Accounting Policies of Reliance Infrastructure Ltd. Company
Mar 31, 2023
1. Corporate Information:
Reliance Infrastructure Limited ("Rlnfra", "the Company") is one of the largest infrastructure company, developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors within the infrastructure space such as Power, Roads, Airport, Metro Rail and Defence. RInfra is having presence across the value chain of power business and also provides Engineering and Construction (E&C) services for various infrastructure projects.
The Company is a public limited Company and its equity and debts are listed on two recognised stock exchanges in India i.e. BSE and NSE. The Company''s Global Depository Receipts, representing Equity Shares, are also listed on London Stock Exchange. The Company is incorporated and domiciled in India under the provisions of the Indian Companies Act, 1913. The registered office of the Company is situated at Reliance Centre, Ground Floor, 19, Walchand Hirachand Marg, Ballard Estate , Mumbai - 400 001.
These standalone financial statements of the Company for the year ended March 31, 2023 were authorised for issue by the board of directors on May 30, 2023. Pursuant to the provisions of section 130 of the Act, the Central Government, Income tax authorities, Securities and Exchange Board of India, other statutory regulatory body and under section 131 of the Act, the board of directors of the Company have powers to amend / re-open the standalone financial statements approved by the board / adopted by the members of the Company.
2. Significant Accounting Policies:
(a) Basis of preparation, measurement and significant accounting policies:
(i) Compliance with Indian Accounting Standard (Ind AS)
The standalone financial statements of the Company have been prepared and comply in all material aspects with Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) as amended time to time and notified under Section 133 of the Companies Act, 2013 (the Act) read with relevant rules and other accounting principles. The policies set out below have been consistently applied during the year presented.
(ii) Basis of Preparation
The standalone financial statements are presented in ''Indian Rupees'', which is also the Company''s functional and presentation currency and all amounts, are rounded to the nearest Crore, with two decimals, unless otherwise stated.
The standalone financial statements have been prepared in accordance with the requirements of the Schedule III to the Act, applicable Ind AS, other applicable pronouncements and regulations.
(iii) Basis of Measurement
The standalone financial statements have been prepared on a historical cost convention on accrual basis, except for the following:
⢠certain financial assets and liabilities that are measured at fair value;
⢠defined benefit plans - planned assets measured at fair value; and
⢠assets held for sale - measured at fair value less cost to sell or carrying value whichever is lower
(b) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
The board of directors of RInfra has appointed the Chief Executive Officer (''CEO'') to assess the financial performance and position of the Company, and making strategic decisions. The CEO has been identified as being the Chief Operating Decision Maker for corporate planning.
(c) Current versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Expected to be realised 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
⢠Held primarily for the purpose of trading
AH other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠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.
⢠Held primarily for the purpose of trading All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
(d) Revenue Recognition
The Company applies Ind AS 115, ''Revenue from contracts within customer'' using cumulative catch-up transition method. The Company recognize revenue from contracts with customers when it satisfies a performance obligation by transferring promised goods or service to a customer. The revenue is recognised to the extent of transaction price allocated to the performance obligation satisfied.
Further, specific criteria for revenue recognition followed for different businesses are as under-
(i) Engineering and Construction Business (E&C)
In case of Engineering and Construction Business performance obligations are satisfied over a period of time and contracts revenue is recognised over a period of time by measuring progress towards complete satisfaction of the performance obligation at the reporting date. The progress is measured based on the proportion of contract costs incurred for work performed to date, to the estimated total contract costs attributable to the performance obligation, using the input method.
Contract cost includes costs that relate directly to the specific contract and allocated costs that are attributable to the performance obligation. Cost that cannot be attributed to the contract activity such as general administration costs are expensed as incurred and classified as other operating expenses.
The Company account for a contract modification (change in the scope or price (or both)) when that is approved by the parties to the contract. In case of modification of contracts a cumulative adjustment is accounted for if changes of transaction price for existing obligation.
Contract assets are recognised when there is excess of revenue earned over billing on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.
Unearned and deferred revenue ("contract liability") is recognised when there is billing in excess of revenues.
The billing schedule agreed with customer include periodic performance based payments and/or milestone based progress payments.
Revenue from Sale of Power: Revenue from sale of power is accounted for in accordance with tariff provided in Power Purchase Agreement (PPA) read with the regulations of Maharashtra Electricity Regulatory Commission (MERC) and no significant uncertainty as to the measurability or collectability exist.
⢠Insurance and other claims are recognized as revenue on certainty of receipt on prudent basis.
⢠Income from rentals and others is recognized in accordance with terms of the contracts with customers based on the period for which the facilities have been used. Rental income arising from operating lease is accounted on a straight line basis over the lease terms.
⢠Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
⢠Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established.
(e) Foreign Currency Transactions Functional and Presentation Currency
Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency'').
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss except in case of certain long term foreign currency monetary items where the treatment is as under:
⢠Non monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the dates of the transaction.
⢠Foreign exchange gains and losses are presented in other expense/income in the standalone Statement of Profit and Loss on a net basis.
(f) Financial Instruments
All financial assets and liabilities are recognised at fair values on initial recognition, except for trade receivables which are initially measured at transaction price. The Company recognises financial assets and liabilities when it becomes a party to the contractual provisions of the instrument.
(I) Financial Assets(i) Classification
The Company classifies its financial assets in the following measurement categories:
⢠those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
⢠those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
(a) Initial
Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction cost directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
(b) Subsequent
A. Debt instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
⢠Fair Value through Other Comprehensive Income (FVOCI)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in the Statement of Profit and Loss. Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair Value through Profit or Loss (FVTPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in the Statement of Profit and Loss and presented net in the Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is included in other income.
B. Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other expenses/income in the Standalone Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Investments in Subsidiaries, Associates and Joint-Ventures
The Company has accounted for its equity instruments in Subsidiaries, Associates and Joint-Ventures at cost except where Investments are classified as assets held for sale accounted in accordance with Ind AS 105
When, the investee entity ceases to be a subsidiary, associate or Joint-Venture of the Company, the said investment is carried at fair value in accordance with Ind AS 109 "Financial Instruments".
Ind AS 101"First-time Adoption of Indian Accounting Standards" permits a first time adopter to measure its each investment in subsidiaries, joint ventures or associates, at the date of transition, at cost determined in accordance with Ind AS 27 "Separate Financial Statements" or deemed cost. The deemed cost of such investment can be it''s fair value at date of transition to Ind AS of the Company, or Previous GAAP carrying amount at that date. The Company had elected to measure its investment in Reliance Power Limited, associate of the Company, which will be regarded at deemed cost at its fair value on transition date. The rest of the investments in subsidiaries, joint ventures and associates were carried at their Previous GAAP carrying values as its deemed cost on the transition date.
(iii) Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note No 46 details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables, the Company measures the expected credit loss associated with its trade receivables applying simplified approach based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
(iv) De recognition of Financial Assets
A financial asset is derecognised only when:
⢠Right to receive cash flow from assets have expired or
⢠The Company has transferred the rights to receive cash flows from the financial asset or
⢠It retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement.
Where the entity has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
(II) Financial LiabilitiesInitial Recognition and Measurement
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 Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
Financial liabilities at amortized cost: After initial measurement, such financial liabilities 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 costs in the Statement of Profit and Loss.
(a) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the period of the borrowings using the EIR method.
(b) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(c) Financial Guarantee Obligations
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of subsidiaries, joint ventures or associates are provided for no compensation, the fair values as on the date of transition are accounted for as contributions and recognised as part of the cost of the equity investment.
A financial liability is derecognized 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 recognized in the Statement of Profit and Loss.
(g) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
¦ In the principal market for the asset or liability, or
¦ In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 -Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s Management determines the policies and procedures for both recurring and non-recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Disclosures for valuation methods, significant estimates and assumptions of Financial Instruments (including those carried at amortised cost) (Refer Note No 3) and Quantitative disclosures of fair value measurement hierarchy (Refer Note No 46).
Derivatives including forward contracts are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The Company does not designate their derivatives as hedges and such contracts are accounted for at fair value through profit or loss and are included in the Statement of Profit and Loss.
In respect of derivative transactions, gains / losses are recognised in the Statement of Profit and Loss on settlement.
On a reporting date, open derivative contracts are revalued at fair values and resulting gains / losses are recognised in the Statement of Profit and Loss
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a nonfinancial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
Derivatives embedded in a host contract that is a financial asset within the scope of Ind AS 109 "Financial Instruments" are not separated. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated.
(i) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(j) Property, Plant and Equipment
Property, Plant and Equipment assets are carried at cost net of tax / duty credit availed less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Capital work in progress (CWIP) includes cost of property, plant and equipment under installation / under development, as at balance sheet date. All project related expenditure viz. civil works, machinery under erection, construction and erection materials, preoperative expenditure incidental / attributable to the construction of projects, borrowing cost incurred prior to the date of commercial operations and trial run expenditure are shown under CWIP. These expenses are net of recoveries and income (net of tax) from surplus funds arising out of project specific borrowings.
Property, Plant and Equipment are derecognised from the standalone financial statements, either on disposal or when retired from active use.
Gains and losses on disposal or retirement of Property, Plant and Equipment are determined by comparing proceeds with carrying amount.
These are recognized in the Statement of Profit and Loss.
Depreciation methods, estimated useful lives and residual value Power Business:
Property, Plant and Equipment relating to license business and other power business are depreciated under the straight line method as per the rates and useful life prescribed as per the Electricity Regulations, as referred to in Part "B" of Schedule II to the Act. Depreciation on amount of fair valuation for assets carried at fair value on date of transition is charged over the balance residual life of the assets considering the life prescribed as per the Electricity Regulation. Once the individual asset is depreciated to the extent of seventy (70) percent, remaining depreciable value as on March 31 of the year closing shall be spread over the balance useful life of the asset, as provided in the Electricity Regulations. The residual values are not more than 10% of the cost of the assets.
Engineering and Construction Business
Property, Plant and Equipment of E&C Business are depreciated under the reducing balance method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act.
Property, Plant and Equipment of other activities have been depreciated under the straight line method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act.
(k) Investment Property
Investment property comprise portion of office building that are held for long term yield and / or capital appreciation. Investment property is initially recognised at cost. Subsequently investment property comprising of building is carried at cost less accumulated depreciation and accumulated impairment losses.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in Statement of Profit and Loss as incurred.
Depreciation on Investment Property is depreciated under the straight line method as per the rates and the useful life prescribed as per Schedule II of the Companies Act.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on periodical basis performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of Profit and Loss.
(l) Intangible Assets
Intangible assets are stated at cost of acquisition net of tax/duty credits availed, if any, less accumulated amortisation / depletion/impairment. Cost includes expenditure directly attributable to the acquisition of asset.
Softwares are amortised over a period of 3 years.
Intangible Assets are derecognised from the standalone financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Intangible Assets are determined by comparing proceeds with carrying amount. These are recognized in the standalone Statement of Profit and Loss.
Inventories are stated at lower of cost and net realisable value. In case of fuel, stores and spares "cost" means weighted average cost. Unserviceable / damaged stores and spares are identified and written down based on technical evaluation.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(n) Allocation of Expenses
Common overheads are absorbed by various jobs in proportion to the prime cost of each job.
(o) Employee Benefits
(i) Short-term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as short term employee benefit obligations in the balance sheet.
(ii) Post-employment Obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity and
(b) defined contribution plans such as provident fund, superannuation fund etc.
(a) Gratuity Obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss. Remeasurement of gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost. The Company contributes to a trust set up by the Company which further contributes to policies taken from Insurance Regulatory and Development Authority (IRDA) approved insurance companies.
(b) Provident Fund
The benefit involving employee established provident funds, which require interest shortfall to be recompensated are to be considered as defined benefit plans. As per the Audited Accounts of Provident Fund Trust maintained by the Company, the shortfall arising in meeting the stipulated interest liability, if any, gets duly provided for.
Defined Contribution plans
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Superannuation plan, a defined contribution scheme is administered by IRDA approved Insurance Companies.
(iii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(p) Treasury Shares
The Company has created a Reliance Infrastructure ESOS Trust (ESOS Trust) for providing share-based payment to its employees. The Company uses ESOS Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOS Trust buys shares of the company from the market, for giving shares to employees.
The Company treats ESOS Trust as its extension and shares held by ESOS Trust are treated as treasury shares.
Reliance Infrastructure ESOS Trust has in substance acted as an agent and the Company as a sponsor retains the majority of the risks rewards relating to funding arrangement. Accordingly, the Company has recognised issue of shares to the Trust as the issue of treasury shares and deducted the total cost of such shares from a separate category of equity (Treasury Shares) by consolidating Trust into standalone financial statements of the Company.
(q) Borrowing Costs
Borrowing cost includes interest, amortisation of ancillary cost incurred in connection with the arrangement of borrowings and the exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
(r) Income Taxes
Income tax expense for the year comprises of current tax and deferred tax. Income tax is recognised in the Standalone Statement of Profit and Loss except to the extent that it relates to items recognised in ''Other Comprehensive Income'' or directly in equity, in which case the tax is recognised in ''Other Comprehensive Income'' or directly in equity, respectively.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the Balance Sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and associates and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
(s) Provisions
Provisions for legal claims/disputed matters and other matters are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as finance cost.
(t) Contingent Liabilities and Contingent Assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is probable that an outflow of resources will not be required to settle the obligation. However, if the possibility of outflow of resources, arising out of present obligation, is remote, the same is not disclosed as contingent liability.
A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the notes to standalone financial statements. A Contingent asset is not recognized in standalone financial statements, however, the same is disclosed where an inflow of economic benefit is probable.
(u) Impairment of Non-financial Assets
Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite-life intangibles are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets is considered as a cash generating unit. Goodwill acquired on a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognizing the impairment loss as an expense in the Statement of Profit and Loss.
The impairment loss is allocated first to reduce the carrying amount of goodwill (if any) allocated to the cash generating unit and then to the other assets on pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s fair value less cost of disposal and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life.
Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. An impairment loss recognized for goodwill is not reversed in subsequent periods.
(v) Cash and Cash Equivalents
Cash and cash equivalents in the Balance Sheet comprise of cash on hand, demand deposits with Banks, other shortterm, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(w) Statement of Cash flow
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(x) Contributed Equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(y) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
(z) Earnings per Share (EPS)
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Both Basic earnings per share and Diluted earnings per share have been calculated with and without considering exceptional items.
The Company, at the inception of a contract, assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee recognises a right-of-use ("ROU") asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. Also, the Company has elected not to recognise right-of-use of assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight line basis over the shorter of the lease term and useful life of the underlying asset. The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured, with a corresponding adjustment to the ROU asset, upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. Lease liabilities and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
(bb) Non-current assets (or disposal group) held for sale and discontinued operations
Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale.
The results of discontinued operations are presented separately in the Statement of Profit and Loss.
(cc) Interest in Joint Operations
The Company has joint operations within its Engineering and Construction segment and participates in several unincorporated joint operations which involve the joint control of assets used in Engineering and Construction activities. Accordingly, assets and liabilities as well as income and expenditure are accounted on the basis of available information on a line-by-line basis with similar items in the standalone financial statements, according to the participating interest of the Company.
(dd) Business Combinations
Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies.
(ee) Standards issued but not effective
On March 31, 2023, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023. This notification has resulted into amendments in the following existing accounting standards which are applicable to company from April 1, 2023.
i) Ind AS 101 - First-time Adoption of Indian Accounting Standards
ii) Ind AS 102 - Share-based Payment
iii) Ind AS 103 - Business Combinations
iv) Ind AS 107 - Financial Instruments Disclosures
v) Ind AS 109 - Financial Instruments
vi) Ind AS 115 - Revenue from Contracts with Customers
vii) Ind AS 1 - Presentation of Financial Statements
viii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
ix) Ind AS 12 - Income Taxes
x) Ind AS 34 - Interim Financial Reporting
Applications of above standards are not expected to have any significant impact on the company''s financial statements.
3. Critical estimates and judgements
The presentation of standalone financial statements under Ind AS requires management to take decisions and make estimates and assumptions that may impact the value of revenues, costs, assets and liabilities and the related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
⢠Estimation of deferred tax assets recoverable
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the same can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
⢠Estimated fair value of unlisted securities
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. Refer Note No. 46 on fair value measurements where the assumptions and methods to perform the same are stated.
