2.16 Provisions, Contingent Liabilities and Capital Commitments
Provisions are recognized when the Company has a present obligation(legal or constructive) as a result of past event & it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation & in respect
of which a reliable estimate can be made of the amount of obligation. If the effect of the time value of money is material,
Provisions are discounted and reflected at present value. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessment of the time value of money and the risks specific to the liability. When discounting
is used, the increase in provision due to passage of time is recognized as interest expense.
Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the
control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the
amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of
economic resources is considered remote.
Contingent liabilities and Capital Commitments disclosed are in respect of items which in each case are above the threshold
limit.
2.17 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chairman and Managing
director who are responsible for allocating resources to and assessing the performance of operating segments.
Following Business segments have been considered as primary segments :
a) Building Material
b) Power Generation
2.18 Revenue recognition
The Company recognises revenue as per IND AS 115. Revenue is recognised to the extent that it is probable that economic
benefits will flow to the Company and revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable, taking in to account contractually defined
terms and excluding taxes or duties collected on behalf of government.
i) The sale of product is accounted for net of GST. Revenue is recognized when the significant risks and rewards
of ownership have been transferred and there is no managerial involvement and effective control over the goods.
Revenue represents net value of goods and services provided to customers after deducting for certain incentives including,
but not limited to discounts, volume rebates, incentive programs etc. For incentives offered to customers, the Company
makes estimates related to customer performance and sales volume to determine the total amounts earned and to be
recorded as deductions. The estimate is made in such a manner, which ensures that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur. The actual amounts may differ from these
estimates and are accounted for prospectively. No element of significant financing is deemed present as the sales are
made with a credit term, which is consistent with market practice.
ii) Income from services are accounted over the period of rendering of services.
iii) Carbon credit entitlement :- In the process of generation of wind power the Company also generate carbon emission
reduction units which may be negotiated for price in international market under Clean Development Mechanism(CDM)
subject to completing formalities and obtaining certificate of Carbon Emission Reduction(CER) as per Kyoto Protocol.
In addition Company also explore the possibilities of negotiating Voluntary Emission Reduction (VER) in respect of
some to the Company's wind power generation projects. Revenue from CER and VER is accounted on its realization.
iv) Interest income is recognized using the effective interest rate method when it is probable that economic benefits
associated with the transaction will flow to the Company and the amount of revenue can be measured reliably as
set out in Ind AS 109 - Financial instruments : recognition and measurement. The effective interest method is the
method of calculating amortized cost of a financial asset and of allocating the interest income over the relevant period.
v) Dividend income is recognized when right to receive payment is established.
2.19 Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. Government grant related to expense item is recognised as income on a systematic basis
over the period that the related cost for which it is intended to compensate are expensed.
When the grant relates to Property, plant and equipment they are included in non current liability as deferred income and is
recognized as an income in the equal amount over expected useful life of the related asset.
2.20 Employee Benefits2.20.1 Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve
months after the end of the period in which the employees render the related service are recognised in respect of
employee 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 current employee benefit obligation in the balance sheet.
2.20.2 Other long-term employee benefit obligation
The liabilities for earned leave is not expected to be settled wholly within twelve months after the end of the period
in which the employees render the related service. They are therefore measured at 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 yield at the end of the reporting period
that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience
adjustments and changes in actuarial assumptions are recognised in profit or 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.
2.20.3 Post-employment Obligations
The Company operates the following post-employment schemes:
(a) Defined benefit plans - gratuity; and
(b) Defined contribution plans - provident fund
Gratuity Obligations
The liability or assets recognised in the balance sheet in respect of 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 the 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.
Defined Contribution Plans
The Company pays provident fund contributions to Regional Provident Fund Commissioner. The Company has no
further payment obligation once the contributions have been paid. The contributions are accounted for as defined
contribution plans and the contributions are recognised as employee benefit expense when they are due..
2.20.4 Bonus
The Company recognises a liability and an expense for bonuses. The Company recognises a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.
