. Company

Mar 31, 2015

1. Background information

Entegra Limited ("Entegra" or the "Company") was incorporated in 1995 as a private limited company. In 2000, the Company was converted into a public limited company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Entegra is engaged in the development of integrated global renewable energy projects.

2. Basis of presentation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standard notified in the Companies (Accounting Slandered) Rules, 2006 and the relevant provisions of the Companies Act 1956, to the extent applicable.

3. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period's results could differ from those estimates. Any revisions to accounting estimates are recognized in the period in which such revisions are made.

4. Significant accounting policies

4.1. Revenue recognition

i. Revenues from sales of goods are recognized on shipment or dispatch to ustomers and are recorded exclusive of Value Added Taxes but are net of any sales returns.

ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive of Service Tax.

iii. Interest income on deposits with banks and investments is recognized on a time proportion basis. iv. Dividend incomes on investments are accounted for when the right to receive the payment is established.

4.2. Purchases

Purchases are shown exclusive of Value Added Tax.

4.3. Fixed assets and depreciation

Fixed assets are stated at cost of acquisition/construction including any cost attributable to bringing the assets to their working condition, less accumulated depreciation and impairment loss, if any. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 and on pro-rata basis with reference to the month of additions / deductions. Fixed assets having value lower than Rs.5,000 are depreciated fully in the year of acquisition / installation. Intangible assets are amortized over the irrespective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

4.4. Expenditure during construction period

Expenditure during construction period reflects an element of capital work in progress and includes directly attributable costs that relate to the project and general and administration overheads as are specifically attributable to the construction of the project. Such expenditure is included under 'Pre operative expenses (pending allocation) and will be capitalized under relevant fixed asset accounts upon commencement of commercial generation of power.

4.5. Inventories

Inventories of components used for renewable energy projects have been valued at lower of cost or net realizable value. Civil construction materials are valued at cost.

4.6. Investments

Long term investments are stated at cost and provision is made to recognize any decline, other than temporary, in the value of such investments.

4.7. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency are recognized in the statement of Profit and Loss.

4.8. Employee benefits

Gratuity

Employees in India are entitled to benefits under the Payment of Gratuity Act, 1972, a defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit conferred by the Company on its employees is equal to or greater than the statutory minimum.

4.9. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the income statement.

4.10. Impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exist or have decreased.

After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

4.11. Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

4.12. Income taxes

Income tax expense comprises current income tax, deferred tax and fringe benefit tax.

Current taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year that includes the enactment date.

Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

4.13. Leases

For operating leases, lease payments (excluding costs for services such as insurance and maintenance) are recognized as an expense in the statement of profit and loss on a straight line basis unless another systematic basis is more representative of the time pattern of the user's benefit, except where the rental is for pre operative activities in which case it is charged to 'Pre operative expenses (pending allocation)'.

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Mar 31, 2014

1. Background information

Entegra Limited ("Entegra" or the "Company") was incorporated in 1995 as a private limited company. In 2000, the Company was converted into a public limited company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Entegra is engaged in the development of integrated global renewable energy projects.

2. Basis of presentation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standards notified in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable.

3. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period''s results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

4.1. Revenue recognition

i. Revenues from sales of goods are recognized on shipment or dispatch to customers and are recorded exclusive of Value Added Taxes but are net of any sales returns. ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive of Service Tax. iii. Interest income on deposits with banks and investments is recognized on a time proportion basis. iv. Dividend incomes on investments are accounted for when the right to receive the payment is established.

4.2. Purchases

Purchases are shown exclusive of Value Added Tax.

4.3. Fixed assets and depreciation

Fixed assets are stated at cost of acquisition/construction including any cost attributable to bringing the assets to their working condition, less accumulated depreciation and impairment loss, if any. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 and on pro-rata basis with reference to the month of additions / deductions. Fixed assets having value lower than Rs.5,000 are depreciated fully in the year of acquisition / installation. Intangible assets are amortised over the irrespective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

4.4. Expenditure during construction period

Expenditure during construction period reflects an element of capital work in progress and includes directly attributable costs that relate to the project and general and administration overheads as are specifically attributable to the construction of the project. Such expenditure is included under ''Pre operative expenses (pending allocation) and will be capitalized under relevant fixed asset accounts upon commencement of commercial generation of power.

4.5. Inventories

Inventories of components used for renewable energy projects have been valued at lower of cost or net realizable value. Civil construction materials are valued at cost.