⢠Estimation of defined benefit obligation
The cost of the defined benefit gratuity plan and other post-employment employee benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates.
Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
Mar 31, 2022
1. Corporate Information: Reliance Infrastructure Limited ("Rlnfra", "the Company") is one of the largest infrastructure company, developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors within the infrastructure space such as Power, Roads, Airport, Metro Rail and Defence. RInfra is having presence across the value chain of power business and also provides Engineering and Construction (E&C) services for various infrastructure projects. The Company is a public limited Company and its equity and debts are listed on two recognised stock exchanges in India i.e BSE and NSE. The Company''s Global Depository Receipts, representing Equity Shares, are also listed on London Stock Exchange. The Company is incorporated and domiciled in India under the provisions of the Indian Companies Act, 1913. The registered office of the Company is situated at Reliance Centre, Ground Floor, 19, Walchand Hirachand Marg, Ballard Estate , Mumbai - 400 001. These standalone financial statements of the Company for the year ended March 31, 2022 were authorised for issue by the board of directors on May 13, 2022. Pursuant to the provisions of Section 130 of the Act, the Central Government, Income tax authorities, Securities and Exchange Board of India, other statutory regulatory body and under section 131 of the Act, the board of directors of the Company have powers to amend / re-open the standalone financial statements approved by the board / adopted by the members of the Company. 2. Significant Accounting Policies: (a) Basis of preparation, measurement and significant accounting policies: (i) Compliance with Indian Accounting Standard (Ind AS) The standalone financial statements of the Company have been prepared and comply in all material aspects with Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) as amended time to time and notified under Section 133 of the Companies Act, 2013 (the Act) read with relevant rules and other accounting principles. The policies set out below have been consistently applied during the years presented. (ii) Basis of Preparation The standalone financial statements are presented in ''Indian Rupees'', which is also the Company''s functional and presentation currency and all amounts, are rounded to the nearest crore, with two decimals, unless otherwise stated. The standalone financial statements have been prepared in accordance with the requirements of the Schedule III to the Act, applicable Ind AS, other applicable pronouncements and regulations. (iii) Basis of Measurement The standalone financial statements have been prepared on a historical cost convention on accrual basis, except for the following: ⢠certain financial assets and liabilities that are measured at fair value; ⢠defined benefit plans - planned assets measured at fair value; and ⢠assets held for sale - measured at fair value less cost to sell or carrying value whichever is lower (b) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The board of directors of RInfra has appointed the Chief Executive Officer (''CEO'') to assess the financial performance and position of the Company, and making strategic decisions. The CEO has been identified as being the Chief Operating Decision Maker for corporate planning. (c) Current versus Non-Current Classification The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is: ⢠Expected to be realised or intended to be sold or consumed in normal operating cycle ⢠Expected to be realised 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 ⢠Held primarily for the purpose of trading 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 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. ⢠Held primarily for the purpose of trading All other liabilities are classified as non-current. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle. Deferred tax assets and liabilities are classified as non-current assets and liabilities. (d) Revenue Recognition The Company applies Ind AS 115 using cumulative catch-up transition method. The Company recognize revenue from contracts with customers when it satisfies a performance obligation by transferring promised goods or service to a customer. The revenue is recognised to the extent of transaction price allocated to the performance obligation satisfied. Further, specific criteria for revenue recognition followed for different businesses are as under- Revenue from Sale of Power: Revenue from sale of power is accounted for in accordance with tariff provided in Power Purchase Agreement (PPA) read with the regulations of Maharashtra Electricity Regulatory Commission (MERC) and no significant uncertainty as to the measurability or collectability exist. (ii) Engineering and Construction Business (E&C) In case of Engineering and Construction Business performance obligations are satisfied over a period of time and contracts revenue is recognised over a period of time by measuring progress towards complete satisfaction of the performance obligation at the reporting date. The progress is measured based on the proportion of contract costs incurred for work performed to date, to the estimated total contract costs attributable to the performance obligation, using the input method. Contract cost includes costs that relate directly to the specific contract and allocated costs that are attributable to the performance obligation. Cost that cannot be attributed to the contract activity such as general administration costs are expensed as incurred and classified as other operating expenses. The Company account for a contract modification (change in the scope or price (or both)) when that is approved by the parties to the contract. In case of modification of contracts a cumulative adjustment is accounted for if changes of transaction price for existing obligation. Contract assets are recognised when there is excess of revenue earned over billing on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unearned and deferred revenue ("contract liability") is recognised when there is billing in excess of revenues. The billing schedule agreed with customer include periodic performance based payments and/or milestone based progress payments. ⢠Insurance and other claims are recognized as revenue on certainty of receipt on prudent basis. ⢠Income from rentals and others is recognized in accordance with terms of the contracts with customers based on the period for which the facilities have been used. ⢠Rental income arising from operating lease is accounted on a straight line basis over the lease terms. ⢠Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. 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. ⢠Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established. (e) Foreign Currency Transactions Functional and Presentation Currency Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss except in case of certain long term foreign currency monetary items where the treatment is as under: ⢠Non monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the dates of the transaction. ⢠Foreign exchange gains and losses are presented in other expense/income in the standalone Statement of Profit and Loss on a net basis. (f) Financial Instruments The Company recognises financial assets and liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognised at fair values on initial recognition, except for trade receivables which are initially measured at transaction price. (I) Financial Assets(i) Classification The Company classifies its financial assets in the following measurement categories: ⢠those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and ⢠those measured at amortised cost. The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes. Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction cost directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Subsequent Debt instruments Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method. ⢠Fair Value through Other Comprehensive Income (FVOCI) Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in the Statement of Profit and Loss. Interest income from these financial assets is included in other income using the effective interest rate method. ⢠Fair Value through Profit or Loss (FVTPL) Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in the Statement of Profit and Loss and presented net in the Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is included in other income. Equity instruments The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in other expenses/ income in the Standalone Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. Investments in Subsidiaries, Associates and Joint-Ventures The Company has accounted for its equity instruments in Subsidiaries, Associates and Joint-Ventures at cost except where Investments are accounted for at cost shall be accounted in accordance with Ind AS 105, wherein they are classified as assets held for sale. When, the investee entity ceases to be a subsidiary, associate or Joint-Venture of the Company, the said investment is carried at fair value in accordance with Ind AS 109 "Financial Instruments". Ind AS 101"First-time Adoption of Indian Accounting Standards" permits a first time adopter to measure its each investment in subsidiaries, joint ventures or associates, at the date of transition, at cost determined in accordance with Ind AS 27 "Separate Financial Statements" or deemed cost. The deemed cost of such investment can be it''s fair value at date of transition to Ind AS of the Company, or Previous GAAP carrying amount at that date. The Company had elected to measure its investment in Reliance Power Limited, associate of the Company, which will be regarded at deemed cost at its fair value on transition date. The rest of the investments in subsidiaries, joint ventures and associates were carried at their Previous GAAP carrying values as its deemed cost on the transition date. (iii) Impairment of Financial Assets The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note No 46 details how the Company determines whether there has been a significant increase in credit risk. For trade receivables, the Company measures the expected credit loss associated with its trade receivables based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. (iv) De recognition of Financial Assets A financial asset is derecognised only when: ⢠Right to receive cash flow from assets have expired or ⢠The Company has transferred the rights to receive cash flows from the financial asset or ⢠It retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement. Where the entity has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset. (II) Financial LiabilitiesInitial Recognition and Measurement 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 Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments. Subsequent measurement Financial liabilities at amortized cost: After initial measurement, such financial liabilities 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 costs in the Statement of Profit and Loss. (a) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the period of the borrowings using the EIR method. (b) Trade and Other Payables These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (c) Financial Guarantee Obligations The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries, joint ventures or associates are provided for no compensation, the fair values as on the date of transition are accounted for as contributions and recognised as part of the cost of the equity investment. A financial liability is derecognized 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 recognized in the Statement of Profit and Loss. (g) Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: ⢠In the principal market for the asset or liability, or ⢠In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3 -Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the standalone financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The Company''s Management determines the policies and procedures for both recurring and non-recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value. At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The management also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Disclosures for valuation methods, significant estimates and assumptions of Financial Instruments (including those carried at amortised cost) (Refer Note No 3) and Quantitative disclosures of fair value measurement hierarchy (Refer Note No 46). (h) (i) Derivatives Derivatives including forward contracts are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The Company does not designate their derivatives as hedges and such contracts are accounted for at fair value through profit or loss and are included in the Statement of Profit and Loss. In respect of derivative transactions, gains / losses are recognised in the Statement of Profit and Loss on settlement. On a reporting date, open derivative contracts are revalued at fair values and resulting gains / losses are recognised in the Statement of Profit and Loss (ii) Embedded Derivatives An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a nonfinancial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss. Derivatives embedded in a host contract that is a financial asset within the scope of Ind AS 109 "Financial Instruments" are not separated. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated. (i) Offsetting Financial Instruments Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty. (j) Property, Plant and Equipment Property, Plant and Equipment assets are carried at cost net of tax / duty credit availed less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is de-recognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred. Capital work in progress (CWIP) includes cost of property, plant and equipment under installation / under development, as at balance sheet date. All project related expenditure viz. civil works, machinery under erection, construction and erection materials, preoperative expenditure incidental / attributable to the construction of projects, borrowing cost incurred prior to the date of commercial operations and trial run expenditure are shown under CWIP. These expenses are net of recoveries and income (net of tax) from surplus funds arising out of project specific borrowings. Property, Plant and Equipment are derecognised from the standalone financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Property, Plant and Equipment are determined by comparing proceeds with carrying amount. These are recognized in the Statement of Profit and Loss. Depreciation methods, estimated useful lives and residual value Power Business: Property, Plant and Equipment relating to license business and other power business are depreciated under the straight line method as per the rates and useful life prescribed as per the Electricity Regulations, as referred to in Part "B" of Schedule II to the Act. Depreciation on amount of fair valuation for assets carried at fair value on date of transition is charged over the balance residual life of the assets considering the life prescribed as per the Electricity Regulation. Once the individual asset is depreciated to the extent of seventy (70) percent, remaining depreciable value as on March 31 of the year closing shall be spread over the balance useful life of the asset, as provided in the Electricity Regulations. The residual values are not more than 10% of the cost of the assets. Engineering and Construction Business Property, Plant and Equipment of E&C Business are depreciated under the reducing balance method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act. Property, Plant and Equipment of other activities have been depreciated under the straight line method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act. (k) Investment Property Investment property comprise portion of office building that are held for long term yield and / or capital appreciation. Investment property is initially recognised at cost. Subsequently investment property comprising of building is carried at cost less accumulated depreciation and accumulated impairment losses. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in Statement of Profit and Loss as incurred. Depreciation on Investment Property is depreciated under the straight line method as per the rates and the useful life prescribed as per Schedule II of the Companies Act. Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on periodical basis performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement ofProfit and Loss. (l) Intangible Assets Intangible assets are stated at cost of acquisition net of tax/duty credits availed, if any, less accumulated amortisation / depletion/impairment. Cost includes expenditure directly attributable to the acquisition of asset. Amortisation Method: Softwares are amortised over a period of 3 years. Intangible Assets are derecognised from the standloane financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Intangible Assets are determined by comparing proceeds with carrying amount. These are recognized in the standalone Statement of Profit and Loss. (m) Inventories Inventories are stated at lower of cost and net realisable value. In case of fuel, stores and spares "cost" means weighted average cost. Unserviceable / damaged stores and spares are identified and written down based on technical evaluation. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (n) Allocation of Expenses Common overheads are absorbed by various jobs in proportion to the prime cost of each job. (o) Employee Benefits (i) Short-term Obligations Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as short term employee benefit obligations in the balance sheet. (ii) Post-employment Obligations The Company operates the following post-employment schemes: (a) defined benefit plans such as gratuity and (b) defined contribution plans such as provident fund, superannuation fund etc. (a) Gratuity Obligations The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss. Remeasurement of gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost. The Company contributes to a trust set up by the Company which further contributes to policies taken from Insurance Regulatory and Development Authority (IRDA) approved insurance companies. (b) Provident Fund The benefit involving employee established provident funds, which require interest shortfall to be recompensated are to be considered as defined benefit plans. As per the Audited Accounts of Provident Fund Trust maintained by the Company, the shortfall arising in meeting the stipulated interest liability, if any, gets duly provided for. Defined Contribution plans The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Superannuation plan, a defined contribution scheme is administered by IRDA approved Insurance Companies. (iii) Other long-term employee benefit obligations The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur. (p) Treasury Shares The Company has created a Reliance Infrastructure ESOS Trust (ESOS Trust) for providing share-based payment to its employees. The Company uses ESOS Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOS Trust buys shares of the company from the market, for giving shares to employees. The Company treats ESOS Trust as its extension and shares held by ESOS Trust are treated as treasury shares. Reliance Infrastructure ESOS Trust has in substance acted as an agent and the Company as a sponsor retains the majority of the risks rewards relating to funding arrangement. Accordingly, the Company has recognised issue of shares to the Trust as the issue of treasury shares and deducted the total cost of such shares from a separate category of equity (Treasury Shares) by consolidating Trust into standalone financial statements of the Company. (q) Borrowing Costs Borrowing cost includes interest, amortisation of ancillary cost incurred in connection with the arrangement of borrowings and the exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred. (r) Income Taxes Income tax expense for the year comprises of current tax and deferred tax. Income tax is recognised in the Standalone Statement of Profit and Loss except to the extent that it relates to items recognised in ''Other Comprehensive Income'' or directly in equity, in which case the tax is recognised in ''Other Comprehensive Income'' or directly in equity, respectively. The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the Balance Sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and associates and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. (s) Provisions Provisions for legal claims/disputed matters and other matters are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as finance cost. (t) Contingent Liabilities and Contingent Assets A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is probable that an outflow of resources will not be required to settle the obligation. However, if the possibility of outflow of resources, arising out of present obligation, is remote, the same is not disclosed as contingent liability. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the notes to standalone financial statements. A Contingent asset is not recognized in standalone financial statements, however, the same is disclosed where an inflow of economic benefit is probable. (u) Impairment of Non-financial Assets Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite-life intangibles are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets is considered as a cash generating unit. Goodwill acquired on a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognizing the impairment loss as an expense in the Statement of Profit and Loss. The impairment loss is allocated first to reduce the carrying amount of goodwill (if any) allocated to the cash generating unit and then to the other assets on pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s fair value less cost of disposal and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. An impairment loss recognized for goodwill is not reversed in subsequent periods. (v) Cash and Cash Equivalents Cash and cash equivalents in the Balance Sheet comprise of cash on hand, demand deposits with Banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (w) Cash flow Statement Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (x) Contributed Equity Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (y) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. (z) Earnings per Share (EPS) Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Both Basic earnings per share and Diluted earnings per share have been calculated with and without considering income from Rate Regulated activities and Discontinued Operations and also before withdrawal of general reserve from the Net Profit attributable to Equity Shareholders. (aa) Leases The Company has adopted the new accounting standard Ind AS 116 "Leases" on April 1, 2019 as per Companies (Indian Accounting Standards) amendment Rules, 2019, notified by MCA on March 30, 2019. Ind AS 116 is a single lessee accounting model and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Company''s lease assets primarily consists of office premises which are of short term lease with the term of twelve months or less and low value leases. For these short term and low value leases, the Company has recognized the lease payments as an expense in the Statement of Profit and Loss on a straight line basis over the term of lease. The Company has adopted Ind AS 116, effective annual reporting period beginning on April 1, 2019 and applied the standard to its leases, retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application without making any adjustment to opening balance of retained earnings. The adoption of the standard did not have any material impact on the Standalone Financial Statement of the Company. Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless the receipts are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases. 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. 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 Company''s 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. (bb) Non-current assets (or disposal group) held for sale and discontinued operations Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Statement of Profit and Loss. (cc) Interest in Joint Operations The Company has joint operations within its Engineering and Construction segment and participates in several unincorporated joint operations which involve the joint control of assets used in Engineering and Construction activities. Accordingly, assets and liabilities as well as income and expenditure are accounted on the basis of available information on a line-by-line basis with similar items in the standalone financial statements, according to the participating interest of the Company. (dd) Business Combinations Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group. Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies. (ee) Recent accounting pronouncements Ministry of Corporate Affairs ("MCA") notified new standard or amendments to the existing standards under Companies (Indian Accounting Standard) Rules as issued from time to time. On March 23, 2022, MCA notified the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1, 2022 to the Company as below: i) Ind As 103 - Business Combination ii) Ind As 109 - Financial Instrument iii) Ind As 16 - Property, Plant & Equipment iv) Ind As 37 - Provisions, Contingent Liabilities and Contingent Assets The Company does not expect these amendments to have any significant impact on the Company''s financial statements. 3. Critical estimates and judgments The presentation of standalone financial statements under Ind AS requires management to take decisions and make estimates and assumptions that may impact the value of revenues, costs, assets and liabilities and the related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. ⢠Estimation of deferred tax assets recoverable Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the same can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. ⢠Estimated fair value of unlisted securities The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. Refer Note No. 46 on fair value measurements where the assumptions and methods to perform the same are stated. ⢠Estimation of defined benefit obligation The cost of the defined benefit gratuity plan and other post-employment employee benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. Thes
Mar 31, 2018
