3.13. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it
is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can
be made.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
Contingent liabilities are disclosed in the financial statements by way of notes to accounts, unless possibility of an outflow of
resources embodying economic benefit is remote. Contingent liabilities are disclosed when there is (i) a possible obligation
arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more
uncertain future events not wholly within the control of the Company or (ii) a present obligation that arises from past events
where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the
amount cannot be made.
Contingent assets are not recognized but disclosed in the financial statements when an inflow of economic benefits is probable.
3.14. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets
and settle the liabilities simultaneously.
A. Financial Assets
a. Initial recognition and measurement
All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially
measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial
assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial
recognition of financial asset. Transaction costs directly attributable to the acquisition of financial assets at fair value
through profit or loss are recognized immediately in the Statement of Profit and Loss.
b. Classification and subsequent measurement
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
• The Company's business model for managing the financial asset and
• The contractual cash flow characteristics of the financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these
financial assets are held within a business whose objective is to hold these assets in order to collect
contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are
held within a business whose objective is achieved by both collecting contractual cash flows and selling
financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
The Company has made an irrevocable election to present in other comprehensive income subsequent
changes in the fair value of equity investments not held for trading.
iii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through Profit or Loss (FVTPL) unless they are measured at
amortised cost or at fair value through other comprehensive income on initial recognition. The transaction
costs directly attributable to the acquisition of financial assets at fair value through Profit or Loss are
immediately recognised in the Statement of Profit and Loss.
Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are
recognised in the Statement of Profit and Loss.
c. Impairment of Financial Assets
The Company assesses at each Balance Sheet date whether a financial asset or a group of financial assets is
impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company
recognizes lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a
financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to 12
months expected credit losses or at an amount equal to lifetime expected losses, if the credit risk on the financial
asset has increased significantly since initial recognition.
d. Derecognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expires, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party.
On derecognition of a financial asset in its entirety, (except for equity instruments designated as FVTOCI), the
difference between the asset's carrying amount and the sum of the consideration received and receivable is
recognized in Statement of Profit and Loss. When the equity investment is derecognized, the cumulative gain or
loss in equity is transferred to retained earnings.
B. Financial liabilities and equity instruments
a. 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 Company's financial liabilities include trade and other payables,
loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
b. Subsequent measurement
Financial liabilities are measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash flows through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
c. Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company's obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and
the consideration paid and payable is recognized in Statement of Profit and Loss.
d. Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all
of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue
costs.
3.15. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash
that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date
of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for
withdrawal and usage.
3.16. Statement of Cash Flows
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non¬
cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses
associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing
activities.
4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty
Inherent in the application of many of the accounting policies used in preparing the Financial Statements is the need for GIPCL
Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual outcomes could differ
from the estimates and assumptions used.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and future periods are affected.
4.1. Critical judgments in applying accounting policies
The following is the critical judgment, apart from those involving estimations (Refer note 4.2), that the Management has made
in the process of applying the Company's accounting policies and that has the significant effect on the amounts recognized in
the Financial Statements.
Evaluation of indicators for impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline
in asset's value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical
damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable
amount of the Property, Plant and Equipment.
4.2. Assumption and key sources of estimation uncertainty
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided below. Actual results may differ from these estimates.
a. Defined Benefit Obligation (DBO)
Management's estimate of the DBO is based on a number of critical underlying assumptions such as standard rates
of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may
significantly impact the DBO amount and the annual defined benefit expenses.
b. Investments in Unquoted Equity Instruments
The unquoted investments of the Company are measured at fair value for financial reporting purposes. In estimating the
fair value of an investment, the Company uses market-observable data to the extent it is available. Where Level 1 and 2
inputs are not available, the Company engages third party valuers, where required, to perform the valuation.
c. Deferred Tax
At each reporting date, the Company assesses whether it is probable that future taxable profits will be available against
which deferred tax assets, including MAT credit, can be utilised. This assessment involves significant judgement and
estimates relating to projections of future taxable income.
Pursuant to changes in the corporate tax regime, the Company has the option to either continue under the existing
tax structure or transition to the new tax regime. The determination of the timing of such transition requires significant
judgement, considering projected profitability, impact of business expansion plans and the ability to utilise available
MAT credit within the prescribed period.
b. Expansion Reserve:
It represents the amount kept aside for future expansion before distributing dividend from the distributable profit.
c. Securities Premium:
It is used to record the premium on issue of equity shares. The reserve is utilised in accordance with the provisions of the
Companies Act 2013.
d. General Reserve:
It is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General Reserve is
created by a transfer from one component of equity to another and is not an item of other comprehensive income, items
included in the general reserve is not reclassified subsequently to the Statement of profit and loss.
e. Retained Earnings:
It represents surplus/accumulated earnings of the Company as on the Balance Sheet date.
f. Other comprehensive income (OCI):
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other
comprehensive income. This reserve represents the cumulative gains and losses arising on the revaluation of equity
instruments measured at fair value through other comprehensive income. The company transfers amounts from this reserve
to retained earnings when the relevant equity securities are disposed.
g. The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the
requirements of the Companies Act, 2013.
