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Accounting Policies of PTC India Ltd. Company
Mar 31, 2025
2.2 Material Accounting Polices
A summary of the material accounting policies applied in the preparation
of the financial statements are as given below. These accounting policies
have been applied consistently to all periods presented in the financial
statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control
is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but is not
control or joint control over those policies.
The Companyâs investments in subsidiaries and its associate are
accounted for at cost except when investment or a portion thereof
is classified as held for sale, in which case it is accounted for in
accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on
current/ non-current classification. An asset as current when it is:
⢠Expected to be realized or intended to sold or consumed in normal
operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting
period, or
⢠Cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting
period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period,
or
⢠There is no unconditional right to defer the settlement of the liability
for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and
liabilities.
Operating Cycle
Based on the nature of products / activities of the company and the normal
time between acquisition of assets and their realisation in cash or cash
equivalents, the company has determined its operating cycle as 12 months
for the purpose of classification of its assets and liabilities as current and
non-current.
3. Foreign Currency
Transactions in foreign currencies are initially recorded by the Company at
its functional currency spot rates at the date the transaction first qualifies
for recognition.
The rate that approximates the actual rate at the date of the transaction or
the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are
translated at the functional currency spot rates of exchange at the reporting
date.
Exchange differences arising on settlement or translation of monetary items
are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are translated using the exchange rate at the date of
the transaction. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the
fair value is determined. The gain or loss arising on translation of non¬
monetary items measured at fair value is treated in line with the recognition
of the gain or loss on the change in fair value of such items (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or
profit or loss are also recognised in OCI or profit or loss, respectively).
4. Taxes
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those that are enacted
or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that
it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to
interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary
differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences,
the carry forward of unused tax credits and any unused tax losses. Deferred
tax assets are recognized to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, and
the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to
be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period
date and are recognized to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realized or the liability
is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except
to the extent that it relates to items recognized in other comprehensive
income or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority.
Additional income taxes that arise from the distribution of dividends are
recognized at the same time that the liability to pay the related dividend is
recognized.
5. Intangible assets
Recognition and Initial Measurement
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and accumulated impairment losses.
Intangible Assets are recognized when it is probable that the future economic
benefits that are attributable to the asset will flow to the Company and cost
of the asset can be measured reliably.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic
life and assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortization period and the
amortization method for an intangible asset with a finite useful life are
reviewed at least at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are considered to modify the
amortization period or method, as appropriate, and are treated as changes
in accounting estimates. The amortization expense on intangible assets with
finite lives is recognized in the statement of profit and loss unless such
expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated
useful lives of 3 years using Straight-line method. Amortization on additions
to/deductions from Intangible Assets during the period is charged on
pro-rata basis from/up to the date on which the asset is available for use/
disposed.
Derecognition
An intangible asset is derecognized when no future economic benefits are
expected from their use or upon their disposal. Gains or losses arising from
derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are
recognized in the statement of profit or loss when the asset is derecognized.
6. Leases
The Company assesses at contract inception whether a contract is, or
contains, a lease. That is, if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for
all leases, except for short-term leases and leases of low-value assets. The
company recognizes lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognizes right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available for
use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re¬
measurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less
any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets, as follows:
Land- 89 years
Office building - 5 years
If ownership of the leased asset transfers to the Company at the end
of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
ii) Lease liabilities
At the commencement date of the lease, the Company recognizes
lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Company and payments
of penalties for terminating the lease, if the lease term reflects the
Company exercising the option to terminate. Variable lease payments
that do not depend on an index or a rate are recognised as expenses in
the period in which the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments, the Company
uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of
lease liabilities is re-measured if there is a modification, a change
in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
The Companyâs lease liabilities are included in Interest-bearing loans
and borrowings.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption
to its short-term leases contracts (i.e., those leases that have a lease
term of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases that are considered to be low value.
Lease payments on short-term leases and leases of low-value assets are
recognised as expense over the lease term.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the
risks and rewards of ownership transfer from the Company to the
lessee. Amounts due from lessees under finance leases are recorded
as receivables at the Companyâs net investment in the leases. Finance
lease income is allocated to accounting periods so as to reflect a
constant periodic rate of return on the net investment outstanding
in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the
risks and rewards incidental to ownership of an asset are classified as
operating leases. Rental income arising is accounted for on a straight¬
line basis over the lease terms and is included in revenue in the
statement of profit or loss due to its operating nature. Initial direct
costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised over
the lease term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are earned.
. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying
amounts of its assets (including investments in subsidiaries and associates)
to determine whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment
loss (if any). When it is not possible to estimate the recoverable amount of
an individual asset, the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and
value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have
not been adjusted. For the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the smallest group
of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the
âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of
the asset (or a cash-generating unit) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no
impairment loss been recognized for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognized immediately in
profit or loss.
Mar 31, 2024
2.2 Material Accounting Polices
A summary of the material accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The Companyâs investments in subsidiaries and its associate are accounted for at cost except when investment or a portion thereof is classified as held for sale, in which case it is accounted for in accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset as current when it is:
⢠Expected to be realized or intended to sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle
Based on the nature of products / activities of the company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
3. Foreign Currency
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition.
The rate that approximates the actual rate at the date of the transaction or the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of such items (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
4. Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
5. Intangible assets
Recognition and Initial Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be measured reliably.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated useful lives of 3 years using Straight-line method. Amortization on additions to/deductions from Intangible Assets during the period is charged on pro-rata basis from/up to the date on which the asset is available for use/ disposed.
Derecognition
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Land- 89 years
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.
ii) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Companyâs lease liabilities are included in Interest-bearing loans and borrowings.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense over the lease term.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straightline basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
7. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its assets (including investments in subsidiaries and associates) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
Mar 31, 2023
Note No.1 : Company overview and significant accounting policies 1. Company overview
The financial statements comprise financial statements of PTC India Limited (the company) for the year ended 31 March, 2023. The company is a public company domiciled in India and limited by shares (CIN: L40105DL1999PLC099328). The company is incorporated under the provisions of the Companies Act applicable in India. The shares of the Company are publicly traded on the National Stock Exchange of India Limited and BSE Limited. The registered office of the company is located at 2nd Floor, NBCC Tower, 15 Bhikaji Cama Place, New Delhi-110066, India.
The company is principally engaged in trading of power. PTC holds Category I license from Central Electricity Regulatory Commission (CERC), the highest category with permission to trade unlimited volumes.
The financial statements were authorized for issue in accordance with a resolution of the directors on May 27, 2023.
2.1 Basis of preparation of financial statements
(i) Statement of Compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies act, 2013 read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), to the extent applicable to these Financial Statements have been prepared and presented on a going concern basis and on the accrual basis of accounting.
(ii) Basis of Measurement
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments). The methods used to measure fair values are discussed further in notes to financial statements.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Companyâs functional currency. All financial information presented in INR has been rounded to the nearest crore (upto two decimals), except as stated otherwise.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.2 Significant Accounting Polices
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The Companyâs investments in subsidiaries and its associate are accounted for at cost except when investment or a portion thereof is classified as held for sale, in which case it is accounted for in accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset as current when it is:
⢠Expected to be realized or intended to sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle
Based on the nature of products / activities of the company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
3. Foreign Currency
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition.
The rate that approximates the actual rate at the date of the transaction or the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of such items (i.e., translation
differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
4. Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
5. Intangible assets
Recognition and Initial Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be measured reliably.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated useful lives of 3 years using Straight-line method. Amortization on additions to/deductions from Intangible Assets during the period is charged on pro-rata basis from/up to the date on which the asset is available for use/ disposed.
Derecognition
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
6. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Land- 89 years
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.
ii) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Companyâs lease liabilities are included in Interest-bearing loans and borrowings.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense over the lease term.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straightline basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
7. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its assets (including investments in subsidiaries and associates) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
8. Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented net of any reimbursement in the statement of profit and loss.
9. Contingent liabilities and contingent assets Contingent Liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events but is not recognised because
i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
A contingent liability is not recognized but disclosed as per requirements of Ind AS 37. The related asset is recognized when the realisation of income becomes virtually certain.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
10. Employee Benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an employee benefits expense in profit or loss in the period during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
The Company pays fixed contribution to Employeesâ Provident Fund. The contributions to the fund for the year are recognized as expense and are charged to the profit or loss. The Companyâs only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs liability is towards gratuity and post-retirement medical facility. The gratuity is funded by the Company and is managed by separate trust PTC INDIA Gratuity Trust. The Company has Post-Retirement Medical Scheme (PRMS), under which eligible retired employee and the spouse are provided medical facilities and avail treatment as out-patient subject to a ceiling fixed by the Company.
The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs is recognised and the fair value of any plan assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognized in OCI in the period in which they arise.
Other long-term employee benefits
Benefits under the Companyâs leave encashment constitute other long term employee benefits.
The Companyâs obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations. The calculation is performed using the projected unit credit method. Any
actuarial gains or losses are recognized in profit or loss in the period in which they arise.
Short-term benefits
Short term employee benefits are that are expected to be settled wholly before twelve months after the end of the reporting periods in which the employee rendered the related services.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Company are accounted for on the basis of terms and conditions of deputation of the parent organizations.
11. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognized when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value except trade receivables and trade payable which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified as under:
a) Debt instruments at amortized cost
b) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
c) Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A debt instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
Debt Instruments at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity Investments at FVTPL or FVTOCI
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
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. There is no recycling of the amounts from OCI to P&L, even on sale of Investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through arrangement; and either (i) the Company has transferred substantially all the. risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Company has transferred its rights to receive cash-flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure-
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
⢠Financial assets that are debt instruments and are measured as at
FVTOCI
⢠Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
⢠Trade receivables, and/or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind
AS 115
⢠All lease receivables resulting from transactions within the scope of
Ind AS 116
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and Credit risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss (P&L). This amount is reflected in a separate line in the P&L as an impairment gain or loss.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contract assets and lease held receivables
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial recognition, Interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are categorised as equity instruments at FVTOCI and financial assets or financial liabilities that are specifically designated at FVTPL. For financial assets, which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
12. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
13. Dividend to equity holders
The company recognises a liability of dividend to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
14. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories is measured on First in and First out (FIFO) basis.
Costs of purchased inventory are determined after deducting rebates and discounts.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
15. Property, plant and equipment Recognition and initial measurement
Property, Plant and equipment (PP&E) are carried in the balance sheet on the basis of at cost of acquisition including incidental costs related to acquisition and installation, net of accumulated depreciation and accumulated impairment losses, if any.
Property, Plant and Equipment is recognized when it is probable that future economic benefits associated with the item will flow to the Company and the cost of each item can be measured reliably. Property, Plant and Equipment are initially stated at cost.
Cost of asset includes
(a) Purchase price, net of any trade discount and rebates.
(b) Borrowing cost if capitalization criteria is met.
(c) Cost directly attributable to the acquisition of the assets which incurred in bringing asset to its working condition for the intended use.
(d) Incidental expenditure during the construction period is capitalized as part of the indirect construction cost to the extent the expenditure is directly related to construction or is incidental thereto.
(e) Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
Subsequent Measurement
Subsequent cost relating to Property, plant and equipment shall be recognized as an asset if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
All other repair and maintenance costs are recognized in profit or loss as incurred.
Depreciation and useful lives
The Company depreciates property, plant and equipment over their estimated useful lives using written down method except wind mill and leasehold land. The useful lives are at the rates and in the manner provided in Schedule II of the Companies Act, 2013
|
Category |
Useful life |
|
Building |
60 years |
|
Plant & Equipment (Wind-mill) |
22 years |
|
Furniture and Fixtures |
10 years |
|
Vehicles |
08 years |
|
Office Equipment |
02-06 years |
The depreciation on Wind Mills has been changed on Straight Line Method (SLM) at rates worked out based on the useful life and in the manner prescribed in the Schedule II to the Companies Act, 2013.
Depreciation on additions to/deductions from property, plant & equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed.
Advance paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is shown under the head nonfinancial assets in the balance sheet.
The cost of assets not available for use is disclosed under Capital Work in Progress till the time they are ready for use.
Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, price adjustment, change in duties or similar factors, the unamortized balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortization.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured
reliably, subsequent expenditure on a PPE along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement when the asset is derecognized.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end and adjusted prospectively, if appropriate.
The Company follows component approach as envisaged in Schedule II to the Companies Act, 2013. The approach involves identification of components of the asset whose cost is significant to the total cost of the asset and have useful life different from the useful life of the remaining assets and in respect of such identified components, useful life is determined separately from the useful life of the main asset.
Modification or extension to an existing asset, which is of capital nature and which becomes an integral part thereof is depreciated prospectively over the remaining useful life of that asset.
Asset costing less than '' 5000/- is fully depreciated in the year of capitalization.
Derecognition
An item of Property, Plant and Equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
16. Earnings per equity share
In determining basic earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period/year. In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period/year are adjusted for the effect of all dilutive potential equity shares.
17. Share based payments Equity settled transactions
The excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option plan is recognize as deferred stock compensation cost and amortized over the vesting period, on a straight line basis. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
18. Revenue Recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange
for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, except for the agency nature transactions, because it typically controls the goods or services before transferring them to the customer. The specific recognition criteria described below must also be met before revenue is recognised. Revenue from other income comprises interest from banks, employees, etc., dividend from investments in associates and subsidiary companies, dividend from mutual fund investments, surcharge received from customers for delayed payments, other miscellaneous income, etc.
Sale of power
Sale is recognized when the power is delivered by the Company at the delivery point in conformity with the parameters and technical limits and fulfilment of other conditions specified in the Power Sales Agreement. Sale of power is accounted for as per tariff specified in the Power Sales Agreement. The sale of power is accounted for net of all local taxes and duties as may be leviable on sale of electricity for all electricity made available and sold to customers.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of power, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).
Rendering of services
The company provides consultancy services to its customers. The Company recognises revenue over time, using the output method measuring the completion of different stages of consultancy project relative to the total completion the service, because the customer receives and consumes the benefits provided by the Company over the time.
Revenue from transactions identified as of agency nature
When another party is involved in providing goods or services to the customers, the Company determines whether it is a principal or an agent in these transactions by evaluating the nature of its promise to the customer. The company is a principal and records revenue on a gross basis if it controls the promised goods or services before transferring them to the customer. However, the company is an agent and records revenue on net basis if it does not control the promised goods or services before transferring them to the customer.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Surcharge Income
The surcharge on late payment/ non- payment from customers is recognized when:
i) the amount of surcharge can be measured reliably; and
ii) there is no significant uncertainty that the economic benefits associated with the surcharge transaction will flow to the entity.
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend, provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
Rental income
Rental income arising from operating leases is accounted for on a straightline basis over the lease terms unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost. Rental Income is included in revenue in the statement of profit and loss.
19. Cash flow statement
Cash flow statement is prepared in accordance with the indirect method prescribed in Ind AS 7 âStatement of Cash Flowsâ
20. Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of that asset. Other borrowing costs are recognized as expenses in the period in which they are incurred.
21. Business Combinations
Business Combinations are accounted for using the acquisition method of accounting, except for common control transactions which are accounted using the pooling of interest method that is accounted at carrying values. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognized at fair values on their acquisition date, which is the date at which control is transferred to the Company. Goodwill is initially measured at cost, being the excess of the consideration transferred over the net identifiable assets acquired
and liabilities assumed. Where the fair value of net identifiable assets acquired and liabilities assumed exceed the consideration transferred, after reassessing the fair values of the net assets and contingent liabilities, the excess is recognized as capital reserve. Acquisition related costs are expensed as incurred.
2.3 Use of estimates and management judgments
The preparation of financial statements requires management to make judgments, estimates and assumptions
Mar 31, 2022
1. Company overview
The financial statements comprise financial statements of PTC India Limited (the company) for the year ended 31 March, 2022. The company is a public company domiciled in India and limited by shares (CIN: L40105DL1999PLC099328). The company is incorporated under the provisions of the Companies Act applicable in India. The shares of the Company are publicly traded on the National Stock Exchange of India Limited and BSE Limited. The registered office of the company is located at 2nd Floor, NBCC Tower, 15 Bhikaji Cama Place, New Delhi-110066, India.
The company is principally engaged in trading of power. PTC holds Category I license from Central Electricity Regulatory Commission (CERC), the highest category with permission to trade unlimited volumes.
The financial statements were authorized for issue in accordance with a resolution of the directors on July 05, 2022.
2.1 Basis of preparation of financial statements(i) Statement of Compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies act, 2013 read together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), to the extent applicable to these Financial Statements have been prepared and presented on a going concern basis and on the accrual basis of accounting.
(ii) Basis of Measurement
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities (including derivative instruments) that are measured at fair value (refer accounting policy regarding financial instruments). The methods used to measure fair values are discussed further in notes to financial statements.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the Companyâs functional currency. All financial information presented in INR has been rounded to the nearest crore (upto two decimals), except as stated otherwise.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.2 Significant Accounting Polices
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The Companyâs investments in subsidiaries and its associate are accounted for at cost except when investment or a portion thereof is classified as held for sale, in which case it is accounted for in accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset as current when it is:
⢠Expected to be realized or intended to sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle
Based on the nature of products / activities of the company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition.
The rate that approximates the actual rate at the date of the transaction or the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of such items (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
Income tax expense represents the sum of the tax currently payable and deferred tax.
amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated useful lives of 3 years using Straight-line method. Amortization on additions to/deductions from Intangible Assets during the period is charged on pro-rata basis from/up to the date on which the asset is available for use/ disposed.
Derecognition
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
6. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Land- 89 years
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.
ii) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
5. Intangible assetsRecognition and Initial Measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
Intangible Assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be measured reliably.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Companyâs lease liabilities are included in Interest-bearing loans and borrowings.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases contracts (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense over the lease term.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straightline basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
7. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its assets (including investments in subsidiaries and associates) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented net of any reimbursement in the statement of profit and loss.