(a) Basis of preparation, measurement and significant accounting policies (i) compliance with indian accounting Standard (ind As) The standalone financial statements of the Company have been prepared and comply in all material aspects with Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with relevant rules and other accounting principles. The policies set out below have been consistently applied during the years presented. (ii) Basis of Preparation These financial statements are presented in âIndian Rupeesâ, which is also the Companyâs functional currency and all amounts, are rounded to the nearest Crore, with two decimals, unless otherwise stated. The financial statements have been prepared in accordance with the requirements of the information and disclosures mandated by Schedule III to the Act, applicable Ind AS, other applicable pronouncements and regulations. (iii) Basis of measurement The financial statements have been prepared on a historical cost convention on accrual basis, except for the following: - certain financial assets and liabilities (including derivative instruments) that are measured at fair value; - defined benefit plans - planned assets measured at fair value; and - assets held for sale - measured at fair value less cost to sell or carrying value whichever is lower (iv) new Standards and interpretations not yet effective Amendments to Ind AS 115, âRevenue from Contracts with Customersâ: In March 2018, the Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amended Rules, 2018 (âamended rulesâ). As per the amended rules, Ind AS 115 âRevenue from contracts with customersâ supersedes Ind AS 11, âConstruction contractsâ and Ind AS 18, âRevenueâ and is applicable for all accounting periods commencing on or after April 01, 2018. Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when (or as) an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The new revenue standard is applicable to the Company from April 01, 2018. The standard permits two possible methods of transition: - Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors. - Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach). The Company is evaluating the amendment and the impact on the financial statements. Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 01, 2018. The Company is evaluating the requirement of the amendment and the impact on the Financial Statements. The effect on adoption of Ind AS 21 is expected to be insignificant. (b) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The board of directors of RInfra has appointed the Chief Executive Officer (âCEOâ) to assess the financial performance and position of the Company, and makes strategic decisions. The CEO has been identified as being the Chief Operating Decision Maker for corporate planning. Refer Note No. 38 for segment information presented. (c) current versus Non-current classification The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is: - Expected to be realised or intended to be sold or consumed in normal operating cycle - Expected to be realised 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 - Held primarily for the purpose of trading 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 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 - Held primarily for the purpose of trading All other liabilities are classified as non-current. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle. Deferred tax assets and liabilities are classified as non-current assets and liabilities. Regulatory Assets / Liabilities are presented as separate line item distinguished from assets and liabilities as per Ind AS 114. (d) Revenue Recognition Policy Revenue is recognized when the amount of revenue can be reliably measured, it is probable that the economic benefits will flow to the Company and specific criteria have been met for each of the Companyâs activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable and is net of discounts, taxes and amount collected on behalf of the Government. Further, specific criteria for revenue recognition followed for different businesses are as under- (i) Power Business a. Revenue from Sale of Power: Revenue from sale of power is accounted for on the basis of billing to consumers based on billing cycles followed by the Company which is inclusive of fuel adjustment charges (FAC) and includes unbilled revenue for the year. Generally all consumers are billed on the basis of recording of consumption of energy by installed meters. Where meters have stopped or are faulty, the billing is done based on the past consumption for such period. b. Revenue from Transmission Business: In case of transmission businesses not assessed as service concession arrangement, revenue is accounted on the basis of periodic billing to consumers / state transmission utility. The surcharge on late / non-payment of dues by customers for sale of energy is recognized as revenue on certainty of receipt. The Transmission system incentive/disincentive is accounted for based on the certification of availability by the respective regional power committee and in accordance with the norms notified / approved by the Central Electricity Regulatory Commission (CERC). c. The Company determines revenue gaps (i.e. surplus/shortfall in actual returns over returns entitled) in respect of its regulated operations in accordance with the provisions of Ind AS 114 âRegulatory Deferral Accountsâ read with the Guidance Note on Rate Regulated Activities issued by ICAI and based on the principles laid down under the relevant Tariff Regulations / Tariff Orders notified by the Electricity Regulator and the actual or expected actions of the regulator under the applicable regulatory framework. Appropriate adjustments in respect of such revenue gaps are made in the revenue of the respective year for the amounts which are reasonably determinable and no significant uncertainty exists in such determination. These adjustments / accruals representing revenue gaps are carried forward as Regulatory deferral accounts debit / credit balances (Regulatory Assets / Regulatory Liabilities) as the case may be in the financial statements, which would be recovered / refunded through future billing based on future tariff determination by the regulator in accordance with the electricity regulations. (ii) EPO and contracts Business In respect of construction contracts, the Company uses the âpercentage-of-completion methodâto determine the appropriate amount of revenue to be recognised in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with the future activity on a contract are excluded from contract costs in determining the stage of completion. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognised over the period of the contract by reference to the stage of completion. Contract costs are recognised as expenses by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. Variations in contract work, claims and incentive payments are included in contract revenue to the extent that they have been agreed with the customer and are capable of being reliably measured. (iii) Service concession Arrangements The Company manages service concession arrangements which include the construction of transmission lines and a power plant followed by a period in which the Company maintains and services the infrastructure. This may also include, in a secondary period, asset replacement or refurbishment. These concession arrangements set out rights and obligations related to the infrastructure and the service to be provided. Under Appendix A to Ind AS 11 - âService Concession Arrangementsâ, these arrangements are accounted for based on the nature of the consideration. The financial model is used when the Company has an unconditional right to receive cash or another financial asset from or at the direction of the grantor for the construction services. For fulfilling those obligations, the Company is entitled to receive either cash from the grantor or a contractual right to charge the users of the service. The consideration received or receivable is allocated by reference to the relative fair values of the services provided; typically: a) Construction component b) A service element for operating and maintenance services performed The right to consideration gives rise to financial asset: Revenue from the oncession arrangements earned under the financial asset model consists of the (i) fair value of the amount due from the grantor; and (ii) interest income related to the capital investment in the project. (iv) Others Insurance and other claims are recognized as revenue on certainty of receipt on prudent basis. Income from rentals and others is recognized in accordance with terms of the contracts with customers based on the period for which the facilities have been used. Rental income arising from operating lease is accounted on a straight line basis over the lease terms. Amounts received from consumers as Service Line Contribution (SLC) towards Property, Plant and Equipment (PPE) are accounted as Liability under Non-Current Liabilities. An amount equivalent to depreciation on such PPE is recognised as income in the Statement of Profit and Loss over the life of the assets. Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. 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. Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment is established. (e) Foreign currency Transactions Functional and Presentation currency Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is Companyâs functional and presentation currency. Transactions and Balances Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss except in case of certain long term foreign currency monetary items where the treatment is as under: The Company has availed an option of continuing the policy adopted for exchange differences arising from translation of long term foreign currency monetary items outstanding as on March 31, 2016 in accordance with Para 46A of AS-11 âThe Effects of changes in Foreign Exchange Ratesâ of Previous GAAP. Accordingly, foreign exchange gain/losses on long term foreign currency monetary items relating to the acquisition of depreciable assets are added to or deducted from the cost of such assets and in other cases, such gains or losses are accumulated in a âForeign Currency Monetary Item Translation Difference Accountâ to be amortised over the remaining life of the concerned monetary item. Non monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the dates of the transaction. (f) Financial instruments The Company recognises financial assets and liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognised at fair values on initial recognition, except for trade receivables which are initially measured at transaction price. (i) Financial Assets (i) classification The Company classifies its financial assets in the following measurement categories: - those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and - those measured at amortised cost. The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes. (ii) Measurement Initial At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs of financial assets carried at fair value through profit or loss are expensed in Statement of Profit and Loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Subsequent Debt instruments Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments: - Amortised cost Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method. - Fair Value through Other Comprehensive Income (FVOCI) Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâcash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in the Statement of Profit and Loss. Interest income from these financial assets is included in other income using the effective interest rate method. - Fair Value through Profit or Loss (FVTPL) Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in the Statement of Profit and Loss and presented net in the Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is included in other income. Equity instruments The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. Investments in Subsidiaries, Associates and Joint-Ventures The Company has accounted for its equity instruments in Subsidiaries, Associates and Joint-Ventures at cost except where Investments are accounted for at cost shall be accounted in accordance with Ind AS 105, wherein they are classified as assets held for sale. Transition to Ind AS Ind AS 101âFirst-time Adoption of Indian Accounting Standardsâ permits a first time adopter to measure its each investment in subsidiaries, joint ventures or associates, at the date of transition, at cost determined in accordance with Ind AS 27 âSeparate Financial Statementsâ or deemed cost. The deemed cost of such investment can be itâs fair value at date of transition to Ind AS of the Company, or Previous GAAP carrying amount at that date. The Company has elected to measure its investment in Reliance Power Limited, associate of the Company, which will be regarded at deemed cost at its fair value on transition date. The rest of the investments in subsidiaries, joint ventures and associates are carried at their Previous GAAP carrying values as its deemed cost on the transition date. (iii) Impairment of Financial Assets The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note No. 54 details how the Company determines whether there has been a significant increase in credit risk. For trade receivables only, the Company measures the expected credit loss associated with its trade receivables based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. (iv) De recognition of Financial Assets A financial asset is derecognised only when: - Right to receive cash flow from assets have expired or - The Company has transferred the rights to receive cash flows from the financial asset or - It retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the received cash flows in full without material delay to a third party under a âpass throughâ arrangement. Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset. (II) Financial Liabilities Initial Recognition and measurement 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 derivative financial instruments. Subsequent measurement Financial liabilities at amortized cost: After initial measurement, such financial liabilities 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 costs in the Statement of Profit and Loss. (a) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the period of the borrowings using the EIR method. (b) Trade and Other Payables These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (c) Financial Guarantee Obligations The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries, joint ventures or associates are provided for no compensation, the fair values as on the date of transition are accounted for as contributions and recognised as part of the cost of the equity investment. Derecognition A financial liability is derecognized 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 recognized in the Statement of Profit and Loss. (g) Fair Value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: - In the principal market for the asset or liability, or - In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3 -Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The Companyâs Management determines the policies and procedures for both recurring and non-recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value. At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Companyâs accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The management also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Disclosures for valuation methods, significant estimates and assumptions of Financial Instruments (including those carried at amortised cost) (Refer Note No. 2) and Quantitative disclosures of fair value measurement hierarchy (Refer Note No. 54). (h) (i) Derivatives Derivatives including forward contracts are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The Company does not designate their derivatives as hedges and such contracts are accounted for at fair value through profit or loss and are included in the Statement of Profit and Loss. In respect of derivative transactions, gains / losses are recognised in the Statement of Profit and Loss on settlement. On a reporting date, open derivative contracts are revalued at fair values and resulting gains / losses are recognised in the Statement of Profit and Loss (ii) Embedded Derivatives An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a nonfinancial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss. Derivatives embedded in a host contract that is a financial asset within the scope of Ind AS 109 âFinancial Instrumentsâ are not separated. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated. (i) Offsetting Financial instruments Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty. (j) Property, Plant and Equipment Property, Plant and Equipment assets are carried at cost net of tax / duty credit availed less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred. Capital work in progress (CWIP) includes cost of property, plant and equipment under installation / under development, as at balance sheet date. All project related expenditure viz. civil works, machinery under erection, construction and erection materials, preoperative expenditure incidental / attributable to the construction of projects, borrowing cost incurred prior to the date of commercial operations and trial run expenditure are shown under CWIP. These expenses are net of recoveries and income (net of tax) from surplus funds arising out of project specific borrowings. Property, Plant and Equipment are derecognised from the financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Property, Plant and Equipment are determined by comparing proceeds with carrying amount. These are recognized in the Statement of Profit and Loss. Depreciation methods, estimated useful lives and residual value Power Business Property, Plant and Equipment relating to license business and other power business are depreciated under the straight line method as per the rates and useful life prescribed as per the Electricity Regulations, as referred to in Part âBâ of Schedule II to the Act. Depreciation on amount of fair valuation for assets carried at fair value on date of transition is charged over the balance residual life of the assets considering the life prescribed as per the Electricity Regulation. Once the individual asset is depreciated to the extent of seventy (70) percent, remaining depreciable value as on March 31 of the year closing shall be spread over the balance useful life of the asset, as provided in the Electricity Regulations. The residual values are not more than 10% of the cost of the assets. EPc and contracts Business Property, Plant and Equipment of EPC and Contracts Business are depreciated under the reducing balance method as per the useful life and in the manner prescribed in Part âCâ Schedule II to the Act. Other Activities Property, Plant and Equipment of other activities have been depreciated under the straight line method as per the useful life and in the manner prescribed in Part âCâ Schedule II to the Act. (k) Investment Property Investment property comprise portion of office building that are held for long term yield and / or capital appreciation. Investment property is initially recognised at cost. Subsequently investment property comprising of building is carried at cost less accumulated depreciation and accumulated impairment losses. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in Statement of Profit and Loss as incurred. Depreciation on Investment Property is depreciated under the straight line method as per the rates and the useful life prescribed as per Schedule II of the Companies Act. Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on periodical basis performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of Profit and Loss. (l) Intangible Assets Intangible assets are stated at cost of acquisition net of tax/duty credits availed, if any, less accumulated amortisation /depletion. Cost includes expenditure directly attributable to the acquisition of asset. Amortisation method Softwares pertaining to the power business are amortized as per the rate and in the manner prescribed in the Electricity Regulations. Other softwares are amortised over a period of 3 years. Intangible Assets are derecognised from the financial statements, either on disposal or when retired from active use. Gains and losses on disposal or retirement of Intangible Assets are determined by comparing proceeds with carrying amount. These are recognized in the Statement of Profit and Loss. (m) Inventories Inventories are stated at lower of cost and net realisable value. In case of fuel, stores and spares âcostâ means weighted average cost. Unserviceable / damaged stores and spares are identified and written down based on technical evaluation. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (n) Allocation of Expenses (i) Power Business: The allocation to capital and revenue is done consistently on the basis of a technical evaluation. (ii) EPC and Contracts Business: Common overheads are absorbed by various jobs in proportion to the prime cost of each job. (o) Employee Benefits (i) Short-term Obligations Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâservices up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as short term employee benefit obligations in the balance sheet. (ii) Post-employment Obligations The Company operates the following post-employment schemes: (a) defined benefit plans such as gratuity and (b) defined contribution plans such as provident fund, superannuation fund etc. Defined Benefit Plans (a) Gratuity Obligations The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss. Remeasurement of gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost. The Company contributes to a trust set up by the Company which further contributes to policies taken from Insurance Regulatory and Development Authority (IRDA) approved insurance companies. (b) Provident Fund The benefit involving employee established provident funds, which require interest shortfall to be recompensated are to be considered as defined benefit plans. As per the Audited Accounts of Provident Fund Trust maintained by the Company, the shortfall arising in meeting the stipulated interest liability, if any, gets duly provided for. Defined contribution Plans The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Superannuation plan, a defined contribution scheme is administered by IRDA approved Insurance Companies. (iii) Other long-term employee benefit obligations: The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur. (p) Treasury Shares The Company has created a Reliance Infrastructure ESOS Trust (ESOS Trust) for providing share-based payment to its employees. The Company uses ESOS Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOS Trust buys shares of the company from the market, for giving shares to employees. The Company treats ESOS Trust as its extension and shares held by ESOS Trust are treated as treasury shares. Reliance Infrastructure ESOS Trust has in substance acted as an agent and the Company as a sponsor retains the majority of the risks rewards relating to funding arrangement. Accordingly, the Company has recognised issue of shares to the Trust as the issue of treasury shares and deducted from equity by consolidating Trust into financial statements of the Company. (q) Borrowing costs Borrowing cost includes interest, amortisation of ancillary cost incurred in connection with the arrangement of borrowings and the exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred. (r) Income Taxes The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the Balance Sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and associates and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Income tax expense for the year comprises of current tax and deferred tax. Income tax is recognised in the Statement of Profit and Loss except to the extent that it relates to items recognised in âOther Comprehensive Incomeâor directly in equity, in which case the tax is recognised in âOther Comprehensive Incomeâor directly in equity, respectively. (s) Provisions Provisions for legal claims are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as finance cost. (t) contingent Liabilities and contingent Assets A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is probable that an outflow of resources will not be required to settle the obligation. However, if the possibility of outflow of resources, arising out of present obligation, is remote, it is not even disclosed as contingent liability. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the notes to financial statements. A Contingent asset is not recognized in financial statements, however, the same is disclosed where an inflow of economic benefit is probable. (u) impairment of non-financial assets Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite-life intangibles are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets is considered as a cash generating unit. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Companyâs cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognizing the impairment loss as an expense in the Statement of Profit and Loss. The impairment loss is allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an assetâs or cash generating unitâs fair value less cost of disposal and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. An impairment loss recognized for goodwill is not reversed in subsequent periods. (v) cash and cash Equivalents Cash and cash equivalents in the Balance Sheet comprise of cash on hand, demand deposits with Banks, other shortterm, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (w) cash flow Statement Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (x) accounting for Oil and Gas activity Oil and natural gas exploration and evaluation expenditures are accounted for using the âsuccessful effortsâmethod of accounting. Costs are accumulated on a field-by-field basis. Geological and geophysical costs are expensed as incurred. Costs directly associated with an exploration well, and exploration and property leasehold acquisition costs, are capitalised until the determination of reserves is evaluated. If it is determined that commercial discovery has not been achieved, these costs are charged to expense. (y) contributed Equity Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (z) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. (aa) Earnings per Share (EPS) Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Both Basic earnings per share and Diluted earnings per share have been calculated with and without considering income from Rate Regulated activities and Discontinued Operations in the Net Profit attributable to Equity Shareholders. (bb) 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. As a lessee Leases of property, plant and equipment where the Company, as lessee, has substantially obtained all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Contingent rentals are recognised as expenses in the periods in which they are incurred. 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 leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. As a lessor Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless the receipts are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. 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. 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 entityâs 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. (cc) Non-current assets (or disposal group) held for sale and discontinued operations Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized. Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Statement of Profit and Loss. (dd) Business combinations Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group. Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonise accounting policies.