During the year ended 31st March 2026, a dividend of ' 4.09 per share (Total dividend ' 6,348.33 lakhs) was paid to
holders of fully paid equity shares. During the year ended 31st March 2025, a dividend of ' 3.95 per share (Total dividend
' 5,974.42 lakhs) was paid to holders of fully paid equity shares.
h. In respect of the year ended 31st March 2026, the Board of Directors has proposed a final dividend of ' 4.10 per share be
paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting
and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders
of fully paid equity shares. The total estimated equity dividend would result in total cash outflow of ' 6,363.85 lakhs.
Transition to New Tax Regime
Pursuant to the amendments introduced by the Union Budget 2026-27, the Company has transitioned to the new
concessional corporate tax regime with effect from 01st April 2026.
• Re-measurement of Deferred Tax Liabilities
Consequent to the change in tax regime, deferred tax liabilities have been re-measured from the erstwhile rate of
34.944% to the new applicable rate of 25.168%, resulting in a one-time credit of ' 11,512.36 lakhs to the tax expense
for the year. This non-recurring credit has favourably impacted the net profit for the year.
• Recognition of MAT Credit Entitlement
Under the new concessional corporate tax regime, no further Minimum Alternate Tax (MAT) credit will accrue.
However, existing MAT credit entitlement can be utilized against future tax liabilities within the prescribed period. In
view of the above, the Company has recognized MAT credit entitlement (including previously unrecognized amounts)
amounting to ' 14,518.47 lakhs as a deferred tax asset, resulting in a corresponding one-time credit to the Statement
of Profit and Loss. This non-recurring credit has favourably impacted the net profit for the year.
48. Post-Employment Benefits:
a. Defined Contribution plans:
The Company makes contributions towards provident fund, pension scheme and superannuation fund to Defined
Contribution retirement benefit plan for qualifying employees.
The Company pays fixed contribution to fund at predetermined rates to a separate trust, which invests the funds in permitted
securities. The obligation of the Company is to make such fixed contribution and to ensure a minimum rate of return to the
members as specified by Government of India.
Provident Fund is governed through a separate trust. The Board of Trustees of the Trust functions in accordance with any
applicable guidelines or directions that may be issued in this behalf from time to time by the Central Government or the
Central Provident Fund Commissioner, the board of trustees have the following responsibilities:
i. Investments of the surplus as per the pattern notified by the Government in this regard so as to meet the requirements
of the fund from time to time.
ii. Raising of moneys as may be required for the purposes of the fund by sale, hypothecation or pledge of the investment
wholly or partially.
iii. Fixation of rate of interest to be credited to members' accounts.
The provident fund plan is operated by the Gujarat Industries Power Company Ltd. Provident Fund Trust (the Trust).
Eligible employees receive benefits from the said trust which is a defined contribution plan. Under the plan, the Company
is required to contribute a specified percentage of employee's salary to the retirement benefit plan to fund the benefits.
The Company has recognised ' 558.86 lakhs (P.Y. ' 435.83 lakhs) for Provident Fund contributions, ' 79.88 lakhs (P.Y.
' 67.59 lakhs) for Pension Scheme and ' 444.26 lakhs (P.Y. ' 279.95) for National Pension Scheme (NPS) in the Statement
of Profit and Loss.
The minimum interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The
Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the
notified interest rate.
The superannuation fund plan is operated by Life Insurance Corporation of India (LIC) under its scheme of superannuation.
The eligible employees receive benefit under the said scheme from LIC. Under the plan, the Company is required to
contribute a specified percentage of employee's basic salary to the retirement benefit plan to fund the benefits. The
Company has recognised T 209.74 lakhs (P.Y. ' 178.33 lakhs) for Superannuation Fund contributions in the Statement of
Profit and Loss.
b. Defined Benefit plans:
Earned Leave (EL) Benefit
Accrual - 25 to 30 days per year
Encashment while in service - Earned Leave balance subject to a minimum available 45 days per calendar year. Encashment
on retirement - maximum 300 days.
Sick Leave (SL) Benefit
Accrual- 10 days per year
The leave is encashable. Leave encashment occurs due to retirement and death. There is no limit on maximum accumulation
of leave days.