9. Contingent liabilities and contingent assets Contingent Liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events but is not recognised because
i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
A contingent liability is not recognized but disclosed as per requirements of Ind (AS) 37. The related asset is recognized when the realisation of income becomes virtually certain.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
10. Employee Benefits Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognized as an employee benefits expense in profit or loss in the period during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
The Company pays fixed contribution to Employeesâ Provident Fund. The contributions to the fund for the year are recognized as expense and are charged to the profit or loss. The Companyâs only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs liability is towards gratuity and post-retirement medical facility. The gratuity is funded by the Company and is managed by separate trust PTC INDIA Gratuity Trust. The Company has Post-Retirement Medical Scheme (PRMS), under which eligible retired employee and the spouse are provided medical facilities and avail treatment as out-patient subject to a ceiling fixed by the Company.
The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs is recognised and the fair value of any plan assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognized in OCI in the period in which they arise.
Other long-term employee benefits
Benefits under the Companyâs leave encashment constitute other long term employee benefits.
The Companyâs obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognized in profit or loss in the period in which they arise.
Short-term benefits
Short term employee benefits are that are expected to be settled wholly before twelve months after the end of the reporting periods in which the employee rendered the related services.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Company are accounted for on the basis of terms and conditions of deputation of the parent organizations.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are recognized when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value except trade receivables and trade payable which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial AssetsInitial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified as under:
a) Debt instruments at amortized cost
b) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
c) Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A debt instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity Investments at FVTPL or FVTOCI
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
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. There is no recycling of the amounts from OCI to P&L, even on sale of Investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through arrangement; and either (i) the Company has transferred substantially all the. risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash-flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing
involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure-
⢠Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
⢠Financial assets that are debt instruments and are measured as at
FVTOCI
⢠Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
⢠Trade receivables, and/or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind
AS 115
⢠All lease receivables resulting from transactions within the scope of
Ind AS 116
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and Credit risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss (P&L). This amount is reflected in a separate line in the P&L as an impairment gain or loss.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contract assets and lease held receivables
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does
not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and financial guarantee contracts.
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial recognition, Interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are categorised as equity instruments at FVTOCI and financial assets or financial liabilities that are specifically designated at FVTPL. For financial assets, which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the
Companyâs operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
13. Dividend to equity holders
The company recognises a liability of dividend to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories is measured on First in and First out (FIFO) basis.
Costs of purchased inventory are determined after deducting rebates and discounts.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
15. Property, plant and equipment Recognition and initial measurement
Property, Plant and equipment (PP&E) are carried in the balance sheet on the basis of at cost of acquisition including incidental costs related to acquisition and installation, net of accumulated depreciation and accumulated impairment losses, if any.
Property, Plant and Equipment is recognized when it is probable that future economic benefits associated with the item will flow to the Company and the cost of each item can be measured reliably. Property, Plant and Equipment are initially stated at cost.
(a) Purchase price, net of any trade discount and rebates.
(b) Borrowing cost if capitalization criteria is met.
(c) Cost directly attributable to the acquisition of the assets which incurred in bringing asset to its working condition for the intended use.
(d) Incidental expenditure during the construction period is capitalized as part of the indirect construction cost to the extent the expenditure is directly related to construction or is incidental thereto.
(e) Present value of the estimated costs of dismantling & removing the items & restoring the site on which it is located if recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
|
Category |
Useful life |
|
Building |
60 years |
|
Plant & Equipment (Wind-mill) |
22 years |
|
Furniture and Fixtures |
10 years |
|
Vehicles |
08 years |
|
Office Equipment |
02-06 years |
Subsequent cost relating to Property, plant and equipment shall be recognized as an asset if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates property, plant and equipment over their estimated useful lives using written down method except wind mill and leasehold land. The useful lives are at the rates and in the manner provided in Schedule II of the Companies Act, 2013
The depreciation on Wind Mills has been changed on Straight Line Method (SLM) at rates worked out based on the useful life and in the manner prescribed in the Schedule II to the Companies Act, 2013.
Depreciation on additions to/deductions from property, plant & equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed.
Advance paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is shown under the head nonfinancial assets in the balance sheet.
The cost of assets not available for use is disclosed under Capital Work in Progress till the time they are ready for use.
Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, price adjustment, change in duties or similar factors, the unamortized balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortization.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement when the asset is derecognized.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end and adjusted prospectively, if appropriate.
The Company follows component approach as envisaged in Schedule II to the Companies Act, 2013. The approach involves identification of components of the asset whose cost is significant to the total cost of the asset and have useful life different from the useful life of the remaining assets
and in respect of such identified components, useful life is determined separately from the useful life of the main asset.
Modification or extension to an existing asset, which is of capital nature and which becomes an integral part thereof is depreciated prospectively over the remaining useful life of that asset.
Asset costing less than '' 5000/- is fully depreciated in the year of capitalization.
Derecognition
An item of Property, Plant and Equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
In determining basic earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period/year. In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period/year are adjusted for the effect of all dilutive potential equity shares.
17. Share based payments Equity settled transactions
The excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option plan is recognize as deferred stock compensation cost and amortized over the vesting period, on a straight line basis. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense-
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, except for the agency nature transactions, because it typically controls the goods or services before transferring them to the customer. The specific recognition criteria described below must also be met before revenue is recognised- Revenue from other income comprises interest from banks, employees, etc., dividend from investments in associates and subsidiary companies, dividend from mutual fund investments, surcharge received from customers for delayed payments, other miscellaneous income, etc.
Sale of power
Sale is recognized when the power is delivered by the Company at the delivery point in conformity with the parameters and technical limits and fulfilment of other conditions specified in the Power Sales Agreement. Sale of power is accounted for as per tariff specified in the Power Sales Agreement. The sale of power is accounted for net of all local taxes and duties as may be leviable on sale of electricity for all electricity made available and sold to customers.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the
transaction price needs to be allocated. In determining the transaction price for the sale of power, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).
The company provides consultancy services to its customers. The Company recognises revenue over time, using the output method measuring the completion of different stages of consultancy project relative to the total completion the service, because the customer receives and consumes the benefits provided by the Company over the time.
Revenue from transactions identified as of agency nature
When another party is involved in providing goods or services to the customers, the Company determines whether it is a principal or an agent in these transactions by evaluating the nature of its promise to the customer. The company is a principal and records revenue on a gross basis if it controls the promised goods or services before transferring them to the customer. However, the company is an agent and records revenue on net basis if it does not control the promised goods or services before transferring them to the customer.
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Surcharge Income
The surcharge on late payment/ non- payment from customers is recognized when:
i) the amount of surcharge can be measured reliably; and
ii) there is no significant uncertainty that the economic benefits associated with the surcharge transaction will flow to the entity.
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend, provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
Rental income arising from operating leases is accounted for on a straightline basis over the lease terms unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost. Rental Income is included in revenue in the statement of profit and loss.
Cash flow statement is prepared in accordance with the indirect method prescribed in Ind AS 7 âStatement of Cash Flowsâ
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of that asset. Other borrowing costs are recognized as expenses in the period in which they are incurred.
2.3 Use of estimates and management judgments
The preparation of financial statements requires management to make judgments, estimates and assumptions that may impact the application of accounting policies and the reported value of assets, liabilities, income, expenses and related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. The estimates and managementâs judgments are based on previous experience and other factors considered reasonable and prudent in the circumstances. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
In order to enhance understanding of the financial statements, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that
Mar 31, 2018
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control orjoint control over those policies.
The Companyâs investments in subsidiaries and its associate are accounted for at cost except when investment or a portion thereof is classified as held for sale, in which case it is accounted for in accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is current when it is:
- Expected to be realized or intended to sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
3. Foreign Currency
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition.
The rate that approximates the actual rate at the date of the transaction or the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of such items (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
4. Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
5. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated useful lives of 3 years using Straight-line method.
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
6. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
Accounting for finance lease
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the Company is classified as a finance lease. Title may or may not eventually be transferred.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Accounting for operating lease
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating lease. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
In the event that lease incentives are received to enter into operating lease, such incentives are recognized as a liability. The aggregate benefits of incentives are recognized as a reduction of rental expenses on straight-line basis.
Contingent rents are recognized as expense in the period in which they are incurred.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income on a straight line basis unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
Contingent rents are recognized as revenue in the period in which they are earned.
7. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its assets (including investments in subsidiaries and associates) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
8. Provisions General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented net of any reimbursement in the statement of profit and loss.
9. Contingent liabilities and contingent assets Contingent Liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events but is not recognised because
i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
A contingent liability is not recognized but disclosed as per requirements of Ind (AS) 37. The related asset is recognized when the realisation of income becomes virtually certain.
Contingent Asset
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
10. Employee Benefits Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an employee benefits expense in profit or loss in the period during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
The Company pays fixed contribution to Employeesâ Provident Fund. The contributions to the fund for the year are recognized as expense and are charged to the profit or loss. The Companyâs only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs liability is towards gratuity and post-retirement medical facility. The gratuity is funded by the Company and is managed by separate trust. The Company has Post-Retirement Medical Scheme (PRMS), under which eligible retired employee and the spouse are provided medical facilities and avail treatment as out-patient subject to a ceiling fixed by the Company.
The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs is recognised and the fair value of any plan assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognized in OCI in the period in which they arise.
Other long-term employee benefits
Benefits under the Companyâs leave encashment constitute other long term employee benefits.