Mar 31, 2017
Corporate Information:
Reliance Infrastructure Limited ("RInfra", "the Company") is one of the largest infrastructure companies, developing projects through various Special Purpose Vehicles (SPVs) in several high growth sectors within the infrastructure space such as Power, Roads, Metro Rail, Cement and Defence. RInfra is also a leading utility having presence across the value chain of power business i.e. Generation, Transmission, Distribution and Power Trading. RInfra also provides Engineering, Procurement and Construction (EPC) services for various infrastructure projects.
The Company is a public limited Company which is listed on two recognized stock exchanges in India. The Company''s Global Depository Receipts, representing Equity Shares, is also listed on London Stock Exchange. The Company is incorporated and domiciled in India under the provisions of the Indian Companies Act, 1913. The registered office of the Company is located at H Block, 1st Floor, Dhirubhai Ambani Knowledge City, Navi Mumbai 400710.
These financial statements of the Company for the year ended March 31, 2017 were authorized for issue by the board of directors on April 15, 2017. Pursuant to the provisions of section 130 of the Act, the Central Government, Income tax authorities, Securities and Exchange Board of India, other statutory regulatory body and under section 131 of the Act, the board of directors of the Company have powers to amend / re-open the financial statements approved by the board / adopted by the members of the Company.
1. Significant Accounting Policies:
(a) Basis of preparation, measurement and significant accounting policies:
(i) Compliance with Indian Accounting Standard (Ind AS)
The standalone financial statements of the Company comply in all material aspects with Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with relevant rules and other accounting principles. The policies set out below have been consistently applied during the years presented.
(ii) Basis of Preparation
The financial statements for all periods up to and including the year ended March 31, 2016 were prepared in accordance with the accounting standards notified under Section 133 of Companies Act, 2013 read together with the Companies (Accounts) Rules, 2014 ("Previous GAAP").
As these financial statements for the year ended March 31, 2017 are the first financial statements of the Company prepared in accordance with Ind AS, Ind AS 101, "First-time Adoption of Indian Accounting Standards" has been applied. An explanation of how the transition from Previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows including reconciliations and descriptions of the effect of the transition are provided in Note No 53.
These financial statements are presented in ''Indian Rupees'', which is also the Company''s functional currency and all amounts, are rounded to the nearest Crore, with two decimals, unless otherwise stated. The financial statements have been prepared in accordance with the requirements of the information and disclosures mandated by Schedule III to the Act, applicable Ind AS, other applicable pronouncements and regulations. The tariff in respect of Company''s Mumbai Generation, Transmission and Distribution Business is subject to approval from Regulatory Authorities. The basis of accounting for regulatory deferral balances of such businesses is in accordance with the provisions of Ind AS 114 "Regulatory Deferral Accounts" read with the Guidance Note on Rate Regulated Activities issued by The Institute of Chartered Accountants of India (ICAI).
(iii) Basis of Measurement
The financial statements have been prepared on a historical cost convention on accrual basis, except for the following:
- certain financial assets and liabilities (including derivative instruments) that are measured at fair value;
- defined benefit plans - planned assets measured at fair value; and
- assets held for sale - measured at fair value less cost to sell or carrying value whichever is lower
(iv) New Standards and Interpretations not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, "Statement of Cash Flows" and Ind AS 102, "Share-Based Payment". The amendments are applicable to the Company from April 01, 2017.
Amendment to Ind AS 7 "Statement of Cash Flows":
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows
and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendment to Ind AS 102 "Share Based Payment":
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.
The Company is evaluating the requirements of the amendment and the impact on the financial statements.
(v) Financial statements have been prepared on a going concern basis in accordance with the applicable accounting standards prescribed in the Companies (Indian Accounting Standards), Rules, 201 5 issued by the Central Government.
(b) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
The board of directors of RInfra has appointed the Chief Executive Officer (''CEO'') to assess the financial performance and position of the Company, and makes strategic decisions. The CEO has been identified as being the Chief Operating Decision Maker for corporate planning. Refer Note No 37 for segment information presented.
(c) Current versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- 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
- Held primarily for the purpose of trading 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 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.
- Held primarily for the purpose of trading All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Regulatory Assets / Liabilities are presented as separate line item distinguished from assets and liabilities as per Ind AS 114.
(d) Revenue Recognition Policy:
Revenue is recognized when the amount of revenue can be reliably measured, it is probable that the economic benefits will flow to the Company and specific criteria have been met for each of the Company''s activities as described below. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Further, specific criteria for revenue recognition followed for different businesses are as under-
(i) Power Business:
a. Revenue from Sale of Power: Revenue from sale of power is accounted for on the basis of billing to consumers based on billing cycles followed by the Company which is inclusive of fuel adjustment charges (FAC) and includes unbilled revenue for the year. Generally all consumers are billed on the basis of recording of consumption of energy by installed meters. Where meters have stopped or are faulty, the billing is done based on the past consumption for such period.
b. Revenue from Transmission Business: In case of transmission businesses not assessed as service concession arrangement, revenue is accounted on the basis of periodic billing to consumers / state transmission utility. The surcharge on late / non-payment of dues by customers for sale of energy is recognized as revenue on certainty of receipt.
The Transmission system Incentive/disincentive is accounted for based on the certification of availability by the respective regional power committee and in accordance with the norms notified / approved by the CERC.
c. The Company determines revenue gaps (i.e. surplus/shortfall in actual returns over returns entitled) in respect of its regulated operations in accordance with the provisions of Ind AS 114 "Regulatory Deferral Accounts" read with the Guidance Note on Rate Regulated Activities issued by ICAI and based on the principles laid down under the relevant Tariff Regulations / Tariff Orders notified by the Electricity Regulator and the actual or expected actions of the regulator under the applicable regulatory framework. Appropriate adjustments in respect of such revenue gaps are made in the revenue of the respective year for the amounts which are reasonably determinable and no significant uncertainty exists in such determination. These adjustments / accruals representing revenue gaps are carried forward as Regulatory deferral accounts debit / credit balances (Regulatory Assets / Regulatory Liabilities) as the case may be in the financial statements, which would be recovered / refunded through future billing based on future tariff determination by the regulator in accordance with the electricity regulations.
The Company presents separate line items in the balance sheet for:
i. the total of all regulatory deferral account debit balances and related deferred tax balances; and
ii. the total of all regulatory deferral account credit balances and related deferred tax balances.
A separate line item is presented in the Statement of Profit and Loss for the net movement in regulatory deferral account net of deferred tax for the reporting period.
(ii) EPC and Contracts Business:
I n respect of construction contracts, the Company uses the ''percentage-of-completion method'' to determine the appropriate amount of revenue to be recognized in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred in the year in connection with the future activity on a contract are excluded from contract costs in determining the stage of completion.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognized over the period of the contract by reference to the stage of completion.
Contract costs are recognized as expenses by reference to the stage of completion of the contract activity at the end of the reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable.
Variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.
(iii) Service Concession Arrangements:
The Company manages service concession arrangements which include the construction of transmission lines and a power plant followed by a period in which the Company maintains and services the infrastructure. This may also include, in a secondary period, asset replacement or refurbishment. These concession arrangements set out rights and obligations related to the infrastructure and the service to be provided.
Under Appendix A to Ind AS 11 - "Service Concession Arrangements", these arrangements are accounted for based on the nature of the consideration. The financial model is used when the Company has an unconditional right to receive cash or another financial asset from or at the direction of the grantor for the construction services.
For fulfilling those obligations, the Company is entitled to receive either cash from the grantor or a contractual right to charge the users of the service. The consideration received or receivable is allocated by reference to the relative fair values of the services provided; typically:
a) Construction component
b) A service element for operating and maintenance services performed The right to consideration gives rise to financial asset:
Revenue from the concession arrangements earned under the financial asset model consists of the (i) fair value of the amount due from the grantor; and (ii) interest income related to the capital investment in the project.
(iv) Others:
Insurance and other claims are recognized as revenue on certainty of receipt on prudent basis.
Income from rentals and others is recognized in accordance with terms of the contracts with customers based on the period for which the facilities have been used.
Rental income arising from operating lease is accounted on a straight line basis over the lease terms.
Amounts received from consumers as Service Line Contribution (SLC) towards Property, Plant and Equipment (PPE) are accounted as Liability under Non-Current Liabilities. An amount equivalent to depreciation on such PPE is recognized as income in the Statement of Profit and Loss over the life of the assets.
Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. 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.
Dividends are recognized in the Statement of Profit and Loss only when the right to receive payment is established.
(e) Foreign Currency Transactions:
Functional and Presentation Currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions and from translation of monetary assets and liabilities at the reporting date exchange rates are recognized in the Statement of Profit and Loss except in case of certain long term foreign currency monetary items where the treatment is as under:
The Company has availed an option of continuing the policy adopted for exchange differences arising from translation of long term foreign currency monetary items outstanding as on March 31, 2016 in accordance with Para 46A of AS-11 "The Effects of changes in Foreign Exchange Rates" of Previous GAAP. Accordingly, foreign exchange gain/ losses on long term foreign currency monetary items relating to the acquisition of depreciable assets are added to or deducted from the cost of such assets and in other cases, such gains or losses are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the remaining life of the concerned monetary item. Non monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the dates of the transaction.
(f) Financial Instruments:
The Company recognizes financial assets and liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair values on initial recognition, except for trade receivables which are initially measured at transaction price.
(I) Financial Assets :
(i) Classification:
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortized cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in Statement of Profit and Loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Measurement Initial
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs of financial assets carried at fair value through profit or loss are expensed in Statement of Profit and Loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Subsequent
Debt instruments:
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
- Amortized cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in Statement of Profit and Loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
- Fair Value through Other Comprehensive Income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in the Statement of Profit and Loss. When the financial asset is derecognized , the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains / (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair Value through Profit or Loss (FVTPL):
Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in the Statement of Profit and Loss and presented net in the Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments:
The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Investments in Subsidiaries, Associates and Joint-Ventures:
The Company has accounted for its equity instruments in Subsidiaries, Associates and Joint-Ventures at cost. Transition to Ind AS
Ind AS 101"First-time Adoption of Indian Accounting Standards" permits a first time adopter to measure its each investment in subsidiaries, joint ventures or associates, at the date of transition, at cost determined in accordance with Ind AS 27 "Separate Financial Statements" or deemed cost. The deemed cost of such investment can be it''s fair value at date of transition to Ind AS of the Company, or Previous GAAP carrying amount at that date. The Company has elected to measure its investment in Reliance Power Limited, associate of the Company, which will be regarded at deemed cost at its fair value on transition date. The rest of the investments in subsidiaries, joint ventures and associates are carried at their Previous GAAP carrying values as its deemed cost on the transition date.
(iii) Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note No 54 details how the Company determines whether there has been a significant increase in credit risk.
For trade receivables only, the Company measures the expected credit loss associated with its trade receivables based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
(iv) De recognition of Financial Assets
A financial asset is derecognized only when:
- Right to receive cash flow from assets have expired or
- The Company has transferred the rights to receive cash flows from the financial asset or
- It retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the received cash flows in full without material delay to a third party under a "pass through" arrangement.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized .
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
(II) Financial Liabilities
Initial Recognition and Measurement
All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Subsequent measurement
Financial liabilities at amortized cost: After initial measurement, such financial liabilities 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 costs in the Statement of Profit and Loss.
(a) Borrowings:
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the Statement of Profit and Loss over the period of the borrowings using the EIR method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
(b) Trade and Other Payables:
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method
(c) Financial Guarantee Obligations:
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of subsidiaries, joint ventures or associates are provided for no compensation, the fair values as on the date of transition are accounted for as contributions and recognized as part of the cost of the equity investment.
Derecognition
A financial liability is derecognized 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 recognized in the Statement of Profit and Loss.
(g) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 -Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s Management determines the policies and procedures for both recurring and non-recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value.
At each reporting date, the Management analyses the movements in the values of assets and liabilities which are required to be premeasured or re-assessed as per the Company''s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Disclosures for valuation methods, significant estimates and assumptions of Financial Instruments (including those carried at amortized cost) (Note No 2) and Quantitative disclosures of fair value measurement hierarchy (Note No 54).
(h) (i) Derivatives
Derivatives including forward contracts are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The Company does not designate their derivatives as hedges and such contracts are accounted for at fair value through profit or loss and are included in the Statement of Profit and Loss. In respect of derivative transactions, gains / losses are recognized in the Statement of Profit and Loss on settlement. On a reporting date, open derivative contracts are revalued at fair values and resulting gains / losses are recognized in the Statement of Profit and Loss
(ii) Embedded Derivatives
An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract - with the effect that some of the cash flows of the combined instrument vary in a way similar to a standalone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a nonfinancial variable that the variable is not specific to a party to the contract. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
Derivatives embedded in a host contract that is a financial asset within the scope of Ind AS 109 "Financial Instruments" are not separated. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated.
(i) Offsetting Financial Instruments:
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
(j) Property, Plant and Equipment:
Property, Plant and Equipment assets are carried at cost net of tax / duty credit availed less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Capital work in progress (CWIP) includes cost of property, plant and equipment under installation / under development, as at balance sheet date. All project related expenditure viz. civil works, machinery under erection, construction and erection materials, preoperative expenditure incidental / attributable to the construction of projects, borrowing cost incurred prior to the date of commercial operations and trial run expenditure are shown under CWIP. These expenses are net of recoveries and income (net of tax) from surplus funds arising out of project specific borrowings.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
Property, Plant and Equipment are eliminated from the financial statements, either on disposal or when retired from active use.