49. Operating Segment
a. The Company's operations fall under single segment namely "Power Generation", taking into account the different risks and
returns, the organization structure and the internal reporting systems hence no separate disclosure of Operating Segment is
required to be made as required under Ind AS - 108 "Operating Segment".
b. Information about major customers
Revenue from sales (which exceeds 10% of total revenues) amounting to ' 137,658.78 lakhs (P.Y. ' 11 7,094.86 lakhs) is
derived from a single customer which is a state Public Sector Undertaking.
c. Information about geographical areas:
Segment revenue from "Sale of Power" represents revenue generated from external customers which is fully attributable to
the Company's Country of Domicile i.e. India.
All assets are located in the Company's Country of domicile.
d. Information about products and services
The Company derives revenue from sale of power. The information about revenues from external customers is disclosed in
Note no. 34 of the Financial Statements.
50. Financial instruments disclosure:
I. Capital management
The Company's objective when managing capital is to:
a. Safeguard its ability to continue as going concern so that the Company is able to provide maximum return to shareholders
and benefits for other shareholders; and
b. Maintain an optimal capital structure to reduce the cost of capital.
The Company maintains its financial framework to support the pursuit of value growth for shareholders, while ensuring a
secure financial base. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Company consists of total equity and debt.
Management of the Company reviews the capital structure on a regular basis. As part of this review, the management
considers the cost of capital, risks associated with each class of capital requirements and maintenance of adequate liquidity.
III. Financial risk management objectives
While ensuring liquidity is sufficient to meet Company's operational requirements, the Company's management also monitors
and manages key financial risks relating to the operations of the Company by analysing exposures by degree and magnitude of
risks. These risks include market risk (including currency risk and price risk), credit risk and liquidity risk.
Market Risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance
of a business. The major components of market risk are commodity price risk and interest rate risk.
Interest rate risk management - Borrowings
The Company's main interest rate risk arises from the long-term borrowings with floating rates.
The Company's floating rates borrowings are carried at amortised cost. Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the
risk of changes in market interest rates relates primarily to the Company's long-term debt obligations with floating interest rates.
Interest rate risk management - Investment
The Company invests the surplus fund generated from operations in bank deposits. Bank deposits are made for a period of upto
12 months and carry interest rate of 4.00%-7.50% as per prevailing market interest rate. Considering these bank deposits are
short term in nature, there is no significant interest rate risk.
Price risks
The Company's equity securities price risk arises from investments held and classified in the Balance Sheet at fair value through
OCI. The Company's equity investments in GACL & Gujarat Gas Ltd are publicly traded.
Price sensitivity analysis
The sensitivity of profit or loss in respect of investments in equity shares at the end of the reporting period for /-5% change in
price and net asset value is presented below:
Other comprehensive income for the year ended 31st March 2026 would increase / decrease by' 482.33 lakhs (P.Y. ' 528.58
lakhs) as a result of 5% changes in fair value of equity investments measured at FVTOCI.
Credit risk management
Credit risk arises from cash and cash equivalents, investments carried at amortized cost and deposits with banks as well as
customers including receivables. Credit risk management considers available reasonable and supportive forward-looking
information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory
changes, government directives, market interest rate).
Major customers, being power purchasing companies having highest credit ratings, carry negligible credit risk. Concentration of
credit risk to any other counterparty did not exceed 15 % of total monetary assets at any time during the year.
Credit exposure is managed by counterparty limits for investment of surplus funds which is reviewed by the Management.
Investments in liquid plan/schemes are with public sector Asset Management Companies having highest rating. For banks, only
high rated banks are considered for placement of deposits.
Bank balances are held with reputed and creditworthy banking institutions.
Liquidity risk management
The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including bank deposits and availability
of funding through an adequate amount of committed credit facilities to meet the obligations when due. Management monitors
rolling forecasts of liquidity position and cash and cash equivalents on the basis of expected cash flows. In addition, liquidity
management also involves projecting cash flows considering level of liquid assets necessary to meet obligations by matching
the maturity profiles of financial assets & liabilities and monitoring balance sheet liquidity ratios.
The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed
repayment periods. The information included in the tables have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest
and principal cash flows. The contractual maturity is based on the earliest date on which the Company may be required to pay.
Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
Management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial
statements except as per note no. 9 approximate their fair values.
51. Reclassification and comparative figures
The Company has made certain reclassifications to the comparative period's financial statements to ensure compliance with the
requirement of Ind AS 1 - Presentation of Financial Statements and Schedule III (Division II) of the Company Act, 2013. As a
result, certain line items have been reclassified in the financial liabilities of the Company, the details of which are as under:
53. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
54. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
55. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable
losses.
56. Previous year's figures have been regrouped, wherever necessary, to confirm to current year's grouping.
57. Approval of Financials Statements
The Financial Statements were approved for issue by the Board of Directors on 29th May 2026.
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