The Companyâs obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognized in profit or loss in the period in which they arise.
Short-term benefits
Short term employee benefits are that are expected to be settled wholly before twelve months after the end of the reporting periods in which the employee rendered the related services.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Company are accounted for on the basis of terms and conditions of deputation of the parent organizations.
11. Financial Ins trum ents
Financial assets and financial liabilities are recognized when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value except trade receivables and trade payable which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial Assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified as under:
a) Debt instruments at amortized cost
b) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
c) Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A debt instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
Debt Instruments at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity Instruments at FVTPL or FVTOCI
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
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. There is no recycling of the amounts from OCI to P&L, even on sale of Investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthrough arrangement; and either (i) the Company has transferred substantially all the. risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Company has transferred its rights to receive cash-flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure-
- Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
- Financial assets that are debt instruments and are measured as at FVTOCI
- Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables, and
- All lease receivables resulting from transactions within the scope of Ind AS 17
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and Credit risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss (P&L). This amount is reflected in a separate line in the P&L as an impairment gain or loss.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contract assets and lease held receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial recognition, Interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are categorised as equity instruments at FVTOCI and financial assets or financial liabilities that are specifically designated at FVTPL. For financial assets, which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
12. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
13. Cash dividend to equity holders
The company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
14. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories is measured on First in and First out (FIFO) basis.
Costs of purchased inventory are determined after deducting rebates and discounts.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
15. Property, plant and equipment
Property, Plant and equipment (PP&E) are carried in the balance sheet on the basis of at cost of acquisition including incidental costs related to acquisition and installation, net of accumulated depreciation and accumulated impairment losses, if any.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
Subsequent cost relating to Property, plant and equipment shall be recognized as an asset if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates property, plant and equipment over their estimated useful lives using written down method except wind mill and leasehold land. The useful lives are at the rates and in the manner provided in Schedule II of the Companies Act, 2013
The depreciation on Wind Mills has been changed on Straight Line Method (SLM) at rates worked out based on the useful life and in the manner prescribed in the Schedule II to the Companies Act, 2013.
Depreciation on additions to/deductions from property, plant & equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed.
Leasehold land are amortised over the lease period.
Advance paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is shown under the head non-financial assets in the balance sheet.
The cost of assets not available for use is disclosed under Capital Work in Progress till the time they are ready for use.
Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, price adjustment, change in duties or similar factors, the unamortized balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortization.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement when the asset is derecognized.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end and adjusted prospectively, if appropriate.
The Company follows component approach as envisaged in Schedule II to the Companies Act, 2013. The approach involves identification of components of the asset whose cost is significant to the total cost of the asset and have useful life different from the useful life of the remaining assets and in respect of such identified components, useful life is determined separately from the useful life of the main asset.
Modification or extension to an existing asset, which is of capital nature and which becomes an integral part thereof is depreciated prospectively over the remaining useful life of that asset.
Asset costing less than Rs.5000/- is fully depreciated in the year of capitalization.
16. Earnings per equity share
In determining basic earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period/year. In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period/year are adjusted for the effect of all dilutive potential equity shares.
17. Share based payments Equity settled transactions
The excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option plan is recognize as deferred stock compensation cost and amortized over the vesting period, on a straight line basis. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense
18. Revenue Recognition
Companyâs revenues arise from trading of power, consultancy and other income. Revenue from sale of energy is recognized based on the rates & terms and conditions mutually agreed with the beneficiaries. Revenue from other income comprises interest from banks, employees, etc., dividend from investments in associates and subsidiary companies, dividend from mutual fund investments, surcharge received from customers for delayed payments, other miscellaneous income, etc.
Trading of Power
Revenue from trading of power is measured at the rates agreed with the beneficiaries and recognized when all the following conditions are satisfied:
i) the company has transferred to the buyer the significant risks and rewards of ownership of the energy;
ii) the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
iii) the amount of revenue can be measured reliably;
iv) it is probable that the economic benefits associated with the transaction will flow to the company; and
v) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rebates allowed to beneficiaries as early payment incentives are deducted from the amount of revenue.
Rendering of Services
Revenue from service is recognized at the fair value of the consideration received or receivable and recognized by reference to the stage of completion of the transaction when all the following conditions are satisfied:
i) the amount of revenue can be measured reliably;
ii) it is probable that the economic benefits associated with the transaction will flow to the entity;
iii) the stage of completion of the transaction can be measured reliably; and
iv) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
If all the above conditions are not met, revenue from service is recognized only to the extent of the expenses recognized that are recoverable.
Surcharge Income
The surcharge on late payment/ non payment from customers is recognized when:
i) the amount of surcharge can be measured reliably; and
ii) there is no significant uncertainty that the economic benefits associated with the surcharge transaction will flow to the entity.
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend, provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
Rental income
Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost. Rental Income is included in revenue in the statement of profit and loss.
19. Cash flow statement
Cash flow statement is prepared in accordance with the indirect method prescribed in Ind AS 7 âStatement of Cash Flowsâ.
Mar 31, 2017
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the financial statements.
1. Investment in Subsidiaries and associates
A subsidiary is an entity that is controlled by the Company. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The Companyâs investments in subsidiaries and its associate are accounted for at cost except when investment or a portion thereof is classified as held for sale, in which case it is accounted for in accordance with Ind AS 105.
2. Current versus non-current classification.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset as current when it is:
- Expected to be realized or intended to sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating Cycle
Based on the nature of products / activities of the Group and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Group has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
3. Foreign Currency
Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition.
The rate that approximates the actual rate at the date of the transaction or the monthly average rate is used for all transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of such items (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
4. Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Unrecognized deferred tax assets are re-assessed at each reporting period date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current income tax and deferred tax are recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Additional income taxes that arise from the distribution of dividends are recognized at the same time that the liability to pay the related dividend is recognized.
5. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
The Company amortizes cost of computer software over their estimated useful lives of 3 years using Straight-line method.
An intangible asset is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
6. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
Accounting for finance lease
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the Company is classified as a finance lease. Title may or may not eventually be transferred.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Accounting for operating lease
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating lease. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
In the event that lease incentives are received to enter into operating lease, such incentives are recognized as a liability. The aggregate benefits of incentives are recognized as a reduction of rental expenses on straight-line basis.
Contingent rents are recognized as expense in the period in which they are incurred.
Company as a lessor
Accounting for finance lease
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Accounting for operating lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income on a straight line basis unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
Contingent rents are recognized as revenue in the period in which they are earned.
7. Impairment of assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its assets (including investments in subsidiaries and associates) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
8. Provisions General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented net of any reimbursement in the statement of profit and loss.
9. Contingent liabilities and contingent assets Contingent Liability
Contingent liability is a possible obligation that arises from past events and whose existence 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 but is not recognised because
i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
ii) the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
A contingent liability is not recognized but disclosed as per requirements of Ind (AS) 37. The related asset is recognized when the realisation of income becomes virtually certain.
Contingent Asset
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
10. Employee Benefits Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into separate entities and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized as an employee benefits expense in profit or loss in the period during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due after more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
The Company pays fixed contribution to Employeesâ Provident Fund. The contributions to the fund for the year are recognized as expense and are charged to the profit or loss. The Companyâs only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs liability is towards gratuity and post-retirement medical facility. The gratuity is funded by the Company and is managed by separate trust. The Company has Post-Retirement Medical Scheme (PRMS), under which eligible retired employee and the spouse are provided medical facilities and avail treatment as out-patient subject to a ceiling fixed by the Company.
The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs is recognised and the fair value of any plan assets is deducted. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations and that are denominated in the same currency in which the benefits are expected to be paid.
The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. Any actuarial gains or losses are recognized in OCI in the period in which they arise.
Other long-term employee benefits
Benefits under the Companyâs leave encashment constitute other long term employee benefits.
The Companyâs obligation in respect of leave encashment is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is based on the prevailing market yields of Indian government securities as at the reporting date that have maturity dates approximating the terms of the Companyâs obligations. The calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognized in profit or loss in the period in which they arise.
Short-term benefits
Short term employee benefits are that are expected to be settled wholly before twelve months after the end of the reporting periods in which the employee rendered the related services.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid under performance related pay if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Company are accounted for on the basis of terms and conditions of deputation of the parent organizations.
11. Financial Instruments
Financial assets and financial liabilities are recognized when a Company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value except trade receivables and trade payable which are initially measured at transaction price.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial Assets Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified as under:
a) Debt instruments at amortized cost
b) Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
c) Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A debt instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
Debt Instruments at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Equity Investments at FVTPL or FVTOCI
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
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. There is no recycling of the amounts from OCI to P&L, even on sale of Investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
a) The rights to receive cash flows from the asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthrough arrangement; and either (i) the Company has transferred substantially all the. risks and rewards of the asset, or (ii) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When the Company has transferred its rights to receive cash-flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure-
- Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
- Financial assets that are debt instruments and are measured as at FVTOCI
- Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables, and
- All lease receivables resulting from transactions within the scope of Ind AS 17
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and Credit risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss (P&L). This amount is reflected in a separate line in the P&L as an impairment gain or loss.