4.6. Investments

Long term investments are stated at cost and provision is made to recognize any decline, other than temporary, in the value of such investments.

4.7. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency are recognized in the statement of Profit and Loss.

4.8. Employee benefits

Gratuity

Employees in India are entitled to benefits under the Payment of Gratuity Act, 1972, a defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit conferred by the Company on its employees is equal to or greater than the statutory minimum.

4.9. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the income statement.

4.10. Impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

4.11. Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

4.12. Income taxes

Income tax expense comprises current income tax, deferred tax and fringe benefit tax.

Current taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

4.13. Leases

For operating leases, lease payments (excluding costs for services such as insurance and maintenance) are recognised as an expense in the statement of profit and loss on a straight line basis unless another systematic basis is more representative of the time pattern of the user''s benefit, except where the rental is for pre operative activities in which case it is charged to ''Pre operative expenses (pending allocation)''.

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Mar 31, 2012

1. Background information

Entegra Limited ("Entegra" or the "Company") was incorporated in 1995 as a private limited company. In 2000, the Company was converted into a public limited company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Entegra is engaged in the development of integrated global renewable energy projects.

2. Basis of presentation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standards notified in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable.

3. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period's results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

4.1. Revenue recognition

i. Revenues from sales of goods are recognized on shipment or dispatch to customers and are recorded exclusive of Value Added Taxes but are net of any sales returns,

ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive of Service Tax.

iii. Interest income on deposits with banks and investments is recognized on a time proportion basis,

iv Dividend incomes on investments are accounted for when the right to receive the payment is established.

4.2. Purchases

Purchases are shown exclusive of Value Added Tax.

4.3. Fixed assets and depreciation

Fixed assets are stated at cost of acquisition/construction including any cost attributable to bringing the assets to their working condition, less accumulated depreciation and impairment loss, if any. Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 and on pro-rata basis with reference to the month of additions / deductions. Fixed assets having value lower than Rs.5,000 are depreciated fully in the year of acquisition / installation. Intangible assets are amortised over the irrespective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use.

4.4. Expenditure during construction period

Expenditure during construction period reflects an element of capital work in progress and includes directly attributable costs that relate to the project and general and administration overheads as are specifi cally attributable to the construction of the project. Such expenditure is included under 'Pre operative expenses (pending allocation) and will be capitalized under relevant fixed asset accounts upon commencement of commercial generation of power.

4.5. Inventories

Inventories of components used for renewable energy projects have been valued at lower of cost or net realizable value. Civil construction materials are valued at cost.

4.6. Investments

Long term investments are stated at cost and provision is made to recognise any decline, other than temporary, in the value of such investments.

4.7. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency are recognised in the statement of Profit and Loss.

4.8. Employee benefits

Gratuity

Employees in India are entitled to benefits under the Payment of Gratuity Act, 1972, a defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit conferred by the Company on its employees is equal to or greater than the statutory minimum.

The Company provides for liability towards gratuity plan on the basis of actuarial valuation. The entire amount of gratuity is unfunded.

Compensated absences

The Company's liability towards compensated absences (leave encashment) is determined on an actuarial basis for the entire unavailed vacation balance standing to the credit of each employee as at period-end.

4.9. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the income statement.

4.10. Impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to statement of Profit and Loss in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

4.11. Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outfl ow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outfl ow of resources is remote, no provision or disclosure is made.

4.12. Income taxes

Income tax expense comprises current income tax, deferred tax and fringe benefit tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of Indian Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the Profits offered for income taxes and the Profits as per the fi nancial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

4.13. Leases

For operating leases, lease payments (excluding costs for services such as insurance and maintenance) are recognised as an expense in the statement of Profit and loss on a straight line basis unless another systematic basis is more representative of the time pattern of the user's benefit, except where the rental is for pre operative activities in which case it is charged to 'Pre operative expenses (pending allocation)'.

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Mar 31, 2011

1. Background information

Entegra Limited ("Entegra" or the "Company") was incorporated in 1995 as a private limited company. In 2000, the Company was converted into a public limited company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Entegra is engaged in the development of integrated global renewable energy projects.

2. Basis of presentation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standards notified in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable.

3. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period's results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

4. Significant accounting policies

4.1. Revenue recognition

i. Revenues from sales of goods are recognized on shipment or dispatch to customers and are recorded exclusive of Value Added Taxes but are net of any sales returns.

ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive of Service Tax. iii. Interest income on deposits with banks and investments is recognized on a time proportion basis. iv. Dividend incomes on investments are accounted for when the right to receive the payment is established.

4.2. Purchases

Purchases are shown exclusive of Value Added Tax.

4.3. Fixed assets and depreciation

Fixed assets are stated at cost of acquisition/construction including any cost attributable to bringing the assets to their working condition, less accumulated depreciation and impairment loss, if any.

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 and on pro-rata basis with reference to the month of additions / deductions. Fixed assets having value lower than Rs. 5,000 are depreciated fully in the year of acquisition / installation.

4.4. Expenditure during construction period

Expenditure during construction period reflects an element of capital work in progress and includes directly attributable costs that relate to the project and general and administration overheads as are specifically attributable to the construction of the project. Such expenditure is included under 'Pre operative expenses (pending allocation) and will be capitalized under relevant fixed asset accounts upon commencement of commercial generation of power.

4.5. Inventories

Inventories of components used for renewable energy projects have been valued at lower of cost or net realizable value. Civil construction materials are valued at cost.

4.6. Investments

Long term investments are stated at cost and provision is made to recognise any decline, other than temporary, in the value of such investments.

4.7. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency are recognised in the Profit and Loss Account.

4.8. Employee benefits

Gratuity

Employees in India are entitled to benefits under the Payment of Gratuity Act, 1972, a defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit conferred by the Company on its employees is equal to or greater than the statutory minimum.

The Company provides for liability towards gratuity plan on the basis of actuarial valuation. The entire amount of gratuity is unfunded.

Compensated absences

The Company's liability towards compensated absences (leave encashment) is determined on an actuarial basis for the entire unavailed vacation balance standing to the credit of each employee as at period-end.

4.9. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the income statement.

4.10. Impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

4.11. Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

4.12. Income taxes

Income tax expense comprises current income tax, deferred tax and fringe benefit tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of Indian Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

4.13. Leases

For operating leases, lease payments (excluding costs for services such as insurance and maintenance) are recognised as an expense in the statement of profit and loss on a straight line basis unless another systematic basis is more representative of the time pattern of the user's benefit, except where the rental is for pre operative activities in which case it is charged to 'Pre operative expenses (pending allocation)'.

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Mar 31, 2010

1. Background information

Entegra Limited ("Entegra or the "Company”) was incorporated in 1995 as a private limited company. In 2000, the Company was converted into a public limited company. The Company is listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Entegra is engaged in the development of integrated global renewable energy projects.

2. Basis of presentation

The financial statements are prepared and presented under the historical cost convention on the accrual basis of accounting and in accordance with the Accounting Standards notified in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956, to the extent applicable.

3. Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future periods results could differ from those estimates. Any revisions to accounting estimates are recognised in the period in which such revisions are made.

4. Significant accounting policies

4.1. Revenue recognition

i. Revenues from sales of goods are recognised on shipment or dispatch to customers and are recorded inclusive of Value Added

Taxes but do not include any sales returns. ii. Revenues from services rendered are recognized on completion of the service and are recorded exclusive of Service Tax. iii. Interest income on deposits with banks and investments is recognised on a time proportion basis. iv. Dividend incomes on investments are accounted for when the right to receive the payment is established.

4.2. Purchases

Purchases are shown inclusive of Value Added Tax, wherever applicable.

4.3. Fixed assets and depreciation

Fixed assets are stated at cost of acquisition/construction including any cost attributable to bringing the assets to their working condition, less accumulated depreciation and impairment loss, if any.

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV of the Companies Act, 1956 and on pro-rata basis with reference to the month of additions / deductions. Fixed assets having value lower than Rs. 5,000 are depreciated fully in the year of acquisition / installation.

4.4. Expenditure during construction period

Expenditure during construction period reflects an element of capital work in progress and includes directly attributable costs that relate to the project and general and administration overheads as are specifically attributable the construction of the project. Such expenditure is included under Pre operative expenses (pending allocation) and will be capitalized under relevant fixed asset accounts upon commencement of commercial generation of power.

4.5. Inventories

Inventories of components used for renewable energy projects have been valued at lower of cost or net realizable value. Civil construction materials are valued at cost.

4.6. Investments

Long term investments are stated at cost and provision is made to recognise any decline, other than temporary, in the value of such investments.

4.7. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transactions. Gains or losses resulting from the settlement of such transactions and from translation of monetary assets and liabilities denominated in foreign currency are recognised in the Profit and Loss Account.