Gains and losses on disposals or retirement of assets are determined by comparing proceeds with carrying amount. These are recognized in the Statement of Profit and Loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to regard the fair values of all its property, plant and equipment as at April 01, 2015 as deemed cost in accordance with the stipulation of Ind AS 101 "First-time Adoption of Indian Accounting Standards". Refer Note No 53 for the first time adoption impact.
Depreciation methods, estimated useful lives and residual value
Power Business:
Property, Plant and Equipment relating to license business and other power business are depreciated under the straight line method as per the rates and useful life prescribed as per the Electricity Regulations, as referred to in Part "B" of Schedule II to the Act. Depreciation on amount of fair valuation for assets carried at fair value on date of transition is charged over the balance residual life of the assets considering the life prescribed as per the Electricity Regulation. Once the individual asset is depreciated to the extent of seventy (70) percent, remaining depreciable value as on 31st March of the year closing shall be spread over the balance useful life of the asset, as provided in the Electricity Regulations. The residual values are not more than 10% of the cost of the assets.
EPC and Contracts Business:
Property, Plant and Equipment of EPC and Contracts Business are depreciated under the reducing balance method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act.
Other Activities:
Property, Plant and Equipment of other activities have been depreciated under the straight line method as per the useful life and in the manner prescribed in Part "C" Schedule II to the Act.
(k) Investment Property:
Investment property comprise portion of office building that are held for long term yield and / or capital appreciation. Investment property is initially recognized at cost. Subsequently investment property comprising of building is carried at cost less accumulated depreciation and accumulated impairment losses.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in Statement of Profit and Loss as incurred.
Depreciation on Investment Property is depreciated under the straight line method as per the rates and the useful life prescribed as per Schedule II of the Companies Act.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on periodical basis performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no economic benefit is expected from its disposal.
The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of Profit and Loss.
(l) Intangible Assets:
Intangible assets are stated at cost of acquisition net of tax/duty credits availed, if any, less accumulated amortisation / depletion. Cost includes expenditure directly attributable to the acquisition of asset.
Amortization Method:
(i) Softwareâs pertaining to the power business are amortized as per the rate and in the manner prescribed in the Electricity Regulations. Other softwareâs are amortized over a period of 3 years.
(ii) The container trains license fee is amortized over 20 years being the life of the license.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with carrying value of all intangible assets as at April 01,
2015 as per Previous GAAP as deemed cost of intangible asset in accordance with the stipulation of Ind AS 101 "Firsttime Adoption of Indian Accounting Standards".
(m) Inventories:
Inventories are stated at lower of cost and net realizable value. In case of fuel, stores and spares "cost" means weighted average cost. Unserviceable / damaged stores and spares are identified and written down based on technical evaluation.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(n) Allocation of Expenses:
(i) Power Business:
The allocation to capital and revenue is done consistently on the basis of a technical evaluation.
(ii) EPC and Contracts Business:
Common overheads are absorbed by various jobs in proportion to the prime cost of each job.
(o) Employee Benefits:
(i) Short-term Obligations:
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as short term employee benefit obligations in the balance sheet.
(ii) Post-employment Obligations:
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity and
(b) defined contribution plans such as provident fund, superannuation fund etc.
Defined Benefit Plans
(a) Gratuity Obligations
The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss. Remeasurement of gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost. The Company contributes to a trust set up by the Company which further contributes to policies taken from Insurance Regulatory and Development Authority (IRDA) approved insurance companies.
(b) Provident Fund
The benefit involving employee established provident funds, which require interest shortfall to be recompensated are to be considered as defined benefit plans. As per the Audited Accounts of Provident Fund Trust maintained by the Company, the shortfall arising in meeting the stipulated interest liability, if any, gets duly provided for.
Defined Contribution plans
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Superannuation plan, a defined contribution scheme is administered by IRDA approved Insurance Companies. The Company makes annual contributions based on a specified percentage of each eligible employee''s salary.
(iii) Other long-term employee benefit obligations:
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(p) Treasury Shares:
The Company has created a Reliance Infrastructure ESOS Trust (ESOS Trust) for providing share-based payment to its employees. The Company uses ESOS Trust as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOS Trust buys shares of the company from the market, for giving shares to employees. The Company treats ESOS Trust as its extension and shares held by ESOS Trust are treated as treasury shares.
Reliance Infrastructure ESOS Trust has in substance acted as an agent and the Company as a sponsor retains the majority of the risks rewards relating to funding arrangement. Accordingly, the Company has recognized issue of shares to the Trust as the issue of treasury shares and deducted from equity by consolidating Trust into financial statements of the Company.
(q) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary cost incurred in connection with the arrangement of borrowings and the exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
(r) Income Taxes:
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Company operates and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in subsidiaries, branches and associates and interest in joint arrangements where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income tax expense for the year comprises of current tax and deferred tax. Income tax is recognized in the Statement of Profit and Loss except to the extent that it relates to items recognized in ''Other Comprehensive Income'' or directly in equity, in which case the tax is recognized in ''Other Comprehensive Income'' or directly in equity, respectively.
(s) Provisions:
Provisions for legal claims are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as finance cost.
(t) Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is probable that an outflow of resources will not be required to settle the obligation. However, if the possibility of outflow of resources, arising out of present obligation, is remote, it is not even disclosed as contingent liability.
A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the notes to financial statements. A Contingent asset is not recognized in financial statements, however, the same is disclosed where an inflow of economic benefit is probable.
(u) Impairment of Non-financial Assets:
Assessment for impairment is done at each Balance Sheet date as to whether there is any indication that a non-financial asset may be impaired. Indefinite-life intangibles are subject to a review for impairment annually or more frequently if events or circumstances indicate that it is necessary. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets is considered as a cash generating unit. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company''s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. If any indication of impairment exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made. Asset/cash generating unit whose carrying value exceeds their recoverable amount are written down to the recoverable amount by recognizing the impairment loss as an expense in the Statement of Profit and Loss. The impairment loss is allocated first to reduce the carrying amount of any goodwill (if any) allocated to the cash generating unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Recoverable amount is higher of an asset''s or cash generating unit''s fair value less cost of disposal and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. An impairment loss recognized for goodwill is not reversed in subsequent periods.
(v) Cash and Cash Equivalents:
Cash and cash equivalents in the Balance Sheet comprise of cash on hand, demand deposits with Banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(w) Cash flow Statement:
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
(x) Accounting for Oil and Gas Activity:
Oil and natural gas exploration and evaluation expenditures are accounted for using the ''successful efforts'' method of accounting. Costs are accumulated on a field-by-field basis. Geological and geophysical costs are expensed as incurred. Costs directly associated with an exploration well, and exploration and property leasehold acquisition costs, are capitalized until the determination of reserves is evaluated. If it is determined that commercial discovery has not been achieved, these costs are charged to expense.
(y) Contributed Equity:
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(z) Dividends:
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
(aa) Earnings per Share (EPS):
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Both Basic earnings per share and Diluted earnings per share have been calculated with and without considering income from Rate Regulated activities in the Net Profit attributable to Equity Shareholders.
(bb) Leases:
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially rests with the lessor are recognized as operating lease. Lease rentals under operating lease are recognized in the Statement of Profit and Loss on a straight line basis.
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.
For arrangements entered into prior to April 1, 2015, the Company has determined whether the arrangement constitute lease on the basis of facts and circumstances existing on the date of transition.
As a lessee
Leases of property, plant and equipment where the Company, as lessee, has substantially obtained all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Contingent rentals are recognized as expenses in the periods in which they are incurred.
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 leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases.
As a less or
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease. 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. Contingent rents are recognized as revenue in the period in which they are earned.
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 entity''s 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.
(cc) Non-current assets (or disposal group) held for sale and discontinued operations:
Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinate plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Statement of Profit and Loss.
(dd) Business Combinations:
Common control business combinations include transactions, such as transfer of subsidiaries or businesses, between entities within a group.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method, the assets and liabilities of the combining entities are reflected at their carrying amounts, the only adjustments that are made are to harmonies accounting policies.
Transition to Ind AS
The Company has availed an option of not to apply Ind AS 103" Business Combination" retrospectively for any business combinations occurred before April 01, 2015.
(ee) Rounding off amounts:
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Crore with two decimals, as per the requirement of Schedule III, unless otherwise stated.
2. Critical estimates and judgments:
The areas involving critical estimates or judgments are:
- Estimation of deferred tax assets recoverable
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the s
Mar 31, 2015
(a) Basis of preparation of financial statements:
The financial statements are prepared on an accrual basis of accounting
and in accordance with the generally accepted accounting principles in
India (Indian GAAP), and comply in material aspects with the Accounting
Standards specified under Section 133 of the Companies Act, 2013 (the
Act) (read with Rule 7 of the Companies (Accounts) Rules, 2014). The
financial statements have been prepared under the historical cost
convention on accrual basis, except for certain fixed assets which are
carried at revalued amounts.
(b) Financial Statements: Presentation and Disclosures:
Financial Statements have been prepared in accordance with the
requirements of the information and disclosures mandated by Schedule
III, applicable Accounting Standards, other applicable pronouncements
and regulations.
(c) Use of Estimate:
The preparation and presentation of financial statements requires
estimates and assumptions to be made that affect the reported amount of
assets and liabilities and disclosures of contingent liabilities as on
date of the financial statements and reported amount of revenue and
expenses during the reporting period. Although these estimates are
based on the management's best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets and liabilities in future periods. Difference between the actual
results and estimates is recognised in the period in which the results
are known/ materialized.
(d) Revenue Recognition Policy:
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. Further, specific criteria for revenue recognition
followed for different businesses are as under -
(i) Power Business:
a. Revenue from Sale of Power:
Revenue from sale of power is accounted for on the basis of billing to
consumers based on billing cycles followed by the Company which is
inclusive of fuel adjustment charges (FAC) and includes unbilled
revenue for the year. Generally all consumers are billed on the basis
of recording of consumption of energy by installed meters. Where meters
have stopped or are faulty, the billing is done based on the past
consumption for such period.
b. Revenue from Transmission Business:
Revenue from Transmission Charges are accounted on the basis of
periodic billing to consumers/state transmission utility. 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.
The Transmission system Incentive/disincentive is accounted for based
on the certification of availability by the respective regional power
committee and in accordance with the norms notified/approved by the
CERC.
c. The Company determines revenue gaps (i.e. surplus/shortfall in
actual returns over returns entitled) in respect of its regulated
operations based on the principles laid down under the relevant Tariff
Regulations/Tariff Orders notified by the Electricity Regulator and the
actual or expected actions of the regulator under the applicable
regulatory framework. Appropriate adjustments in respect of such
revenue gaps are made in the revenue of the respective year for the
amounts which are reasonably determinable and no significant
uncertainty exists in such determination. These adjustments/accruals
representing revenue gaps are carried forward as Regulatory
Assets/Regulatory Liabilities and are classified as Current/Non Current
Assets/Liabilities, as the case may be, which would be
recovered/refunded through future billing based on future tariff
determination by the regulator in accordance with the electricity
regulations.
(ii) EPC and Contracts Business:
In respect of construction contracts, revenue is recognised on the
percentage of completion method based on the stage of completion of a
contract upto the reporting date.
The stage of completion of a contract is determined as a proportion
that the progress billings raised, on the basis of joint measurement
and works certified by the customers, up to the reporting date as per
the terms of the contract bear to the total value of such contract.
Revenue from Construction Contract is recognised by adding the
aggregate cost incurred on the contract till reporting period and the
proportionate profit using the Percentage Completion Method. Profit
proportionate to the value of work done upto reporting date is
determined as a percentage of the Profit estimated to arise on
completion of the entire contract, after deduction of Contingency.
Profit is recognised only when the outcome of the contract can be
estimated reliably. When the construction contract is expected to
result in a loss on completion of the entire contract, the entire loss
is recognised as an expense immediately in the same reporting period.
Contract in progress is valued at cost plus recognised profit (less
recognised losses) upto the reporting date.
In respect of operation and maintenance contracts, revenue
proportionate to value of work done or the period elapsed as the case
may be, is recognised.
(!!!) Others:
Insurance and other claims are recognised as revenue on certainty of
receipt on prudent basis.
Income on investments is recognised based on the terms of the
investment. Income from mutual fund scheme having fixed maturity plans
is accounted on declaration of dividend or on maturity of such
investments. Interest income is recognised on a time proportion basis
after taking into account the principal amount outstanding and the rate
applicable. Dividend on investment is recognised when the right to
receive the payment is established.
(e) Foreign Currency Transactions:
(!) Transactions denominated in foreign currencies are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
(!!) Foreign currency monetary items (assets and liabilities) are
restated using the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of historical cost
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Gains and losses, if any, at the
year-end in respect of monetary assets and monetary liabilities are
recognised in the Statement of Profit and Loss except in case of gains
or losses arising on long term foreign currency monetary items, the
accounting treatment for which is as under:
In accordance with Govt. of India, Ministry of Corporate affairs
notification (GSR No.914(E) dated December 29, 2011) in respect of
accounting year commencing on or after April 1, 2011, the Company has
exercised the option and foreign exchange gain/losses on long term
foreign currency monetary items relating to the acquisition of
depreciable assets are added to or deducted from the cost of such
assets and in other cases, such gains or losses are accumulated in a
"Foreign Currency Monetary Item Translation Difference Account" to be
amortised over the remaining life of the concerned monetary item.
(!!!) In respect of integral foreign operations of the Company, its
fixed assets are translated at the rate on the date of acquisition,
monetary assets and monetary liabilities are translated at the rate on
the date of the balance sheet and income and expenditure are translated
at the average of month-end rates during the year.
(!v) In respect of derivative transactions, gains/losses are recognised
in the Statement of Profit and Loss on settlement. On a reporting
date, open derivative contracts are revalued at fair values and
resulting losses on an overall basis (including reversal of losses for
earlier periods), if any, are recognised in the Statement of Profit and
Loss. Net gain, if any, is ignored.
(v) In respect of forward exchange contracts entered into to hedge
foreign currency risk of an existing asset/liability, the premium or
discount arising at the inception of forward exchange contract is
amortized and recognised as an expense/ income over the life of the
contract. Exchange differences on such contracts, are recognised in the
Statement of Profit and Loss in the period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such
forward exchange contract is also recognised as income or as expense
for the period.
(f) Fixed Assets:
Tangible Assets
(!) Cost comprises cost of acquisition or construction of assets
(excluding revalued assets) including borrowing costs attributable to
bringing the assets to their intended use.
(ii) All project related expenditure viz. Civil works, machinery under
erection, construction and erection materials, pre-operative
expenditure incidental/attributable to the construction of project,
borrowing cost incurred prior to the date of commercial operations and
trial run expenditure are shown under Capital Work-In-Progress (CWIP).
These expenses are net of recoveries and income (net of tax) from
surplus funds arising out of project specific borrowings.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of tax/duty/
credits availed, if any, less accumulated amortisation/ depletion.
Acquisition cost of residual interest in the monthly cash flow of the
toll road businesses have been accounted as intangible assets.
(g) Depreciation/Amortisation:
Tangible Assets:
(i) Power Business:
Fixed assets are depreciated under the straight line method as per the
rates and in the manner prescribed as per the Electricity Regulations
relating to license business and other power business.
The depreciation for the year has been shown after reducing the
proportion of the amount of depreciation provided on assets created
against the contributions received from consumers.
Depreciation on revalued assets is charged over the balance residual
life of the assets considering the life prescribed as per the
Electricity regulations.
(ii) EPC and Contracts Business:
Fixed assets of EPC Business have been depreciated under the reducing
balance method as per the useful life and in the manner prescribed in
Schedule II to the Act.
Other Activities:
Fixed assets of other activities have been depreciated under the
straight line method as per the useful life and in the manner
prescribed in Schedule II to the Act.
Intangible Assets:
(i) Softwares pertaining to the power business are amortized as per the
rate and in the manner prescribed in the electricity regulations. Other
softwares are amortised over a period of 3 years.
(ii) Intangible Assets representing acquisition of Residual Interest in
Toll Businesses are amortised over a contract period of 14 years, on
the basis of projected revenue which reflects the pattern, which is
beyond the maximum period of 10 years, as specified in the Accounting
Standard 26 on Intangible Assets, as the economic benefits from the
underlying assets would be available to the Company over such period as
per the agreements entered.