The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contract assets and lease held receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial recognition, Interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are categorised as equity instruments at FVTOCI and financial assets or financial liabilities that are specifically designated at FVTPL. For financial assets, which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
12. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
13. Cash dividend to equity holders
The company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
14. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost includes cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of inventories is measured on First in and First out (FIFO) basis.
Costs of purchased inventory are determined after deducting rebates and discounts.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
15. Property, plant and equipment
Under the previous GAAP (Indian GAAP), Property, plant and equipment (PP&E) were carried in the balance sheet on the basis of at cost of acquisition including incidental costs related to acquisition and installation, net of accumulated depreciation and accumulated impairment losses, if any. The company has elected to regard those values of PP&E as deemed cost as per the guidance under Ind AS 101, First Time Adoption of Indian Accounting Standards.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.
Subsequent cost relating to Property, plant and equipment shall be recognized as an asset if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates property, plant and equipment over their estimated useful lives using written down method except wind mill and leasehold land. The useful lives are at the rates and in the manner provided in Schedule II of the Companies Act, 2013
The depreciation on Wind Mills has been changed on Straight Line Method (SLM) at rates worked out based on the useful life and in the manner prescribed in the Schedule II to the Companies Act, 2013.
Depreciation on additions to/deductions from property, plant & equipment during the year is charged on pro-rata basis from/up to the month in which the asset is available for use/disposed.
Leasehold land are amortised over the lease period.
Advance paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is shown under the head non-financial assets in the balance sheet.
The cost of assets not available for use is disclosed under Capital Work in Progress till the time they are ready for use.
Where the cost of depreciable assets has undergone a change during the year due to increase/decrease in long term liabilities on account of exchange fluctuation, price adjustment, change in duties or similar factors, the unamortized balance of such asset is charged off prospectively over the remaining useful life determined following the applicable accounting policies relating to depreciation/ amortization.
Where it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably, subsequent expenditure on a PPE along-with its unamortized depreciable amount is charged off prospectively over the revised useful life determined by technical assessment.
In circumstance, where a property is abandoned, the cumulative capitalized costs relating to the property are written off in the same period.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement when the asset is derecognized.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end and adjusted prospectively, if appropriate.
The Company follows component approach as envisaged in Schedule II to the Companies Act, 2013. The approach involves identification of components of the asset whose cost is significant to the total cost of the asset and have useful life different from the useful life of the remaining assets and in respect of such identified components, useful life is determined separately from the useful life of the main asset.
Modification or extension to an existing asset, which is of capital nature and which becomes an integral part thereof is depreciated prospectively over the remaining useful life of that asset.
Asset costing less than Rs. 5000/- is fully depreciated in the year of capitalization.
16. Earnings per equity share
In determining basic earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period/year. In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period/year are adjusted for the effect of all dilutive potential equity shares.
17. Share based payments Equity settled transactions
The excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option plan is recognize as deferred stock compensation cost and amortized over the vesting period, on a straight line basis. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense
18. Revenue Recognition
Companyâs revenues arise from trading of power, consultancy and other income. Revenue from sale of energy is recognized based on the rates & terms and conditions mutually agreed with the beneficiaries. Revenue from other income comprises interest from banks, employees, etc., dividend from investments in associates and subsidiary companies, dividend from mutual fund investments, surcharge received from customers for delayed payments, other miscellaneous income, etc.
Trading of Power
Revenue from trading of power is measured at the rates agreed with the beneficiaries and recognized when all the following conditions are satisfied:
i) the company has transferred to the buyer the significant risks and rewards of ownership of the energy;
ii) the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
iii) the amount of revenue can be measured reliably;
iv) it is probable that the economic benefits associated with the transaction will flow to the company; and
v) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rebates allowed to beneficiaries as early payment incentives are deducted from the amount of revenue.
Rendering of Services
Revenue from service is recognized at the fair value of the consideration received or receivable and recognized by reference to the stage of completion of the transaction when all the following conditions are satisfied:
i) the amount of revenue can be measured reliably;
ii) it is probable that the economic benefits associated with the transaction will flow to the entity;
iii) the stage of completion of the transaction can be measured reliably; and
iv) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
If all the above conditions are not met, revenue from service is recognized only to the extent of the expenses recognized that are recoverable.
Surcharge Income and Surcharge Expense
Surcharge Income
The surcharge on late payment/ non payment from customers is recognized when:
i) the amount of surcharge can be measured reliably; and
ii) there is no significant uncertainty that the economic benefits associated with the surcharge transaction will flow to the entity.
Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividends
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend, provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.
Rental income
Rental income arising from operating leases is accounted for on a straight-line basis over the lease terms unless the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost. Rental Income is included in revenue in the statement of profit and loss.
19. Cash flow statement
Cash flow statement is prepared in accordance with the indirect method prescribed in Ind AS 7 âStatement of Cash Flowsâ.
Mar 31, 2016
Note No. 1 Summary of significant accounting policies
1 Basis of preparation of Accounts
The financial statements are prepared under the historical cost convention and in accordance with applicable Accounting Standards in India. The financial statements adhere to the relevant presentational requirements of the Companies Act, 2013.
2 Fixed Assets
i. Fixed Assets are stated at original cost less accumulated depreciation. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses related to acquisition, installation and commissioning. Expenses incurred on tangible/intangible assets are carried forward as capital work in progress at cost till the same are ready for use.
ii. Depreciation is provided on a pro-rata basis from the day the assets are put to use at written down value as per the useful life prescribed in Part C to Schedule II of the Companies Act, 2013 except for assets costing less than Rs. 5,000 each which are fully depreciated in the year of capitalization and in the case of mobile phones, which are depreciated over a period of three years instead of five years life given in Schedule II.
iii. Computer software recognized as intangible asset is amortized on straight line method on pro-rata basis over a period of three years.
iv. Capital expenditure on assets not owned by the Company is reflected as distinct item in Capital work-in-progress till the period of completion and thereafter in the Fixed Assets and is amortized over a period of three years.
v. No amortization is provided for in case of leasehold land on perpetual lease. Other Leasehold land is amortized over the lease period. Leasehold improvements are depreciated over the remaining period of the lease.
3 Inventories
Inventories are valued at lower of the cost or net realizable value. The cost of the inventories is determined on first in first out (FIFO) basis.
4 Revenue
i. Revenue from sale of power is accounted for, based on rates agreed with the beneficiaries, excluding service charges wherever separately indicated in the agreement.
ii. Service charges include transaction fee charged under the contracts of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services rendered in relation to development work of Potential Power Projects is recognized when such fee is assured and determinable under the terms of the respective contract.
iv. The surcharge on late payment/ non-payment from customers is recognized when no significant uncertainty as to measurability or collectability exists.
v. Consultancy income is recognized proportionately with the degree of completion of services.
vi. Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
vii. Dividend is accounted when the right to receive is established.
5 Prepaid and prior-period items
Prepaid and prior-period items up to Rs. 5000/- are accounted to natural heads of accounts.
6 Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due wholly within twelve months after the end of the year in which the employees render the related service are recognized at the amount expected to be paid for it.
ii. Post Employment Benefits Defined contribution plans
Liability in respect of defined contribution plans are accounted for to the extent of contributions paid/payable to the separate entity/ trust/fund.
Defined Benefit plan
a) Liability in respect of defined benefit plans is accounted for on actuarial valuation basis at the period/year end.
b) Actuarial gains and losses are recognized in the statement of profit and loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident fund of employees on deputation with the Company are accounted for on the basis of terms and conditions of deputation of the parent organizations.
7 Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Liability / receivables on account of foreign currency are converted at the exchange rates prevailing as at the end of the year and gains / losses thereon are taken to the statement of profit and loss.
8 Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option plan is recognized as deferred stock compensation cost and amortized over the vesting period, on a straight line basis.
9 Investments
i. Long term investments are carried at cost less provision, if any, for permanent diminution in the value of such investments. Short term investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the period/year in the books to the extent of initial/Mark to Market margin paid/ received. Equity stock futures are carried at cost where they are used as an instrument for hedging and independent open positions of equity stock future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the period/ year in the books to the extent of premium paid. Equity index/stock options are carried at cost where they are used as an instrument for hedging and independent open positions of equity index/stock options are being carried at lower of cost or fair value.
10 Earnings per Share
In determining basic earnings per share, the Company considers the net profit attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period/year. In determining diluted earnings per share, the net profit attributable to equity shareholders and weighted average number of shares outstanding during the period/year are adjusted for the effect of all dilutive potential equity shares.
11 Provisions and Contingencies
A provision is recognized when the Company has a present obligation as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
12 Income Tax
Provision for current tax is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized on unabsorbed depreciation and carry forward of losses based on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
13 Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
14 Use of Estimates
The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, revenues and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
15 Cash and cash equivalents
Cash and cash equivalents comprise cash balances on hand, cash balance with bank and fixed deposits with an original maturity period of three months or less.
c) The Company has only one class of equity shares having a face value of ''10 each. Each shareholder of equity share is entitled to one vote per share.
d) Shareholders holding more than 5% shares of the Company4
The Board of Directors in their meeting held on 18th May, 2016 has proposed a dividend of ''2.50 per equity share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
Mar 31, 2014
1. Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirements of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning. Expenses incurred on
tangible/intangible assets are carried forward as capital work in
progress at cost till the same are ready for use.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. Assets costing upto Rs. 5,000/- are fully depreciated in the
year of capitalization.
iii. Computer software recognized as intangible asset is amortised on
straight line method on pro-rata basis over a period of three years.
iv. Capital expenditure on assets not owned by the Company is refl
ected as distinct item in Capital work-in-progress till the period of
completion and thereafter in the Fixed Assets and is amortised over a
period of three years.
v. No amortization is provided for in case of leasehold land on
perpetual lease. Other Leasehold land are amortised over the lease
period.
