Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation
in measurement are recognized when there is a legal
or constructive obligation as a result of past events
and it is probable that there will be an outflow of
resources and a reliable estimate can be made of the
amount of obligation. Provisions are not recognized
for future operating losses. 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.

Contingent liabilities is not recognized and are
disclosed by way of notes to the financial statements
when there is 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 when there is 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 same or a reliable estimate of the amount in this
respect cannot be made.

Contingent Assets are disclosed in the financial
statements by way of notes to accounts when an inflow
of economic benefits is probable.

2.16 Employee Benefits

The Company makes contributions to Gratuity fund
which is administered through duly constituted and
approved Trust. Provident Fund contributions are in the
nature of defined contribution scheme. Provident funds
are deposited with the Government and recognised
as expense. The cost of providing benefits under the
defined benefit obligation is calculated by independent
actuary using the projected unit credit method.
Service costs and net interest expense or income is
reflected in the Statement of Profit and Loss. Gain or
Loss on account of remeasurements are recognised
immediately through other comprehensive income in
the period in which they occur. The employees of the
Company are entitled to compensated leave for which
the Company records the liability based on actuarial
valuation computed using projected unit credit method.
These benefits are unfunded except Gratuity.

2.17 Revenue Recognition

Revenue from contracts with customers is recognised
on supply of electricity or when services are rendered
to the customers at an amount that reflects the
consideration to which the Company is entitled under
appropriate regulatory framework.

Revenue to be earned from sale of electricity supplied
from regulated business is accounted for on basis of
monthly billing with specified due dates to consumers
at rates approved by WBERC based on relevant tariff
order and Company's understanding of the applicable
available regulatory provisions. Sales are net of rebates
and do not include electricity duty collected from
consumers and payable to the State Government.

Sale of electricity other than above is billed monthly
with specified due dates and accounted for at rates
agreed with respective consumers.

Regulatory income and expense for the year recognised
as per Regulations issued by WBERC are shown
separately in the Statement of Profit and Loss.

The Company receives contribution from consumers
in accordance with the regulations, that is being
used to construct or acquire items of property, plant
and equipment in order to connect the consumer to
the Company's distribution network. The Company
recognises revenue in respect for such contribution so
received from consumer in the year they are connected
to the distribution network.

2.18 Interest, Dividend and Claims

Dividend income is recognized when the right to receive
payment is established. Interest has been accounted
using effective interest rate method. Insurance claims/
other claims are accounted as and when admitted /
settled.

2.19 Borrowing Costs

Borrowing cost comprises of interest and other costs
incurred in connection with the borrowing of the funds.
All borrowing costs are recognized in the Statement
of Profit and Loss using the effective interest method
except to the extent attributable to qualifying Property
Plant and Equipment (PPE) which are capitalized to
the cost of the related assets. A qualifying PPE is an
asset, that necessarily takes a substantial period of
time to get ready for its intended use or sale. Borrowing
cost also includes exchange differences to the extent
considered as an adjustment to the borrowing costs.

2.20 Income Tax

Current tax represents the amount payable based on
computation of tax as per prevailing taxation laws
under the Income Tax Act, 1961. Provision for deferred

taxation is made using liability method on temporary
difference arising between the tax base of assets and
liabilities and their carrying amounts in the financial
statements 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 tax asset is realised or the deferred tax
liability is settled. Deferred Tax Assets are recognized
subject to the consideration of prudence and are
periodically reviewed to reassess realization thereof.
Deferred Tax Liability or Asset will give rise to actual
tax payable or recoverable at the time of reversal
thereof. Current and Deferred tax relating to items
recognised outside profit or loss, that is either in other
comprehensive income (OCI) or in equity, is recognised
along with the related items.

2.21 Earnings per equity share

Basic earnings per share including regulatory income/
expense is calculated by dividing the net profit or loss
for the period attributable to equity shareholders
(after deducting attributable taxes) by the weighted
average number of equity shares outstanding during
the period. The weighted average number of equity
shares outstanding during the period is adjusted for
events including a bonus issue.

Basic earnings per share excluding regulatory income/
expense is calculated by dividing the net profit or loss
for the period before regulatory income/expense
attributable to equity shareholders (after deducting
attributable taxes) by the weighted average number
of equity shares outstanding during the period. The
weighted average number of equity shares outstanding
during the period is adjusted for events including a
bonus issue.

For the purpose of calculating diluted earnings per
share including regulatory income/expense, the net
profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) and
the weighted average number of shares outstanding
during the period are adjusted for the effects of all
dilutive potential equity shares.

For the purpose of calculating diluted earnings per
share excluding regulatory income/expense, the net
profit or loss for the period before regulatory income/
expense attributable to equity shareholders (after
deducting attributable taxes) and the weighted average
number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity
shares.