(iii) The container trains license fee is amortised over 20 years being
the life of the license which is beyond the maximum period of 10 years,
as specified in the Accounting Standard 26 on Intangible Assets, as the
economic benefits from the underlying assets would be available to the
Company over such period.
(h) Investments:
Investments, which are readily recognised and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are recognised at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees
and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss.
(i) Inventories:
Inventories are stated at lower of cost and net realisable value. In
case of fuel, stores and spares "cost" means weighted average cost.
Unserviceable/damaged stores and spares are identified and written down
based on technical evaluation.
Net recognised value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Allocation of Indirect Expenses:
(i) Power Business:
The allocation to capital and revenue is done consistently on the basis
of a technical evaluation.
(ii) EPC and Contracts Business:
Common overheads are absorbed by various jobs in proportion to the
prime cost of each job.
(k) Employee Benefits:
Contributions to defined contribution schemes such as provident fund,
superannuation funds etc. are charged to Statement of Profit and
Loss/Capital Work-in-Progress, as applicable. The Company also provides
for retirement benefits in the form of gratuity and leave encashment.
The liability in respect of this defined benefit plans is calculated
using the Projected Unit Credit Method and spread over the period
during which the benefit is expected to be derived from employees'
services.
Such defined benefits are charged to Statement of Profit and
Loss/Capital Work-in-Progress, as applicable, based on actuarial
valuations, as at the balance sheet date, made by independent
actuaries. Actuarial Gain and loss is recognised in the Statement of
Profit and Loss/Capital Work-in-progress, as may be applicable.
(l) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(m) Accounting for Taxes on Income:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from "timing differences" between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future. However, in respect of unabsorbed depreciation or carry
forward loss, the deferred tax asset is recognised and carried forward
only to the extent that there is a virtual certainty that the assets
will be realised in future.
(n) Provisions:
Provisions are recognised when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of the obligation.
(o) Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is probable that an outflow of resources will not be
required to settle the obligation. However, if the possibility of
outflow of resources, arising out of present obligation, is remote, it
is not even disclosed as contingent liability. A contingent liability
also arises in extremely rare cases where there is a liability that
cannot be recognised because it cannot be measured reliably. The
Company does not recognize a contingent liability but discloses its
existence in the notes to financial statements. Contingent assets are
neither recognised nor disclosed in the financial statements.
(p) Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
the carrying amount of fixed assets/cash generating unit exceeds the
recoverable amount on the reporting date, the carrying amount is
reduced to the recoverable amount. The recoverable amount is measured
as the higher of the net selling price and the value in use determined
by the present value of estimated future cash flows.
(q) Cash and cash equivalents:
Cash and cash equivalents for the purposes of cash flow statement
comprise cash on hand and demand deposits with bank.
(r) Accounting for Oil and Gas Activity:
The Company follows "successful efforts method" for accounting of oil
and gas exploration activities as set out by the guidance note issued
by the Institute of Chartered Accountants of India on 'Accounting for
Oil and Gas Producing Activities'. The cost of survey and prospecting
activities conducted in search of oil and gas are expensed out in the
year in which the same are incurred.
(s) All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Act.
Mar 31, 2014
(a) Basis of preparation of financial statements:
The financial statements are prepared on an accrual basis of accounting
and in accordance with the generally accepted accounting principles in
India (Indian GAAP), the relevant provisions of the Companies Act, 1956
upon their notifcation (including any statutory modification(s) or
re-enactments thereof for the time being in force) (the Act) and comply
in material aspects with the Accounting Standards notifed under Section
211 (3C) of the Act, which continues to be applicable under Section 133
of the Companies Act, 2013 in terms of general circular 15/2013 dated
September 13, 2013 of Ministry of Corporate Affairs (MCA), read with
Companies (Accounting Standards) Rules, 2006 (as amended). In view of
General Circular 08/2014 dated April 04,2014 of MCA, the provisions of
the Companies Act, 1956 shall apply in relation to maintenance of books
of account and preparation of financial statements for the year ended
March 31, 2014 shall apply. Assets and Liabilities created under
applicable electricity laws continue to be depicted under appropriate
heads.
(b) Financial Statements: Presentation and Disclosures:
Financial Statements have been prepared in accordance with the
requirements of the information and disclosures mandated by Revised
Schedule VI, applicable Accounting Standards, other applicable
pronouncements and regulations.
(c) Use of Estimates:
The preparation and presentation of financial statements requires
estimates and assumptions to be made that affect the reported amount of
assets and liabilities and disclosures of contingent liabilities as on
date of the financial statements and reported amount of revenue and
expenses during the reporting period. Although these estimates are
based on the management''s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets and liabilities in future periods. Difference between the
actual results and estimates is recognised in the period in which the
results are known / materialized.
(d) Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured. Further, Specific criteria for revenue recognition
followed for different businesses are as under:
(i) Electricity Business:
Revenue from sale of electrical energy is accounted for on the basis of
billing to consumers based on billing cycles followed by the Company
which is inclusive of fuel adjustment charges (FAC) and includes
unbilled revenue accrued upto end of accounting year. Generally all
consumers are billed on the basis of recording of consumption of energy
by installed meters. Where meters have stopped or are faulty, the
billing is done based on the past consumption for such period.
Revenue from Transmission Charges are accounted on the basis of
periodic billing to consumers / state transmission utility.
The Company determines revenue gaps (i.e. surplus/shortfall in actual
returns over returns entitled) in respect of its regulated operations
based on the principles laid down under the relevant Tariff
Regulations/Tariff Orders notifed by the Electricity Regulator and the
actual or expected actions of the regulator under the applicable
regulatory framework. Appropriate adjustments in respect of such
revenue gaps are made in the revenue of the respective year for the
amounts which are reasonably determinable and no significant uncertainty
exists in such determination. These adjustments/ accruals representing
revenue gaps are carried forward as Regulatory Assets / Regulatory
Liabilities and are classifed as Current / Non Current Assets /
Liabilities, as the case may be, which would be recovered / refunded
through future billing based on future tariff determination by the
regulator in accordance with the electricity regulations.
(ii) EPC and Contracts Business:
In respect of construction contracts, revenue is recognised on the
percentage of completion method based on the stage of completion of a
contract upto the reporting date.
The stage of completion of a contract is determined as a proportion
that the progress billings raised by the Company on the basis of joint
measurement and works certified by the customers up to the reporting
date as per the terms of the contract, bear to the total contract
value.
Revenue from Construction Contract is recognised by adding the
aggregate cost incurred on the contract till reporting period and the
proportionate profit using the Percentage Completion Method. profit
proportionate to the value of work done upto reporting date is
determined as a percentage of the profit estimated to arise on
completion of the entire contract, after deduction of Contingency.
profit is recognised only when the outcome of the contract can be
estimated reliably. When the construction contract is expected to
result in a loss on completion of the entire contract, the entire loss
is recognized as an expense immediately in the same reporting period.
Contract in progress is valued at cost plus recognised profit (less
recognised losses) upto the reporting date.
In respect of operation and maintenance contracts, revenue
proportionate to value of work done or the period elapsed as the case
may be, is recognised.
In respect of Operation & Maintenance contracts in toll business,
revenue is recognised based on the terms of the contracts entered with
the party.
(iii) Others:
Insurance and other claims are recognised as revenue on certainty of
receipt on prudent basis.
Income on investments is recognised based on the terms of the
investment. Income from mutual fund scheme having fixed maturity plans
is accounted on declaration of dividend or on maturity of such
investments. Interest income is recognised on a time proportion basis
after taking into account the principal amount outstanding and the rate
applicable. Dividend on investment is recognized when the right to
receive the payment is established.
(e) Foreign Currency Transactions:
(i) Transactions denominated in foreign currencies are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
(ii) Foreign currency monetary items (assets and liabilities) are
restated using the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of historical cost
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Gains and losses, if any, at the
year-end in respect of monetary assets and monetary liabilities are
recognised in the Statement of profit and Loss except in case of gains
or losses arising on long term foreign currency monetary items, the
accounting treatment for which is as under:
In accordance with Govt. of India, Ministry of Corporate affairs
notifcation (GSR No.914(E) dated December 29, 2011) in respect of
accounting year commencing on or after April 1, 2011, the Company has
exercised the option whereby the foreign exchange gains / losses on
long term foreign currency monetary items relating to the acquisition
of depreciable assets are added to or deducted from the cost of such
assets and in other cases, such gains or losses are accumulated in a
"Foreign Currency Monetary Item Translation Difference Account" to be
amortised over the remaining life of the concerned monetary item.
(iii) In respect of integral foreign operations of the Company, its
fixed assets are translated at the rate on the date of acquisition,
monetary assets and monetary liabilities are translated at the rate on
the date of the balance sheet and income and expenditure are translated
at the average of month-end rates during the year.
(iv) In respect of derivative transactions, gains / losses are
recognised in the Statement of profit and Loss on settlement. On a
reporting date, open derivative contracts are revalued at fair values
and resulting losses on an overall basis (including reversal of losses
for earlier periods), if any, are recognised in the Statement of profit
and Loss. Net gain, if any, is ignored.
(f) Fixed Assets:
Tangible Assets
(i) Cost comprises cost of acquisition or construction of assets
(excluding revalued assets) including borrowing costs attributable to
bringing the assets to their intended use.
(ii) All project related expenditure viz. civil works, machinery under
erection, construction and erection materials, pre- operative
expenditure incidental / attributable to the construction of project,
borrowing cost incurred prior to the date of commercial operations and
trial run expenditure are shown under Capital Work-In-Progress (CWIP).
These expenses are net of recoveries and income (net of tax) from
surplus funds arising out of project Specific borrowings.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of
tax/duty/credits availed, if any, less accumulated amortisation /
depletion. Acquisition cost of residual interest in the monthly cash
fow of the toll road businesses have been accounted as intangible
assets.
(g) Depreciation / Amortisation:
(i) Electricity Business:
Fixed assets are depreciated under the straight line method as per the
rates and in the manner prescribed as per the Electricity Regulations
relating to license business and other electricity business. The
depreciation for the year has been shown after reducing the proportion
of the amount of depreciation provided on assets created against the
contributions received from consumers.
Depreciation on revalued assets is charged over the balance residual
life of the assets considering the life prescribed as per the
Electricity regulations.
(ii) EPC and Contracts Business:
Fixed assets of EPC Business have been depreciated under the reducing
balance method at the rates and in the manner prescribed in Schedule
XIV to the Act.
(iii) Other Activities:
Fixed assets of other activities have been depreciated under the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Act.
(iv) Intangible Assets:
(i) Softwares pertaining to the electricity business are amortized as
per the rate and in the manner prescribed in the electricity
regulations. Other softwares are amortised over a period of 3 years.
(ii) Intangible Assets representing acquisition of Residual Interest in
Toll Businesses are amortised over a contract period of 14 years, on
the basis of projected revenue which refects the pattern, which is
beyond the maximum period of 10 years, as specified in the Accounting
Standard 26 on Intangible Assets, as the economic benefits from the
underlying assets would be available to the Company over such period as
per the agreements entered. The same is in line with the Ministry of
Corporate Affairs notifcation no. GSR (E) dated April 17, 2012.
(iii) The container trains license fee is amortised over 20 years being
the life of the license which is beyond the maximum period of 10 years,
as specified in the Accounting Standard 26 on Intangible Assets, as the
economic benefits from the underlying assets would be available to the
Company over such period.
(h) Investments:
Investments which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classifed as current investments. All other investments are
classifed as long-term investments. On initial recognition, all
investments are recognised at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees
and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of profit and Loss.
(i) Inventories:
Inventories are stated at lower of cost and net realisable value. In
case of fuel, stores and spares "cost" means weighted average cost.
Unserviceable / damaged stores and spares are identified and written
down based on technical evaluation.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Allocation of Indirect Expenses:
(i) Electricity Business:
The allocation to capital and revenue is done consistently on the basis
of a technical evaluation.
(ii) EPC and Contracts Business:
Common overheads are absorbed by various jobs in proportion to the
prime cost of each job.
(k) Employee benefits:
Contributions to Defined contribution schemes such as provident fund,
superannuation funds etc. are charged to Statement of profit and Loss /
Capital Work-in-Progress, as applicable. The Company also provides for
retirement benefits in the form of gratuity and leave encashment. The
liability in respect of this Defined benefit plans is calculated using
the Projected Unit Credit Method and spread over the period during
which the benefit is expected to be derived from employees'' services.
Such Defined benefits are charged to Statement of profit and Loss /
Capital Work-in-Progress, as applicable, based on actuarial valuations,
as at the balance sheet date, made by independent actuaries. Actuarial
gain and loss is recognised in the Statement of profit and Loss /
Capital Work-in-Progress, as may be applicable.
(l) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(m) Accounting for Taxes on Income:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from "timing differences" between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future. However, in respect of unabsorbed depreciation or carry
forward loss, the deferred tax asset is recognised and carried forward
only to the extent that there is a virtual certainty that the assets
will be realised in future.
(n) Provisions:
Provisions are recognised when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of the obligation.
(o) Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is probable that an outflow of resources will not be required
to settle the obligation . However, if the possibility of outflow of
resources, arising out of present obligation, is remote, it is not even
disclosed as contingent liability. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognised because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
notes to financial statements. Contingent assets are neither recognized
nor disclosed in the financial statements.
(p) Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
the carrying amount of fixed assets / cash generating unit exceeds the
recoverable amount on the reporting date, the carrying amount is
reduced to the recoverable amount. The recoverable amount is measured
as the higher of the net selling price and the value in use determined
by the present value of estimated future cash flows.
(q) Cash and cash equivalents:
Cash and cash equivalents for the purposes of cash fow statement
comprise cash on hand and demand deposits with bank.
(r) Accounting for Oil and Gas Activity:
The Company follows "successful efforts method" for accounting of oil
and gas exploration activities as set out by the guidance note issued
by the Institute of Chartered Accountants of India on ''Accounting for
Oil and Gas Producing Activities''. The cost of survey and prospecting
activities conducted in search of oil and gas are expensed out in the
year in which the same are incurred.
(s) All assets and liabilities have been classifed as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Act.
2.3 Terms / Rights attached to equity shares:
(a) Voting
The Company has only one class of equity shares having a par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share.
(b) Dividends
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2014, the amount of per share dividend
recognised as distributions to equity shareholders was Rs. 7.50.
(c) Liquidation
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive all of the remaining assets of the
Company, after distribution of all preferential amounts. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
2.4 Buy-back of Equity Shares:
Aggregate number of shares bought back during the period of five years
immediately preceding the reporting date  51,83,767 (1,47,38,762)
4. Long Term Borrowings:
Security:
Non Convertible Debentures referred above to the extent of:
(a) Rs. 125 Crore are secured by way of frst pari-passu charge, on
Company''s fixed Rs. 125 Crore are secured by way of frst pari-passu charge
assets, both present and future, on Company''s fixed assets, both present
and future, located at its plants situated at Goa and Samalkot and
Specific premises at Hyderabad ,properties comprising certain plant and
machinery and certain fixed assets of Mumbai distribution business and
on Company''s Specific immovable properties located in the state of
Maharashtra.
(b) Rs. 850 Crore are secured by way of frst pari-passu charge on
Company''s certain fixed assets, both present and future, located at its
plant situated at Dahanu and on Company''s Specific premises in Mumbai.
(c) Rs. 975 Crore are secured by way of frst pari-pasu charge on Specific
land and buildings and certain fixed assets of Mumbai Distribution
Business of the Company.
(d) Rs. 500 Crore are secured by frst pari-passu charge on Specific
properties (Land and Buildings) located in suburban Mumbai and certain
fixed assets of the Company''s Mumbai distribution business.
(e) Rs. 40 Crore are secured by assets related to 8MW Windmill Project of
the Company located at Jogimatti in Chitradurga district of Karnataka
and on Company''s Specific immovable property located at Thane district
in the state of Maharashtra.
(f) Rs. 650 Crore are secured by way of frst pari-passu charge on assets
of Company, located at its plants at Goa and Samalkot and Specific
premises at Hyderabad, properties comprising certain plant and
machinery and certain fixed assets of Mumbai distribution business and
on Company''s Specific immovable properties located in the state of
Maharashtra. (The existing Rs. 125 Crore NCD holders also hold pari-passu
charge on the above assets.)