3. Inventories
Inventories are valued at lower of the cost or net realizable value.
The cost of the inventories is determined on fi rst in fi rst out
(FIFO) basis.
4. Revenue
i. Revenue from sale of power is accounted for, based on rates agreed
with the benefi ciaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the
contracts of purchase and supply of power. iii. Revenue in the
form of Management and/or Success Fee for services rendered in
relation to development work of Potential Power Projects is
recognised when such fee is assured and determinable under the terms
of the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
v. Consultancy income is recognized proportionately with the degree
of completion of services. vi. Interest is recognized on a time
proportion basis taking into account the amount outstanding and the
rate applicable.
vii. Dividend is accounted when the right to receive is established.
5. Prepaid and prior-period items
Prepaid and prior-period items up to Rs. 5,000/- are accounted to natural
heads of accounts.
6. Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall
due wholly within twelve months after the end of the year in which the
employees render the related service are recognized at the amount
expected to be paid for it.
ii. Post Employment Benefits Defined contribution plans
Liability in respect of defi ned contribution plans are accounted for
to the extent of contributions paid/payable to the separate
entity/trust/fund.
Defined Benefit plan
(a) Liability in respect of defi ned benefit plans is accounted for on
actuarial valuation basis at the period/year end.
(b) Actuarial gains and losses are recognized in the statement of profi
t and loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the Company are accounted for on
the basis of terms and conditions of deputation of the parent
organizations.
7. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to the statement of profit and loss.
8. Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
9. Investments
i. Long term investments are carried at cost less provision, if any,
for permanent diminution in the value of such investments. Short term
investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the period/year
in the books to the extent of initial/Mark to Market margin paid/
received. Equity stock futures are carried at cost where they are used
as an instrument for hedging and independent open positions of equity
stock future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the
period/year in the books to the extent of premium paid. Equity
index/stock options are carried at cost where they are used as an
instrument for hedging and independent open positions of equity
index/stock options are being carried at lower of cost or fair value.
10. Earnings per Share
In determining basic earnings per share, the Company considers the net
profit attributable to equity shareholders. The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the period/year. In determining diluted
earnings per share, the net profit attributable to equity shareholders
and weighted average number of shares outstanding during the
period/year are adjusted for the effect of all dilutive potential
equity shares.
11. Provisions and Contingencies
A provision is recognized when the Company has a present obligation as
a result of a past event, when it is probable that an outfl ow of
resources embodying economic benefits will be required to settle the
obligation and reliable estimate can be made of the amount of the
obligation.Contingent Liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
12. Income Tax
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income-tax
Act, 1961. Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax
assets are recognized on unabsorbed depreciation and carry forward of
losses based on virtual certainty that suffi cient future taxable
income will be available against which such deferred tax assets can be
realized.
13. Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the statement
of profit and loss in the year in which an asset is identifi ed as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
14. Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities. The management
believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.
(b) Reconciliation of number of equity shares outstanding at the
beginning and at the end of the year is as under:
(c) During the year, NIL (Previous year 1,034,750) equity shares of Rs.
10/Â each were issued under the Company''s Employee Stock Option Scheme.
(d) The Company has only one class of equity shares having a face value
of Rs. 10 each. Each shareholder of equity share is entitled to one vote
per share.
The Board of Directors in their meeting held on 24 May, 2014 has
proposed a dividend of Rs. 2 per equity share. The dividend proposed by
the Board of Directors is subject to the approval of the shareholders
in the ensuing Annual General Meeting.
(b) Based on the information available with the Company, there are no
dues as at March 31, 2014 payable to enterprises covered under "Micro
Small and Medium Enterprises Development Act, 2006". As such, no
interest is paid/ payable by the Company in terms of Section 16 of the
Micro, Small and Medium Enterprises Development Act, 2006.
*High Court passed the liquidation orders for Ashmore PTC India
Infrastructure Advisors Private Limited and Ashmore PTC India Energy
Infrastructure Trustee Private Limited on 03.02.2014 and 05.02.2014
respectively
(b) The Company has pledged, in favour of Power Finance Corporation
Limited (PFC) , 77,77,500 Equity Shares of Rs. 10 each at par held by it
in M/s. Krishna Godavari Power Utilities Limited (KGPUL) along with the
promoter of KGPUL to comply with the lending requirements of PFC for
loan taken by KGPUL.
(c) As per Accounting Standard 27 ''Financial reporting of interest in
Joint Ventures'' notifi ed under Companies (Accounting Standards) Rules
2006, the Company''s share of ownership interest, assets, liabilities,
income, expenses, contingent liabilities and capital commitments in the
joint venture companies, incorporated in India, are given below:
(b) Trade receivables are hypothecated to the banks for availing the
non- fund based working capital facilities.
(c) Trade receivables include an amount of Rs. 16.23 Crore due from Tamil
Nadu Electricity Board (TNEB) towards compensation claim. The Company
considers the said amount as good and recoverable even though TNEB has
not accepted the claim of the Company. The matter was referred to the
Madras High Court which has appointed a sole arbitrator, which gave the
order not in favour of the company. The company has fi led the appeal
against the said order at Madras High Court.
The closing stock has been sold by the company during the year on
conversion of power tolling into PPA. Hence shown as Change in
Inventories.
(viii) The fair value of each stock option issued in the year 2009Â10
and 2008Â09 has been estimated using Black Scholes Options Pricing
model after applying the following key assumptions (weighted value):
(c) The disclosures as required by AS-15 (Revised) on Employees Benefi
ts are as under:
(i) The amounts recognized in the balance sheet are as follows:
(ii) Changes in the present value of obligation representing
reconciliation of opening and closing balances thereof are as follows:
(iv) Percentage of each category of plan assets to total fair value of
plan assets as at the end of the year:
(v) The amounts recognized in the statement of profit and loss for the
year are as follows:
*includes amount recoverable from group companies
The Company expects to contribute Rs. 0.25 crore to gratuity, Rs. 0.07
crore to Post- employment medical benefit and Rs. 0.38 crore to leave
encashment in 2014Â15.
(vi) Effect of one percentage point change in the assumed infl ation
rate in case of valuation of benefits under post retirement medical
benefits scheme.
(vii) Economic Assumption:
The principal assumptions are the discount rate and salary increase.
The discount rate is based upon the market yields available on
government bonds at the accounting date with a term that matches that
of the liabilities and the salary increase takes.
(viii) Experience on actuarial gain/ (loss) for benefit obligations
and plan assets:
Note: The estimates of future salary increases, considered in actuarial
valuation, take account of infl ation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
(x) Details of expenses incurred for defi ned contribution plans during
the year:
(b) As per Power purchase agreements entered into with the off takers
of Chukha and Kurichhu power projects (Bhutan), the interest earned on
the term deposits made with commercial banks for the payments received
on behalf of these projects is passed back to them. Accordingly
interest income as well as expense is accounted for in the books of
account.
(c) The Company has taken warehouse and branch offi ce on operating
lease. The disclosures as per AS-19 are given as under:
(i) Rs. 0.08 crore has been debited to the statement of profit and loss
(Previous year Rs. 0.07 crore).
(ii) Details of future lease payments
(a) The company is in the business of power. Consultancy income and
sale/ purchase of coal have not been reported separately as the same
being insignifi cant. As such, there are no separate reportable
segments as per Accounting Standard-17 on Segment Reporting as notifi
ed by the Companies (Accounting Standards) Rules 2006.
(b) Estimated amount of capital commitments:
(c) Details of contingent liabilities:
(i) Claims against the Company not acknowledged as debt:
Mar 31, 2013
1 Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirements of the Companies Act, 1956.
2 Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning. Expenses incurred on
tangible/intangible assets are carried forward as capital work in
progress at cost till the same are ready for use.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. Assets costing upto '' 5,000/- are fully depreciated in the
year of capitalization.
iii. Computer software recognized as intangible asset is amortised on
straight line method on pro-rata basis over a period of three years.
iv. Capital expenditure on assets not owned by the Company is
reflected as distinct item in Capital work-in-progress till the period
of completion and thereafter in the Fixed Assets and is amortised over
a period of three years.
v. No amortization is provided for in case of leasehold land on
perpetual lease. Other Leasehold land are amortised over the lease
period.
3 Inventories
Inventories are valued at lower of the cost or net realizable value.
The cost of the inventories is determined on first in first out (FIFO)
basis.
4 Revenue
i. Revenue from sale of power is accounted for, based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the
contracts of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of Potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
v. Consultancy income is recognized proportionately with the degree of
completion of services.
vi. Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable
vii. Dividend is accounted when the right to receive is established
5 Prepaid and prior-period items
Prepaid and prior-period items up to '' 5000/- are accounted to natural
heads of accounts.