4.8. Employee benefits

i) Defined benefit plan

Gratuity

Employees in India are entitled to benefits under the Payment of Gratuity Act, 1972, a defined benefit retirement plan covering eligible employees of the Company. The Plan provides a lump-sum payment to eligible employees at retirement or on termination of employment. The gratuity benefit conferred by the Company on its employees is equal to or greater than the statutory minimum.

The Company provides for liability towards gratuity plan on the basis of actuarial valuation. The entire amount of gratuity is unfunded.

Compensated absences

The Companys liability towards compensated absences (leave encashment) is determined on an actuarial basis for the entire unavailed vacation balance standing to the credit of each employee as at period-end.

4.9. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the income statement.

4.10.Impairment of assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss, if any, is charged to Profit and Loss Account in the year in which an asset is identified as impaired. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

After impairment depreciation is provided on the revised carrying amount of the asset over its remaining useful life. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

4.11.Provisions and contingent liabilities

The Company creates a provision when there is present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required, and a reliable estimate can be made of the amount required to settle the

obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

4.12.Income taxes

Income tax expense comprises current income tax, deferred tax and fringe benefit tax.

Current taxes

Provision for current income-tax is recognised in accordance with the provisions of Indian Income Tax Act, 1961, and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted at the balance sheet date. The effect of a change in tax rates on deferred tax assets and liabilities is recognised in the year that includes the enactment date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in the future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty, supported by convincing evidence of recognition of such assets. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date.

4.13.Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders, compulsorily convertible preference shares and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

5. Notes to the financial statements

5.1. Issue of Equity shares and Compulsorily Convertible Preference Shares pursuant to the merger of SKG Power Ventures Private Limited (SKGPV) with the Company

Pursuant to the Scheme of Merger of SKG Power Ventures Private Limited (SKGPV) with the Company, as approved by the shareholders in the Court-convened meeting held on 27 July 2009 and subsequently sanctioned by the Honourable High Court of Bombay on 25 September 2009, the assets and liabilities of SKGPV were transferred to and vested in the Company with effect from 1 April 2008, the appointed date of the merger. The scheme had accordingly been given effect to in the accounts for the year ended 31 March 2009. The amalgamation has been accounted for under the purchase method as prescribed by Accounting Standard 14 Accounting for Amalgamations (AS-14). Accordingly, the assets and liabilities of the SKGPV as at the aforementioned date have been taken over at their fair values and/or as specified in the scheme.

SKG Power Ventures Private Limited was carrying on the Hydel Power generation business through its majority owed subsidiary, Shree Maheshwar Hydel Power Corporation Limited (“SMHPCL”). SMHPCL has undertaken setting of a 400 MW Hydel Power plant at West Nimar in District Khargone of Madhya Pradesh state.

Pursuant to the Scheme, the shareholders of the erstwhile SKGPV were alloted 500 (Five Hundred) Equity Shares of the face value of Rs. 10 (Rupees Ten each) at par and 13,567 (Thirteen Thousand, Five Hundred and Sixty Seven) Compulsorily Convertible Preference Share(s) (CCPS) of the face value of Rs. 10 (Rupees Ten each) at par of the Transferee Company credited as fully paid- up, for every 1 (One) Equity Share of the face value of Rs. 10 (Rupees Ten each) held in the share capital of SKGPV. Such shares were pending allotment till the end of the previous year as at 31 March 2009 and the consideration was shown as Merger consideration pending allotment in the Balance Sheet as at 31 March 2009.

The Company has allotted 5,000,000 equity shares and 135,670,000 CCPS on December 14, 2009. The difference between the fair value of assets and liabilities of SKGPV taken over and face value of equity and preference shares allotted amounting to Rs. 11,473.13 Lakhs has been credited to the Securities Premium Account.

5.2. In order to issue additional shares as required by the Scheme, the Company has increased its Authorized Share Capital from Rs.11,000 Lakhs to Rs.100,051 Lakhs, comprising of Equity shares of Rs.46,451 Lakhs and Preference shares of Rs.53,600 Lakhs. The Company has incurred Rs. 204.39 Lakhs for this increase and for issue of the additional shares in the period ended 31 March 2010 which has been adjusted against the Securities Premium Account.