(g) Rs. 700 Crore shall be secured by frst ranking pari-passu charge on
the following:- 1) Regulatory Assets , present and future, related to
Mumbai Distribution Business 2) Escrow accounts established for the
purpose and specified immovable property
(Note: The security on the above assets is yet to be created.) (h) Rs.
500 Crore are secured by the following:- 1) Pledge of 18,75,000 shares
of M/s Reliance Power Limited which are owned by the Company.
2) Specific immovable property located at Thane District.
3) All of the Company''s rights, title, interest and benefits in, to and
under the bank account no.0656363-00-0 of Reliance Infrastructure
Limited with Deutsche Bank, Mumbai branch together with fixed deposits
standing to the credit of the said bank account.
The Term Loans of Rs. 2,256.74 Crore are secured as under:
(a) Rs. 307.94 Crore from Central Bank of India is secured by way of frst
exclusive pari-passu charge on certain fixed assets of Mumbai
Distribution Business.
(b) Rs. 163.50 Crore from Central Bank of India is secured by way of frst
exclusive pari-passu charge on certain fixed assets of EPC business.
(c) Rs. 300 Crore from South Indian Bank is secured by way of frst
pari-passu charge on certain fixed assets of Mumbai Transmission
Business.
(d) Rs. 92 Crore from Corporation Bank is secured by way of frst
pari-passu charge on certain fixed assets of Mumbai Transmission
Business.
(e) Rs. 62 Crore from State Bank of Hyderabad is secured by way of frst
pari-passu charge on certain fixed assets of Mumbai Transmission
Business.
(f) Rs. 203.12 Crore from Bank of Maharashtra is secured by way of frst
exclusive charge on certain fixed assets of Mumbai Transmission
Business.
(g) Rs. 150 Crore from Jammu & Kashmir Bank shall be secured by way of
frst pari-passu charge on the moveable & immovable assets of power
plant belonging to M/s BSES Kerala Power Limited (a 100% subsidiary of
the Company) located in Kochi. (The security on these assets is yet to
be created.)
(h) Rs. 50 Crore from Karnataka Bank shall be secured by way of frst
pari-passu charge on the fixed assets of the company and the fixed assets
of power plant belonging to M/s BSES Kerala Power Limited (a 100%
subsidiary of the Company) located in Kochi. (The security on these
assets is yet to be created.)
(i) Rs. 400 Crore from Bank of Baroda shall be secured by the Regulatory
Assets related to Mumbai Distribution Business, Escrow accounts
established for the purpose and specified immovable property. (The
security on these assets is yet to be created.)
(j) Rs. 250 Crore from Syndicate Bank shall be secured by the Regulatory
Assets related to Mumbai Distribution Business; Escrow accounts
established for the purpose and specified immovable property. (The
security on these assets is yet to be created.)
(k) Rs. 200 Crore from PTC India Financial Services Limited shall be
secured by land in Thane district and fixed assets related to two
Specific schemes of Mumbai Transmission Business. (The security on these
assets is yet to be created).
(l) Rs. 11 Crore from Andhra Bank are secured by way of second pari-passu
charge on certain fixed assets of Mumbai Distribution Business of the
Company. (The security on these assets is yet to be created).
(m) Rs. 22 Crore from Bank of India are secured by way of second
pari-passu charge on certain fixed assets of Mumbai Distribution
Business of the Company. (The security on these assets is yet to be
created).
(n) Rs. 16 Crore from Canara Bank are secured by way of second pari-passu
charge on certain fixed assets of Mumbai Distribution Business of the
Company. (The security on these assets is yet to be created).
(o) Rs. 29.10 Crore from Axis Bank Ltd. are secured by way of second
pari-passu charge on certain fixed assets of Mumbai Distribution
Business of the Company. (The security on these assets is yet to be
created).
Mar 31, 2013
(a) Basis of preparation of financial statements:
The financial statements are prepared on an accrual basis of accounting
and in accordance with the generally accepted accounting principles in
India (Indian GAAP), the relevant provisions of the Companies Act, 1956
(the Act) and comply in material aspects with the Accounting Standards
notified under Section 211 (3C) of the Act, read with Companies
(Accounting Standards) Rules, 2006 (as amended). Assets and Liabilities
created under applicable electricity laws continue to be depicted under
appropriate heads.
(b) Financial Statements: Presentation and Disclosures:
Financial Statements have been prepared in accordance with the
requirements of the information and disclosures mandated by Revised
Schedule VI, applicable Accounting Standards, other applicable
pronouncements and regulations.
(c) Use of Estimates:
The preparation and presentation of financial statements requires
estimates and assumptions to be made that affect the reported amount of
assets and liabilities and disclosures of contingent liabilities as on
date of the financial statements and reported amount of revenue and
expenses during the reporting period. Although these estimates are
based on the management''s best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets and liabilities in future periods. Difference between the
actual results and estimates is recognised in the period in which the
results are known / materialized.
(d) Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. Further, specific criteria for revenue recognition
followed for different businesses are as under :
(i) Electricity Business:
Revenue from sale of electrical energy is accounted for on the basis of
billing to consumers based on billing cycles followed by the Company
which is inclusive of fuel adjustment charges (FAC) and includes
unbilled revenue accrued upto end of accounting year. Generally all
consumers are billed on the basis of recording of consumption of energy
by installed meters. Where meters have stopped or are faulty, the
billing is done based on the past consumption for such period.
Revenue from Transmission Charges are accounted on the basis of
periodic billing to consumers / state transmission utility.
The Company determines revenue gaps (i.e. surplus/shortfall in actual
returns over returns entitled) in respect of its regulated operations
based on the principles laid down under the relevant Tariff
Regulations/Tariff Orders notified by the Electricity Regulator and the
actual or expected actions of the regulator under the applicable
regulatory framework. Appropriate adjustments in respect of such
revenue gaps are made in the revenue of the respective year for the
amounts which are reasonably determinable and no significant
uncertainty exists in such determination. These adjustments/ accruals
representing revenue gaps are carried forward as Regulatory Assets /
Regulatory Liabilities and are classified as Current / Non Current
Assets / Liabilities, as the case may be, which would be recovered /
refunded through future billing based on future tariff determination by
the regulator in accordance with the electricity regulations.
(ii) EPC and Contracts Business:
In respect of construction contracts, revenue is recognised on the
percentage of completion method based on the stage of completion of a
contract upto the reporting date.
The stage of completion of a contract is determined as a proportion
that the progress billings raised by the Company on the basis of joint
measurement and works certified by the customers up to the reporting
date as per the terms of the contract, bear to the total contract
value.
Revenue from Construction Contract is recognised by adding the
aggregate cost incurred on the contract till reporting period and the
proportionate profit using the Percentage Completion Method. Profit
proportionate to the value of work done upto reporting date is
determined as a percentage of the Profit estimated to arise on
completion of the entire contract, after deduction of Contingency.
Profit is recognised only when the outcome of the contract can be
estimated reliably. When the construction contract is expected to
result in a loss on completion of the entire contract, the entire loss
is recognized as an expense immediately in the same reporting period.
Contract in progress is valued at cost plus recognised profit (less
recognised losses) upto the reporting date.
In respect of operation and maintenance contracts, revenue
proportionate to value of work done or the period elapsed as the case
may be, is recognised.
(iii) Others:
Insurance and other claims are recognised as revenue on certainty of
receipt on prudent basis.
Income on investments is recognised based on the terms of the
investment. Income from mutual fund scheme having fixed maturity plans
is accounted on declaration of dividend or on maturity of such
investments. Interest income is recognised on a time proportion basis
after taking into account the principal amount outstanding and the rate
applicable. Dividend on investment is recognized when the right to
receive the payment is established.
(e) Foreign Currency Transactions:
(i) Transactions denominated in foreign currencies are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
(ii) Foreign currency monetary items (assets and liabilities) are
restated using the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of historical cost
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Gains and losses, if any, at the
year-end in respect of monetary assets and monetary liabilities are
recognised in the Statement of Profit and Loss except in case of gains
or losses arising on long term foreign currency monetary items, the
accounting treatment for which is as under:
In accordance with Government of India, Ministry of Corporate affairs
notification (GSR No.914(E) dated December 29, 2011) in respect of
accounting year commencing on or after April 1, 2011, the Company has
exercised the option and foreign exchange gain / losses on long term
foreign currency monetary items relating to the acquisition of
depreciable assets are added to or deducted from the cost of such
assets and in other cases, such gains or losses are accumulated in a
"Foreign Currency Monetary Item Translation Difference Account" to be
amortised over the remaining life of the concerned monetary item.
(iii) In respect of integral foreign operations of the Company, its
fixed assets are translated at the rate on the date of acquisition,
monetary assets and monetary liabilities are translated at the rate on
the date of the balance sheet and income and expenditure are translated
at the average of month-end rates during the year,
(iv) In respect of derivative transactions, gains / losses are
recognised in the Statement of Profit and Loss on settlement. On a
reporting date, open derivative contracts are revalued at fair values
and resulting losses on an overall basis (including reversal of losses
for earlier periods), if any, are recognised in the Statement of Profit
and Loss. Net gain, if any, is ignored.
(f) Fixed Assets:
Tangible Assets
(i) Cost comprises cost of acquisition or construction of assets
(excluding revalued assets) including borrowing costs attributable to
bringing the assets to their intended use.
(ii) All project related expenditure viz. civil works, machinery under
erection, construction and erection materials, pre- operative
expenditure incidental / attributable to the construction of project,
borrowing cost incurred prior to the date of commercial operations and
trial run expenditure are shown under Capital Work-In-Progress (CWIP).
These expenses are net of recoveries and income (net of tax) from
surplus funds arising out of project specific borrowings.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortisation / depletion. Acquisition cost of
residual interest in the monthly cash flow of the toll road businesses
have been accounted as intangible assets.
(g) Depreciation / Amortisation:
(i) Electricity Business:
Fixed assets are depreciated under the straight line method as per the
rates and in the manner prescribed as per the Electricity Regulations
relating to license business and other electricity business. The
depreciation for the year has been shown after reducing the proportion
of the amount of depreciation provided on assets created against the
contributions received from consumers.
Depreciation on revalued assets is charged over the balance residual
life of the assets considering the life prescribed as per the
Electricity regulations.
(ii) EPC and Contracts Business:
Fixed assets of EPC Business have been depreciated under the reducing
balance method at the rates and in the manner prescribed in Schedule
XIV to the Act.
(iii) Other Activities:
Fixed assets of other activities have been depreciated under the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Act.
(iv) Intangible Assets:
(i) Softwares pertaining to the electricity business are amortized as
per the rate and in the manner prescribed in the electricity
regulations. Other softwares are amortised over a period of 3 years.
(ii) Intangible Assets representing acquisition of Residual Interest in
Toll Businesses are amortised over a contract period ranging from 9 to
17 years, on the basis of projected revenue which reflects the pattern,
which is beyond the maximum period of 10 years, as specified in the
Accounting Standard 26 on Intangible Assets, as the economic benefits
from the underlying assets would be available to the Company over such
period as per the agreements entered.
(iii) The container trains license fee is amortised over 20 years being
the life of the license which is beyond the maximum period of 10 years,
as specified in the Accounting Standard 26 on Intangible Assets, as the
economic benefits from the underlying assets would be available to the
Company over such period.
(h) Investments:
Investments which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are recognised at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees
and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss.
(i) Inventories:
Inventories are stated at lower of cost and net realisable value. In
case of fuel, stores and spares "cost" means weighted average cost.
Unserviceable / damaged stores and spares are identified and written
down based on technical evaluation.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Allocation of Indirect Expenses:
(i) Electricity Business:
The allocation to capital and revenue is done consistently on the basis
of a technical evaluation.
(ii) EPC and Contracts Business:
Common overheads are absorbed by various jobs in proportion to the
prime cost of each job.
(k) Employee Benefits:
Contributions to defined contribution schemes such as provident fund,
superannuation funds etc. are charged to Statement of Profit and Loss /
Capital Work-in-Progress, as applicable. The Company also provides for
retirement benefits in the form of gratuity and leave encashment. Such
defined benefits are charged to Statement of Profit and Loss / Capital
Work-in- Progress, as applicable, based on actuarial valuations, as at
the balance sheet date, made by independent actuaries. Actuarial Gain
and loss is recognised in the Statement of Profit and Loss / Capital
Work-in-progress, as may be applicable.
(l) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur,
(m) Accounting for Taxes on Income:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from "timing differences" between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future. However, in respect of unabsorbed depreciation or carry
forward loss, the deferred tax asset is recognised and carried forward
only to the extent that there is a virtual certainty that the assets
will be realised in future.
(n) Provisions:
Provisions are recognised when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of the obligation.
(o) Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is probable that an outflow of resources will not be
required to settle the obligation . However, if the possibility of
outflow of resources, arising out of present obligation, is remote, it
is not even disclosed as contingent liability. A contingent liability
also arises in extremely rare cases where there is a liability that
cannot be recognised because it cannot be measured reliably. The
Company does not recognize a contingent liability but discloses its
existence in the notes to financial statements. Contingent assets are
neither recognized nor disclosed in the financial statements.
(p) Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
the carrying amount of fixed assets / cash generating unit exceeds the
recoverable amount on the reporting date, the carrying amount is
reduced to the recoverable amount. The recoverable amount is measured
as the higher of the net selling price and the value in use determined
by the present value of estimated future cash flows.
(q) Cash and Cash Equivalents:
Cash and cash equivalents for the purposes of cash flow statement
comprise cash on hand and demand deposits with bank.
(r) Accounting for Oil and Gas Activity:
The Company follows "successful efforts method" for accounting of oil
and gas exploration activities as set out by the guidance note issued
by the Institute of Chartered Accountants of India on ''Accounting for
Oil and Gas Producing Activities'', The cost of survey and prospecting
activities conducted in search of oil and gas are expensed out in the
year in which the same are incurred.
(s) All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Act.
Mar 31, 2012
(a) Basis of preparation of financial statements:
The financial statements are prepared on an accrual basis of accounting
and in accordance with the generally accepted accounting principles in
India (Indian GAAP), the relevant provisions of the Companies Act, 1956
(the Act) and comply in material aspects with the Accounting Standards
notified under Section 211 (3C) of the Act, read with Companies
(Accounting Standards) Rules, 2006 (as amended). Assets and Liabilities
created under applicable electricity laws continue to be depicted under
appropriate heads.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained in Note No.2 and accounting for
foreign currency transactions as explained in Note 1(e) below.
(b) Financial Statements: Presentation and Disclosures:
During the year ended March 31, 2012, the Revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company, for
preparation and presentation of its financial statements. Except for
accounting for dividend on investments in subsidiary companies (Refer
Note 2(a)), the adoption of Revised Schedule VI does not impact
recognition and measurement principles followed for preparation of
financial statements.
Financial Statements contain the information and disclosures mandated
by Revised Schedule VI, applicable Accounting Standards, other
applicable pronouncements and regulations.
(c) Use of Estimate:
The preparation and presentation of financial statements requires
estimates and assumptions to be made that affect the reported amount of
assets and liabilities and disclosures of contingent liabilities as on
date of the financial statements and reported amount of revenue and
expenses during the reporting period. Although these estimates are
based on the management's best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets and liabilities in future periods. Difference between the
actual results and estimates is recognised in the period in which the
results are known / materialized.
(d) Revenue Recognition Policy:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria are also
met before revenue is recognized.
(i) Electricity Business:
Revenue from sale of electrical energy is accounted for on the basis of
billing to consumers based on billing cycles followed by the Company
which is inclusive of fuel adjustment charges (FAC) and unbilled
revenue carried forward in the Balance Sheet as Regulatory Assets.
Generally all consumers are billed on the basis of recording of
consumption of energy by installed meters. Where meters have stopped or
are faulty, the billing is done based on the past consumption for such
period.
The Company determines revenue gaps (i.e. surplus/shortfall in actual
returns over assured returns) in respect of its regulated operations
based on the principles laid down under the relevant Tariff
Regulations/Tariff Orders notified by the Electricity Regulator and the
actual or expected actions of the regulator under the applicable
regulatory framework. In respect of such revenue gaps, appropriate
adjustments are made in the revenue of the respective year for the
amounts which are reasonably determinable and no significant
uncertainty exists in such determination. These adjustments
representing revenue gaps are carried forward as Regulatory Assets /
Regulatory Liabilities and are classified as Current / Non Current
Assets / Liabilities, as the case may be, which would be recovered /
refunded through future billing based on future tariff determination by
the regulator in accordance with the electricity regulations.