6 Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due
wholly within twelve months after the end of the year in which the
employees render the related service are recognized at the amount
expected to be paid for it.
ii. Post Employment Benefits Defined contribution plans
Liability in respect of defined contribution plans are accounted for to
the extent of contributions paid/payable to the separate
entity/trust/fund.
Defined Benefit plan
(a) Liability in respect of defined benefit plans is accounted for on
actuarial valuation basis at the period/year end.
(b) Actuarial gains and losses are recognized in the statement of
profit and loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the Company are accounted for on
the basis of terms and conditions of deputation of the parent
organizations.
7 Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to the statement of profit and loss.
8 Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
9 Investments
i. Long term investments are carried at cost less provision, if any,
for permanent diminution in the value of such investments. Short term
investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the period/year
in the books to the extent of initial/Mark to Market margin
paid/received. Equity stock futures are carried at cost where they are
used as an instrument for hedging and independent open positions of
equity stock future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the
period/year in the books to the extent of premium paid. Equity
index/stock options are carried at cost where they are used as an
instrument for hedging and independent open positions of equity
index/stock options are being carried at lower of cost or fair value.
10 Earnings per Share
In determining basic earnings per share, the Company considers the net
profit attributable to equity shareholders. The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the period/year. In determining diluted
earnings per share, the net profit attributable to equity shareholders
and weighted average number of shares outstanding during the
period/year are adjusted for the effect of all dilutive potential
equity shares.
11 Provisions and Contingencies
A provision is recognized when the Company has a present obligation as
a result of a past event, when it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and reliable estimate can be made of the amount of the
obligation.Contingent Liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
12 Income Tax
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income-tax
Act, 1961. Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax
assets are recognized on unabsorbed depreciation and carry forward of
losses based on virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets can be
realized
13 Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the statement
of profit and loss in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
14 Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities. The management
believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.
Mar 31, 2012
1. Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirements of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning. Expenses incurred on
tangible/intangible assets are carried forward as capital work in
progress at cost till the same are ready for use.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. Assets costing upto Rs. 5,000/- are fully depreciated in the
year of capitalization.
iii. Computer software recognized as intangible asset is amortised on
straight line method on pro-rata basis over a period of three years.
iv. Capital expenditure on assets not owned by the Company is reflected
as distinct item in Capital work-in-progress till the period of
completion and thereafter in the Fixed Assets and is amortised over a
period of three years.
v. No amortization is provided for in case of leasehold land on
perpetual lease. Other Leasehold land are amortised over the lease
period.
3. Inventories
Inventories are valued at lower of the cost or net realizable value.
The cost of the inventories is determined on first in first out (FIFO)
basis.
4. Revenue
i. Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the contracts
of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of Potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
v. Consultancy income is recognized proportionately with the degree of
completion of services.
vi. Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
vii. Dividend is accounted when the right to receive is established.
5. Prepaid and prior-period items
Prepaid and prior-period items up to Rs. 5000/- are accounted to
natural heads of accounts.
6. Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due
wholly within twelve months after the end of the year in which the
employees render the related service are recognized at the amount
expected to be paid for it.
ii. Post Employment Benefits
Defined contribution plans
Liability in respect of defined contribution plans are accounted for to
the extent of contributions paid/payable to the separate entity/trust/
fund.
Defined Benefit plan
(a) Liability in respect of defined benefit plans is accounted for on
actuarial valuation basis at the period/year end.
(b) Actuarial gains and losses are recognized in the statement of
profit and loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the Company are accounted for on
the basis of terms and conditions of deputation of the parent
organizations.
7. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to the statement of profit and loss.
8. Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
9. Investments
i. Long term investments are carried at cost less provision, if any,
for permanent diminution in the value of such investments. Short term
investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the period/year
in the books to the extent of initial/Mark to Market margin
paid/received. Equity stock futures are carried at cost where they are
used as an instrument for hedging and independent open positions of
equity stock future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the
period/ year in the books to the extent of premium paid. Equity
index/stock options are carried at cost where they are used as an
instrument for hedging and independent open positions of equity
index/stock options are being carried at lower of cost or fair value.
10. Earnings per Share
In determining basic earnings per share, the Company considers the net
profit attributable to equity shareholders. The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the period/year. In determining diluted
earnings per share, the net profit attributable to equity shareholders
and weighted average number of shares outstanding during the
period/year are adjusted for the effect of all dilutive potential
equity shares.
11. Provisions and Contingencies
A provision is recognized when the Company has a present obligation as
a result of a past event, when it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and reliable estimate can be made of the amount of the
obligation.Contingent Liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
12. Income Tax
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income-tax
Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognized on unabsorbed depreciation and carry forward of losses based
on virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized
13. Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the statement
of profit and loss in the year in which an asset is identified as
impaired. The impairment loss recognized in prior accounting period is
reversed if there has been a change in the estimate of recoverable
amount.
14. Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities. The management
believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.
Mar 31, 2011
1 Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirement of the Companies Act, 1956.
2 Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning. Expenses incurred on
tangible/intangible assets are carried forward as capital work in
progress at cost till the same are ready for use.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. Assets costing upto Rs. 5,000/- are fully depreciated in the
year of capitalization.
iii. Computer software recognized as intangible asset is amortised on
straight line method on pro-rata basis over a year of three years.
iv. Capital expenditure on assets not owned by the Company is reflected
as distinct item in Capital work-in-progress till the period of
completion and thereafter in the Fixed Assets and is amortised over a
period of 3 years.
v. No amortization is provided for in case of leasehold land on
perpetual lease. Other Leasehold land are amortised over the lease
period.
3 Revenue
i. Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the contracts
of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of Potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
v. Consultancy income is recognized proportionately with the degree of
completion of services.
vi. Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable
vii. Dividend is accounted when the right to receive is established
4 Prepaid and prior-period items
Prepaid and prior-period items up to Rs. 5000/- are accounted to
natural heads of accounts.
5 Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due
wholly within twelve months after the end of the year in which the
employees render the related service are recognized at the amount
expected to be paid for it.
ii. Post Employment Benefits
Defined contribution plans
Liability in respect of defined contribution plans are accounted for to
the extent of contributions paid/payable to the separate
entity/trust/fund
Defined Benefit plan
(a) Liability in respect of defined benefit plans is accounted for on
actuarial valuation basis at the period/year end.
(b) Actuarial gains and losses are recognized in the statement of
profit & loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the company are accounted for on
the basis of terms and conditions of deputation of the parent
organizations
6. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to profit and loss account.
7 Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
8 Investments
i. Long term investments are carried at cost less provision, if any,
for permanent diminution in the value of such investments. Short term
investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the year/year in
the books to the extent of initial/Mark to Market margin paid/received.
Equity stock futures are carried at cost where they are used as an
instrument for hedging and independent open positions of equity stock
future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the
year/year in the books to the extent of premium paid. Equity
index/stock options are carried at cost where they are used as an
instrument for hedging and independent open positions of equity
index/stock options are being carried at lower of cost or fair value.
9 Earnings per Share
In determining basic earnings per share, the company considers the net
profit attributable to equity shareholders. The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the period. In determining diluted earnings
per share, the net profit attributable to equity shareholders and
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
10 Provisions and Contingencies
A provision is recognized when the company has a present obligation as
a result of a past event, when it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and reliable estimate can be made of the amount of the
obligation.Contingent Liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
11 Income Tax
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income-tax
Act, 1961
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognized on unabsorbed depreciation and carry forward of losses based
on virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized
12 Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Account in the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
13 Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities. The management
believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.
Mar 31, 2010
1. Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirement of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning. Expenses incurred on
tangible/intangible assets are carried forward as capital work in
progress at cost till the same are ready for use.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. Assets costing upto Rs. 5,000/- are fully depreciated in the
year of capitalization.
iii. Computer software recognized as intangible asset is amortised on
straight line method on pro-rata basis over a year of three years.
iv. Capital expenditure on assets not owned by the Company is reflected
as distinct item in Capital work-in-progress till the period of
completion and thereafter in the Fixed Assets and is amortised over a
period of 3 years.
v. No amortization is provided for in case of leasehold land on
perpetual lease. Other Leasehold land are amortised over the lease
period.
3. Revenue
i. Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the contracts
of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of Potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
v. Consultancy income is recognized proportionately with the degree of
completion of services.
vi. Interest is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable
vii. Dividend is accounted when the right to receive is established
4. Prepaid and prior-period items
Prepaid and prior-period items up to Rs. 5000/- are accounted to
natural heads of accounts.
5. Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due
wholly within twelve months after the end of the year in which the
employees render the related service are recognized at the amount
expected to be paid for it.
ii. Post Employment Benefits
Defined contribution plans
Liability in respect of defined contribution plans are accounted for to
the extent of contributions paid/payable to the separate
entity/trust/fund.
Defined Benefit plan
(a) Liability in respect of defined benefit plans is accounted for on
actuarial valuation basis at the period/year end.
(b) Actuarial gains and losses are recognized in the statement of
profit & loss in the year of its occurrence.
iii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the company are accounted for on
the
basis of terms and conditions of deputation of the parent
organizations.
6. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to profit and loss account.