2.21 Borrowing Costs
Company capitalises borrowing costs the are directly attributable to the acquisition, construction or production of a qualifying
asset as a part of that asset. Company recognises other borrowing costs as an expense in the period in which it incurred
them. Borrowing costs are interest and other costs that the company incurred in connection with the borrowing of funds
including exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment
to interest costs.
A qualifying asset is an asset that takes substantial period of time to get ready for its intended use or sale.
2.22 Lease
In March 2019, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules,
2019, notifying Ind AS 116 -'Leases'. This standard is effective from 1st April,2019. The Standard sets out the principles for
the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the
lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for
all leases with a term of more than twelve months, unless the underlying asset is of low value or in case of few exceptions.
According to the standard all operating leases (with a few exceptions) must therefore be recognized in the balance sheet as
lease assets and corresponding lease liabilities should be recognised. The lease expenses, which were recognised previously
as a single amount (operating expenses), hereafter will consist of two elements: depreciation and interest expenses.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the Company uses its weighted average incremental borrowing rate.
For short-term and low value leases, the Company recognises the lease payments as an operating expenses on a straight
line basis over the lease term.
The standard has become effective from 2019 and the Company has accordingly applied provisions of IND AS 116 in respect
of those leases where applicable.
2.23 Earnings per share2.23.1 Basic earnings per share
Basic earnings per share is calculated by dividing net profit or loss after tax attributable to ordinary equity shareholders
(numerator) by weighted average number of ordinary shares outstanding (denominator) during the period.
2.23.2 Diluted earning per share
For the purpose of calculating diluted earnings per share, net profit or loss after tax for the year attributable to equity
shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
2.24 Cash dividend distribution to equity holder of the Company
The Company recognises a liability to make cash or non cash distributions to the equity holders of the Company when the
distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in
India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in
equity, upon such approval.
2.25 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the Company's financial statements requires management to make judgement, estimates and assumptions
that affects the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and
the disclosures of contingent liability. Uncertainties about these estimates could results in outcome that requires a material
adjustment to the carrying amount of the assets or liabilities affected in future periods.
Key assumptions :
The key assumptions concerning the future and other key sources of estimation of uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are described below. The Company based its assumptions and estimates on parameters available when the financial
statements were prepared. Existing circumstances and assumptions about future developments, however, may change due
to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the
assumptions when they occur.
a) Allowance for doubtful debts -
The Company makes allowances for doubtful debts based on an assessment of the recoverability of the trade and
other receivables. The identification of doubtful debt requires use of judgements and estimates. Where the expectation
is different from the original estimates, such difference will impact the carrying value of the trade and other receivables
and doubtful debt expenses in the period in which such estimates has been changed.
(b) Fair value measurement of financial instruments -
When the fair values of financial assets and financial liabilities recorded in the balance sheet can not be measured based
on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted
Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such
as liquidity risk, credit risk and volatility.
(c) Impairment of assets -
The Company has used certain judgements and estimates to estimate future projections and discount rates to compute
value in use of cash generating unit and to assess impairment.
(d) Defined Benefit Plans and provision for leave encashment -
The cost of the defined benefit gratuity plan, present value of gratuity obligation and present value of leave encashment
obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that
may defer from actual developments in the future. These includes 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 and leave encashment provision is highly sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date.
2.26 Business combination under common control
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest
method. Under pooling of interest method, the assets and liabilities of the combining entities or businesses are reflected at
their carrying amounts after making adjustments necessary to harmonise the accounting policies. The financial information
in the financial statements in respect of prior periods is restated as if the business combination had occurred from the
beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity
of the reserves is preserved in the same form in which they appeared in the financial statements of the transferor and the
difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash
or other assets and the amount of share capital of the transferor is transferred to capital reserve.
2.27 Rounding off amounts
All amounts disclosed in the financial statements and notes have been rounded offto the nearest Crore as per the requirement
of Schedule III, unless otherwise stated.
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