5.4 Update on matter related to settlement of liability with Madhya Pradesh State Industrial Development Corporation Limited (MPSIDC)

The Company had originally accepted a One Time Settlement (OTS) from Madhya Pradesh State Industrial Development Corporation Limited (MPSIDC), which has been communicated vide letter dated 3 July 2004. The Company had also made a payment of Rs. 2,209.76 Lakhs till 11 July 2006 towards such settlement. The outstanding liability towards MPSIDC, recognized in the Balance Sheet as on 31 March 2010, amounts to Rs. 5,527.53 Lakhs.

During the current year ended 31 March 2010, the Company has continued to negotiate with MPSIDC for consideration of the Companys request to reschedule the repayment of the aforesaid liability. Based on these negotiations, the Company is confident of obtaining a waiver of past interest and a rescheduling of repayment of the balance amount of interest and principal outstanding. The Company expects that on finalization of these negotiations, the Company would be required to repay outstanding principal amount of Rs. 5,527.53 Lakhs and on the basis of the expected outcome, had written back interest accrued of Rs. 1,478.19 Lakhs as at 31 March 2009 and recognized this amount as a gain during year ended 31 March 2009.

As per the discussion of the State Level Committee Meeting held on 1 October 2009, the Company has already submitted a proposal for reschedulement of OTS dues of Rs. 5,527.53 Lakhs and offered Redeemable Cumulative Preference Shares (RCPS) of Shree Maheshwar Hydel Power Corporation Limited (SMHPCL) proposing a return of 8% per annum for the settlement and given the above amount as Share Application Money on 27 January 2010 and 9 February 2010 to SMHPCL.

On 26 October 2009, MPSIDC, has communicated vide letter no. MPSIDC/ICD/ Recy/09/4487 to the Secretary, Energy Department, Government of Madhya Pradesh about the Companys proposal, asking for the Departments views confirming the availability of revenue to MPSIDC in lieu of its dues. Upon obtaining the Departments views, the State Level Committee constituted considered the Companys proposal for re-schedulement to be forwarded to the Madhya Pradesh Government.

In a recent development, the Company after obtaining a legal opinion from their solicitors, has filed an application with the Honourable Chief Minister of Madhya Pradesh vide a letter dated 2 March 2010, claiming relief under the May 2007 OTS scheme of MPSIDC, to which it becomes eligible. The claim, in the event of its acceptance, will result in the Company paying a lower rate of interest on the principal amount outstanding from the date of default. The application of a lower rate of interest as contemplated by the said scheme could potentially reduce the total liability in respect of such dues.

As on the date of the approval of these financial statements, a formal decision in respect of the Companys above proposal is yet to be taken by the Madhya Pradesh Government. While a formal decision is awaited, MPSIDC continues to send periodic demand notices for the full amount of principal and interest accrued thereon to the Company.

5.5. Pre operative expenses (pending allocation) in the Balance Sheet of the Company represent directly attributable expenditure incurred by the Company in the current year for setting up of 10 MW Concentrated Solar Thermal Power Project (CSP) and 1 MW Solar Photo Voltaic (CSPV) in Rajasthan. Expenditure capitalized as pre operative expenses consists of expenditure directly attributable to the project and general and administrative costs as are specifically attributable to the construction of the project.

5.6. Investments made by the Company during the year

Set up of new subsidiary

The Company has set up in the current year, a fully owned subsidiary, Nevaa Solar Power Company Private Limited from 10 November 2009. The subsidiary has been set up by the Company for the purposes of its existing and any future planned solar power projects business.

Acquisition of equity shares and debentures in SMHPCL

In the current year, the Company has acquired further 100,000,000 shares of face value Rs 10 each of SMHPCL at par. As a result of the acquisition, Entegra Limited now holds 68.73 % of the paid up equity share capital of SMHPCL.

The Company has also acquired Optional Fully Convertible Debentures (OFCDs) of the total face value of Rs 21,750 Lakhs issued by SMHPCL from a Subscriber of the said debentures in the current year. As per agreement entered with Yes Bank Limited, the Company has paid Call premium on the option to purchase the said debentures. As on 31 March 2010, the Company has exercised this option and has purchased the OFCDs from the Subscriber at an agreed value. The summary of costs capitalized as cost of investment in the OFCDs is as under;

The above investment was bought by the Company cum interest. Accordingly, the interest accrued on the said OFCDs has been excluded from the cost of investment.

5.7. In the opinion of the Board, the current assets and loans and advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated and provision for all known and determined liabilities (except wherever otherwise stated) are adequate and not in excess of the amount reasonably necessary. Keeping in view the fact that the investments are of the long-term nature, no diminution in the book value of the said investments is considered during the year.