7. Employee Stock option based compensation
The excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to
employees under the employee stock option plan is recognize as deferred
stock compensation cost and amortized over the vesting period, on a
straight line basis.
8. Investments
i. Long term investments are carried at cost less provision, if any,
for permanent diminution in the value of such investments. Short term
investments are carried at lower of cost or fair value.
ii. Equity stock futures are recognized at the end of the year/year in
the books to the extent of initial/Mark to Market margin paid/received.
Equity stock futures are carried at cost where they are used as an
instrument for hedging and independent open positions of equity stock
future are being carried at lower of cost or fair value.
iii. Equity index/stock options are recognized at the end of the
year/year in the books to the extent of premium paid. Equity
index/stock options are carried at cost where they are used as an
instrument for hedging and independent open positions of equity
index/stock options are being carried at lower of cost or fair value.
9. Earnings per Share
In determining basic earnings per share, the company considers the net
profit attributable to equity shareholders. The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the period. In determining diluted earnings
per share, the net profit attributable to equity shareholders and
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
10. Provisions and Contingencies
A provision is recognized when the company has a present obligation as
a result of a past event, when it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and reliable estimate can be made of the amount of the
obligation.Contingent Liabilities are not recognized but are disclosed
in the notes. Contingent Assets are neither recognized nor disclosed in
the financial statements.
11. Income Tax
Provision for current tax is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income tax
Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognized on unabsorbed depreciation and carry forward of losses based
on virtual certainty that sufficeient future taxable income will be
available against which such deferred tax assets can be realized
12. Impairment of Assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Account in the year in which an asset is identified as impaired.
The impairment loss recognized in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
13. Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities, revenues and expenses and
disclosures relating to the contingent liabilities. The management
believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Future results could differ from
these estimates. Any revision to accounting estimates is recognized
prospectively in the current and future periods.
Mar 31, 2003
1. Basis of preparation of Accounts
The financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirement of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses related to acquisition,
installation and commissioning.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. In respect of the assets costing Rs. 5,000 or below,
depreciation is provided at 100%.
3. Revenue
i Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii Service charges include transaction fee charged under the contracts
of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainity of its
realization and is, therefore, accounted for on receipt basis.
4. Expenditure
i Developmental expenditure in relation to potential Power Projects is
carried forward as Deferred Revenue Expenditure to be written off
equally in five years beginning with the financial year 2003-04 when it
is expected that significant developmental work would get concluded and
the preparatory stage would end. Such expenditure comprises of payments
to consultants, legal expenses, salaries and allowances to employees
engaged in the developmental activities, other direct expenses and
allocation of common expenses in proportion to the employee cost and is
net of incidental revenue arising from sale of tender documents,
processing fee, etc.
ii Pre-acquisition Development Expenditure i.e. payment towards
developmental expenditure on potential Power Projects (net of revenue
earned thereagainst), in respect of the period prior to take over of
the developmental work by the company is treated as Deferred Revenue
Expenditure to be written off equally in five years from the year of
take over.
iii Payments to consultants, other than those related to potential
Power Projects, where the aggregate value of assignment exceeds Rs.
10,00,000 and benefit of which is expected to accrue over a number of
years, are treated as Deferred Revenue Expenditure to be written off
over a period of 5 years.
iv Preliminary Expenses are amortized over a period of 5 years.
v Prepaid and prior-period items up to Rs. 5000 are accounted to
natural heads of accounts.
vi The expenditure, the benefits of which shall accrue in future over a
number of years, may be treated as Deferred Revenue Expenditure at
the discretion of board and shall be written off equally in five years
beginning with the year of its incidence.
5. Retirement Benefits
i Liability towards retirement benefits to employees of the company in
respect of gratuity and leave encashment is accounted for on actuarial
valuation basis.
ii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the company are accounted for on
the basis of terms and conditions of deputation of the parent
organisations.
6. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains/losses thereon are taken
to the Profit & Loss Account except in case of liabilities relating to
fixed assets, which are adjusted to the cost of acquisition of the
asset.
7. Investments
Long term investments are-carried at cost less provision, if any, for
permanent diminution in the value of such investments. Current
investments are carried at lower of cost and fair value.
Mar 31, 2002
1. Basis of preparation of Accounts
These financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirement of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties and
taxes and incidental expenses related to acquisition, installation and
commissioning.
ii. Depreciation is provided on Written Down Value method as per the
rates and in the manner prescribed in the Schedule XIV to the Companies
Act, 1956. In respect of the assets costing Rs. 5,000/- or below,
depreciation is provided at 100%.
3. Revenue
i. Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the
contracts of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
iv. The surcharge on late/non-payment of dues by sundry debtors for
sale of energy is not treated as accrued due to uncertainty of its
realization and is, therefore, accounted for on receipt basis.
4. Expenditure
i. Developmental expenditure in relation to potential Power Projects is
carried forward as Deferred Revenue Expenditure to be written off
equally in five years beginning with the financial year 2003-04 when it
is expected that significant developmental work would get concluded and
the Preparatory Stage would end. Such expenditure comprises of payments
to consultants, legal expenses, salaries and allowances to employees
engaged in the developmental activities, other direct expenses and
allocation of common expenses in proportion to the employee cost and is
net of incidental revenue arising from sale of tender documents,
processing fee, etc.
ii. Pre-acquisition Development Expenditure i.e. payment towards
developmental expenditure on potential Power Projects (net of revenue
earned thereagainst), in respect of the period prior to take over of
the developmental work by the Corporation is treated as ÃDeferred
Revenue Expenditure to be written off equally in five years from the
year of take over.
iii. Payments to consultants, other than those related to potential
Power Projects, where the aggregate value of assignment exceeds
Rs.10,00,000 and benefit of which is expected to accrue over a number
of years, are treated as Deferred Revenue Expenditure to be written off
over a period of 5 years .
iv. Preliminary Expenses are amortized over a period of 5 years.
v. Prepaid and prior-period items up to Rs. 5000/- are accounted to
natural heads of accounts.
5. Retirement Benefits
i. Liability towards retirement benefits to employees of the
Corporation in respect of gratuity and leave encashment is accounted
for on actuarial valuation basis.
ii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the Corporation are accounted for
on the basis of terms and conditions of deputation of the parent
organisations.
6. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to the Profit & Loss Account, except in case of liabilities
relating to fixed assets, which are adjusted to the cost of acquisition
of the asset.
Mar 31, 2001
1. Basis of preparation of Accounts
These financial statements are prepared under the historical cost
convention and in accordance with applicable Accounting Standards in
India. The financial statements adhere to the relevant presentational
requirement of the Companies Act, 1956.
2. Fixed Assets
i. Fixed Assets are stated at original cost less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties and
taxes and incidental expenses related to acquisition, installation and
commissioning.
ii. Depreciation is provided on Written Down Value method as per the
rates and the manner prescribed in the Schedule XIV to the Companies
Act, 1956. In respect of the assets costing Rs. 5,000/- or below,
depreciation is provided at 100%.
3. Revenue
i. Revenue from sale of power is accounted for based on rates agreed
with the beneficiaries, excluding service charges wherever separately
indicated in the agreement.
ii. Service charges include transaction fee charged under the contracts
of purchase and supply of power.
iii. Revenue in the form of Management and/or Success Fee for services
rendered in relation to development work of potential Power Projects is
recognised when such fee is assured and determinable under the terms of
the respective contract.
4. Expenditure
i. Developmental Expenditure in relation to potential Power Projects is
carried forward as Deferred Revenue Expenditure to be written off
equally in five years beginning with the financial year 2003- 04 when
it is expected that significant developmental work would get concluded
and the Preparatory Stage would end. Such expenditure comprises of
payments to consultants, legal expenses, salaries and allowances to
employees engaged in the developmental activities, other direct
expenses and allocation of common expenses in proportion to the
employee cost and is net of incidental revenue arising from sale of
tender documents, processing fee, etc.
ii. Pre-acquisition Development Expenditure i.e. payment towards
developmental expenditure on potential Power Projects (net of revenue
earned thereagainst) in respect of the period prior to take over of the
developmental work by the Corporation is treated as ÃDeferred Revenue
Expenditure to be written off equally in five years from the year of
take over.
iii. Payments to consultants, other than those related to potential
Power Projects, where the aggregate value of assignment exceeds
Rs.10,00,000 and benefit of which is expected to accrue over a number
of years are treated as Deferred Revenue Expenditure to be written off
over a period of 5 years .
iv. Preliminary Expenses are amortized over a period of 5 years.
v. Prepaid and prior-period items up to Rs. 5000/- are accounted to
natural heads of accounts.
5. Retirement Benefits
i. Liability towards retirement benefits to employees of the
Corporation in respect of gratuity and leave encashment is accounted
for on actuarial valuation basis.
ii. Liability in respect of gratuity, leave encashment and provident
fund of employees on deputation with the Corporation are accounted for
on the basis of charges raised by the parent organisations.
6. Foreign Exchange
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Liability / receivables on
account of foreign currency are converted at the exchange rates
prevailing as at the end of the year and gains / losses thereon are
taken to the Profit & Loss Account, except in case of liabilities
relating to fixed assets, which are adjusted to the cost of acquisition
of the asset.
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