(ii) EPC and Contracts Business:
In respect of construction contracts, revenue is recognised on the
percentage of completion method based on the stage of completion of a
contract upto the reporting date.
The stage of completion of a contract is determined as a proportion
that the progress billings raised by the Company on the basis of joint
measurement and works certified by the customers up to the reporting
date as per the terms of the contract, bear to the total contract
value.
Revenue from Construction Contract is recognised by adding the
aggregate cost incurred on the contract till reporting period and the
proportionate profit using the Percentage Completion Method. Profit
proportionate to the value of work done upto reporting date is
determined as a percentage of the Profit estimated to arise on
completion of the entire contract, after deduction of Contingency.
Profit is recognised only when the outcome of the contract can be
estimated reliably. When the construction contract is expected to
result in a loss on completion of the entire contract, the entire loss
is recognized as an expense immediately in the same reporting period.
Contract in progress is valued at cost plus recognised profit (less
recognised losses) upto the reporting date.
In respect of operation and maintenance contracts, revenue
proportionate to value of work done or the period elapsed as the case
may be, is recognised.
(iii) Others:
Insurance and other claims are recognised as revenue on certainty of
receipt on prudent basis.
Income on investments is recognised based on the terms of the
investment. Income from mutual fund scheme having fixed maturity plans
is accounted on declaration of dividend or on maturity of such
investments. The accounting for the same is done based on the
(e) Foreign Currency Transactions:
(i) Transactions denominated in foreign currencies are recorded in the
reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
(ii) Foreign currency monetary items (assets and liabilities) are
restated using the exchange rate prevailing at the reporting date.
Non-monetary items, which are measured in terms of historical cost
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Gains and losses, if any, at the
year-end in respect of monetary assets and monetary liabilities are
recognised in the Statement of Profit and Loss except in case of gains
or losses arising on long term foreign currency monetary items, the
accounting treatment for which is as under:
In accordance with Govt. of India, Ministry of Corporate affairs
notification (GSR No.914(E) dated December 29, 2011) in respect of
accounting year commencing on or after April 1, 2011, the Company has
exercised the option and foreign exchange gain / losses on long term
foreign currency monetary items relating to the acquisition of
depreciable assets are added to or deducted from the cost of such
assets and in other cases, such gains or losses are accumulated in a
"Foreign Currency Monetary Item Translation Difference Account" to be
amortised over the remaining life of the concerned monetary item.
(iii) In respect of integral foreign operations of the Company, its
fixed assets are translated at the rate on the date of acquisition,
monetary assets and monetary liabilities are translated at the rate on
the date of the balance sheet and income and expenditure are translated
at the average of month-end rates during the year.
(iv) In respect of derivative transactions, gains / losses are
recognised in the Statement of Profit and Loss on settlement. On a
reporting date, open derivative contracts are revalued at fair values
and resulting losses on an overall basis (including reversal of losses
for earlier periods), if any, are recognised in the Statement of Profit
and Loss. Net gain, if any, is ignored.
(f) Fixed Assets:
Tangible Assets
(i) Cost comprises cost of acquisition or construction of assets
(excluding revalued assets) including borrowing costs attributable to
bringing the assets to their intended use.
(ii) All project related expenditure viz. civil works, machinery under
erection, construction and erection materials, pre- operative
expenditure incidental / attributable to the construction of project,
borrowing cost incurred prior to the date of commercial operations and
trial run expenditure are shown under Capital Work-In-Progress (CWIP).
These expenses are net of recoveries and income (net of tax) from
surplus funds arising out of project specific borrowings.
Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortisation / depletion. Acquisition cost of
residual interest in the monthly cash flow of the toll road businesses
have been accounted as intangible assets.
(g) Depreciation / Amortisation:
(i) Electricity Business:
Fixed assets are depreciated under the straight line method as per the
rates and in the manner prescribed as per the Electricity Regulations
relating to license business and other electricity business. The
depreciation for the year has been shown after reducing the proportion
of the amount of depreciation provided on assets created against the
contributions received from consumers.
Depreciation on revalued assets is charged over the balance residual
life of the assets considering the life prescribed as per the
Electricity regulations.
(ii) EPC and Contracts Business:
Fixed assets of EPC Business have been depreciated under the reducing
balance method at the rates and in the manner prescribed in Schedule
XIV to the Act.
(iii) Other Activities:
Fixed assets of other activities have been depreciated under the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Act.
(iv) Intangible Assets:
(i) Softwares pertaining to the electricity business are amortized as
per the rate and in the manner prescribed in the electricity
regulations. Other softwares are amortised over a period of 3 years.
(ii) Intangible Assets representing acquisition of Residual Interest in
Toll Businesses are amortised over a contract period ranging from 12 to
15 years, on the basis of projected revenue which reflects the pattern,
which is beyond the maximum period of 10 years, as specified in the
Accounting Standard 26 on Intangible Assets, as the economic benefits
from the underlying assets would be available to the Company over such
period as per the agreements entered.
(iii) The container trains license fee is amortised over 20 years being
the life of the license which is beyond the maximum period of 10 years,
as specified in the Accounting Standard 26 on Intangible Assets, as the
economic benefits from the underlying assets would be available to the
Company over such period.
(h) Investments:
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments. On initial recognition, all
investments are recognised at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees
and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
Statement of Profit and Loss.
(i) Inventories:
Inventories are stated at lower of cost and net realisable value. In
case of fuel, stores and spares "cost" means weighted average cost.
Unserviceable / damaged stores and spares are identified and written
down based on technical evaluation
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Allocation of Indirect Expenses:
(i) Electricity Business:
The allocation to capital and revenue is done consistently on the basis
of a technical evaluation.
(ii) EPC and Contracts Business:
Common overheads are absorbed by various jobs in proportion to the
prime cost of each job.
(k) Employee Benefits:
Contributions to defined contribution schemes such as provident fund,
superannuation funds etc. are charged to Statement of Profit and Loss /
Capital Work-in-Progress, as applicable. The Company also provides for
retirement benefits in the form of gratuity and leave encashment. Such
defined benefits are charged to Statement of Profit and Loss / Capital
Work-in- Progress, as applicable, based on actuarial valuations, as at
the balance sheet date, made by independent actuaries.
(l) Borrowing Costs:
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(m) Accounting for Taxes on Income:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from "timing differences" between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future. However, in respect of unabsorbed depreciation or carry
forward loss, the deferred tax asset is recognised and carried forward
only to the extent that there is a virtual certainty that the assets
will be realised in future.
(n) Provisions:
Provisions are recognised when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of the obligation.
(o) Contingent Liabilities and Contingent Assets:
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognised
because it is probable that an outflow of resources will not be
required to settle the obligation . However, if the possibility of
outflow of resources, arising out of present obligation, is remote, it
is not even disclosed as contingent liability. A contingent liability
also arises in extremely rare cases where there is a liability that
cannot be recognised because it cannot be measured reliably. The
Company does not recognize a contingent liability but discloses its
existence in the notes to financial statements. Contingent assets are
neither recognized nor disclosed in the financial statements.
(p) Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
the carrying amount of fixed assets / cash generating unit exceeds the
recoverable amount on the reporting date, the carrying amount is
reduced to the recoverable amount. The recoverable amount is measured
as the higher of the net selling price and the value in use determined
by the present value of estimated future cash flows.
(q) Cash and cash equivalents:
Cash and cash equivalents for the purposes of cash flow statement
comprise cash on hand and demand deposits with bank.
(r) Accounting for Oil and Gas Activity:
The Company follows "successful efforts method" for accounting of oil
and gas exploration activities as set out by the guidance note issued
by the Institute of Chartered Accountants of India on 'Accounting for
Oil and Gas Producing Activities'. The cost of survey and prospecting
activities conducted in search of oil and gas are expensed out in the
year in which the same are incurred.
(s) All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised Schedule VI to the Act.
Mar 31, 2011
(a) Basis of preparation of financial statements:
The financial statements are prepared on an accrual basis of accounting
and in accordance with the generally accepted accounting principles in
India, provisions of the Companies Act, 1956 (the Act) and comply in
material aspects with the Accounting Standards notified under Section
211 (3C) of the Act, read with Companies (Accounting Standards) Rules
2006. Assets and Liabilities created under applicable electricity laws
continue to be depicted under appropriate heads
(b) Use of Estimate:
The preparation and presentation of financial statements requires
estimates and assumptions to be made that affect the reported amount of
assets and liabilities and disclosures of contingent liabilities as on
date of the financial statements and reported amount of revenue and
expenses during the reporting period. Difference between the actual
results and estimates is recognised in the period in which the results
are known / materialized
(c) Revenue Recognition Policy:
(i) Electricity Business:
Revenue from sale of electrical energy is accounted for on the basis of
billing to consumers and is inclusive of fuel adjustment charges (FAC)
and unbilled revenue carried forward in the Balance sheet as Tariff
Adjustment Account, Generally all consumers are billed on the basis of
recording of consumption of energy by installed meters. Where meters
have stopped or are faulty, the billing is done based on the past
consumption for such period
The Company determines revenue gaps (i.e surplus/shortfall in actual
returns over assured returns) in respect of its regulated operations
based on the principles laid down under the relevant Tariff
Regulations/Tariff Orders notified by MERC. In respect of such revenue
gaps, appropriate adjustments are made in the revenue of the respective
year for the amounts which are reasonably determinable and no
significant uncertainity exists in such determination. These
adjustments representing unbilled revenue are carried forward as Tariff
Adjustment Account under the schedule 'Loans and Advances' which would
be recovered through future tariff determination by the regulator in
accordance with the electricity regulations
(ii) EPC and contracts Business:
In respect of construction contracts, revenue is recognised on the
percentage of completion method based on the stage of completion of a
contract upto the reporting date
The stage of completion of a contract is determined in proportion that
the progress billings raised by the Company on the basis of joint
measurement and works certified by the customers up to the reporting
date as per the terms of the contract, bear to the total contract value
Profit is recognised when the outcome of the contract can be estimated
reliably. Profit proportionate to value of work done is arrived at by
deducting cost of work done plus cost estimated by the management to
complete the work from the agreed contract value, after deduction of
contingency
contract in progress is valued at cost plus proportionate profit less
anticipated loss.
In respect of operation and maintenance contracts, profit proportionate
to value of work done or the period elapsed as the case may be, is
recognised
(iii) Others:
insurance and other claims are recognised as revenue on certainty of
receipt on prudent basis income oninvestments is recognised based on
the terms of the investment. income from mutual fund scheme having
fixed maturity plans is accounted on declaration of dividend or on
maturity of such investments
(d) Foreign Currency Transactions:
(i) Foreign currency transactions are accounted at the exchange rates
prevailing on the date of the transactions. Gains and losses, if any,
at the year-end in respect of monetary assets and monetary liabilities
are recognised in the Profit and Loss Account,
(ii) In respect of integral foreign operations of the Company, its
fixed assets are translated at the rate on the date of acquisition,
monetary assets and monetary liabilities are translated at the rate on
the date of the balance sheet and income and expenditure are translated
at the average of month-end rates during the year,
(iii) Non-Monetary items denominated in foreign currency are stated at
the rate prevailing on the date of the transaction
(iv) In respect of derivative transactions, gains / losses are
recognised in the Profit and Loss Account on settlement. On a
reporting date, open derivative contracts are revalued at fair values
and resulting losses on an overall basis (including reversal of losses
for earlier periods), if any, are recognised in the Profit and Loss
Account,
(e) Fixed Assets: Tangible Assets
(i) The gross block of fixed assets is stated at cost of acquisition or
construction (except revalued assets), including any cost attributable
to bringing the assets to their working condition for their intended
use
(ii) All project related expenditure viz. civil works, machinery under
erection, construction and erection materials pre-operative expenditure
incidental/ attributable to the construction of project, borrowing cost
incurred prior to the date of commercial operations and trial run
expenditure are shown under Capital Work-in-Progress (CWIP) These
expenses are net of recoveries and income (net of tax) from surplus
funds arising out of project specific borrowings
Intangible Assets
Acquisition cost of residual Interest in the monthly cash flow of the
toll road businesses have been accounted as intangible assets
(f) Depreciation / Amortisation: (i) Electricity Business:
Fixed assets are depreciated under the straight line method as per the
rates and in the manner prescribed under Schedule XIV of the Companies
Act, 1956 relating to license business and other electricity business.
The depreciation for the year has been shown after reducing the
proportion of the amount of depreciation provided on assets created
against the contributions received from consumers
Depreciation on revalued assets is charged over the balance residual
life of the assets considering the life prescribed under Schedule XIV
of the Companies Act, 1956 (ii) EPC and contracts Business:
Fixed assets of EPC Business have been depreciated under the reducing
balance method at the rates and in the manner prescribed in Schedule
XIV of the Companies Act, 1956 (iii) Other Activities:
Fixed assets of other activities have been depreciated under the
straight line method at the rates and in the manner prescribed in
Schedule XIV of the Companies Act, 1956
(iv) Leased Assets:
Depreciation on all assets given on lease upto March 31, 2001 is
provided on straight line method at the higher of the rates determined
with reference to the primary period of the lease and the rates and in
the manner prescribed in Schedule XIV of the Companies Act, 1956
(v) Intangible Assets:
(i) Softwares are amortised over a period of three years,
(ii) Intangible Assets representing acquisition of Residual Interest in
Toll Businesses are amortised over a contract period ranging from 1 2
to 15 years, on the basis of projected revenue which reflects the
pattern which is beyond the maximum period of 10 years, as specified
in the Accounting Standard 26 on Intangible Assets, as the economic
benefits from the underlying assets would be available to the Company
over such period as per the agreements entered
((f) Investments:
Long-terminvestments are carried at cost, less provision for
diminution other than temporary, if any, in the value of such
investments. Currentinvestments are carried at lower of cost and fair
value
(h) Inventories:
Inventories are stated at lower of cost and net realisable value. In
case of fuel, stores and spares "cost" means weighted average cost.
Unserviceable / damaged stores and spares are identified and written
down based on technical evaluation (i) Allocation of Indirect Expenses:
(i) Electricity Business
The allocation to capital and revenue is done consistently on the basis
of a technical evaluation (ii) EPC and contracts Business Common
overheads are absorbed by various jobs in proportion to the prime cost
of each job (j) Retirement Benefits:
Contributions to defined contribution schemes such as provident fund,
superannuation fund etc. are charged to Profit and Loss Account/
Capital Work-in-Progress, as applicable. The Company also provides for
retirement benefits in the form of
gratuity and leave encashment. Such defined benefits are charged to
Profit and Loss Account/ Capital Work-in-Progress as applicable, based
on actuarial valuations, as at the balance sheet date, made by
independent actuaries,
(k) Borrowing Costs:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue
(I) Accounting for Taxes on income:
Provision for current tax is made after king into consideration
benefits admissible under the provisions of the income Tax Act, 1961.
Deferred tax resulting from "timing differences" between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future. However, in respect of unabsorbed depreciation or carry
forward loss, the deferred tax asset is recognised and carried forward
only to the extent that there is a virtual certainty that the assets
will be realised in future. Since income-tax paid is considered in "
truing -up" for future tariff determination under the applicable tariff
regulation, the Deferred tax liability/ asset arising on account of
difference between the depreciation claimed as per Electricity Act,
2003 and income-tax Act, 1961 is recoverable or payable through future
tariff. Hence, the recognition of deferred tax asset or liability is
made with corresponding provision of liability or asset, for payable or
recoverable, as applicable
(m) Provisions:
Provisions are recognised when the Company has a present obligation, as
a result of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation and a
reliable estimate can be made for the amount of the obligation
(n) Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
the carrying amount of fixed assets / cash generating unit exceeds the
recoverable amount on the reporting date, the carrying amount is
reduced to the recoverable amount. The recoverable amount is measured
as the higher of the net selling price and the value in use determined
by the present value of estimated future cash flows,
(o) Accounting for Oil and Gas Activity:
The Company follows "successful efforts method" for accounting of oil
and gas exploration activities as set out by the guidance note issued
by the Institute of Chartered Accountants of India on 'Accounting for
Oil and Gas Producing Activities'. The cost of survey and prospecting
activities conducted in search of oil and gas are expensed out in the
year in which the same are incurred
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