2.22 Regulatory Assets and Liabilities

Regulatory assets and liabilities shown as Regulatory
Deferral Account Balance are recognised based
on process defined in Tariff Regulations issued by
WBERC and in accordance with provision of Ind AS
114- Regulatory Deferral Accounts read with guidance
note on rate regulated activities. Any adjustment
thereof are recognised in the year in which order of
WBERC are received. It includes amount recoverable
from/ refundable to consumers on account of Fuel and
Power Purchase Cost Adjustment (FPPCA), and other
adjustments based on tariff regulations and orders.
Consequential adjustments are given effect to upon
confirmation by the relevant authorities.

3 CRITICAL ACCOUNTING JUDGEMENTS,
ASSUMPTIONS AND KEY SOURCES OF
ESTIMATION AND UNCERTAINTY

The preparation of the financial statements in
conformity with IND AS requires management to
make estimates, judgments and assumptions. These
estimates, judgments and assumptions affect the
application of accounting policies and the reported
amount of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the
financial statements and reported amount of revenues
and expenses during the period. Accounting estimates
could change from period to period. Actual results could
differ from those estimates. Appropriate changes in
estimates are made as management becomes aware of
changes in circumstances surrounding the estimates.
Differences between the actual results and estimates
are recognised in the year in which the results are
known / materialized and, if material, their effects are
disclosed in the notes to the financial statements.

Application of accounting policies that require
significant areas of estimation, uncertainty and
critical judgments and the use of assumptions in the
financial statements have been disclosed below. The
key assumptions and other key sources of estimation
and uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next
financial year have also been discussed below:

a) Regulatory Deferral Account Balances

Regulatory Deferral account balances consists of
Fuel and Power Purchase Cost Adjustment (FPPCA)
and other accruals as per the tariff Regulation as
recognised in the accounts have been considered on

the basis of available tariff order and as per the norms
and formula prescribed in the regulations. This may
vary requiring adjustments on determination by the
regulator.

b) Fair Valuation of Financial assets

Beneficial interest in Power Trust have been evaluated
and considered based on the valuation of underlying
securities and the projected inflows of the Investee
entities as estimated by the respective management
and evaluated by an independent valuer. Variation
arising with respect to actual numbers in future may
require adjustment effecting other comprehensive
income.

Investment in unlisted equity are carried at fair value
through other comprehensive income based on
latest available audited financial statement and other
relevent information available with the Company as at
the balance sheet date.

c) Income taxes

Significant judgment is required in determination of
taxability of certain income and deductibility of certain
expenses during the estimation of the provision for
income tax. Accordingly, such provision has been made
considering concession/allowances including those
based on expert advice/judicial pronouncements.

d) Contingencies

Management judgement is required for estimating
the possible outflow of resources, if any, in respect of
contingencies/claim/litigations as it is not possible to
predict the outcome of pending matters with accuracy.

e) Impairment loss on trade receivables

The Company evaluates whether there is any objective
evidence that trade receivables are impaired and
determines the amount of impairment loss as a result of
the inability of the debtors to make required payments.
The Company bases the estimates on the ageing of
the trade receivables balance, credit-worthiness of the
trade receivables and historical write-off experience.
If the financial conditions of the trade receivable
vary, it may effect the amount of actual write-offs as
estimated.

f) 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, cost trends, mortality, discount rate
and anticipation of future salary increases. Variation in
these assumptions may impact the DBO amount and
the annual defined benefit expenses.

4 AMALGAMATION OF INDIA POWER
CORPORATION LIMITED

Pursuant to the scheme of arrangement and
amalgamation (‘the scheme') sanctioned by the Hon'ble
Calcutta High Court vide its order dated 17th April, 2013,
erstwhile India Power Corporation Limited (erstwhile
IPCL), has been amalgamated with the Company with
effect from 1st October 2011 (the appointed date). The
scheme was therefore given effect to in the financial
Statements for the year ended 31st March 2013.

4.1 Consequent to the amalgamation as above:

The shareholders of erstwhile IPCL (the Transferor
Company) are entitled to 11 equity shares of the
Company (the Transferee Company) against every 100
equity shares held by them. Accordingly 1,12,02,75,823
equity shares of ' 1 each of the Company aggregating to
' 11,202.75 lakhs are to be issued to the shareholders of
erstwhile IPCL. Erstwhile IPCL being the Amalgamating
/ Transferor Company, its shareholding of 51,61,32,374
equity shares of ' 1 each aggregating to ' 5,161.32 lakhs
in the Company shall stand cancelled in terms of the
scheme approved by the High Court leaving 38,95,15,856
equity shares held by Power Trust. The above referred
allotment and cancellation has not been given effect
due to certain pending clearance(s)/approval(s) from
the Stock Exchanges. Pending this, a net amount of
' 6,041.43 lakhs, being the differential amount with
respect to the equity shares to be allotted and to be
cancelled as stated herein above, has continued to be
shown as share capital suspense account.

In terms of the Orders dated 27th January, 2017 ,
25th August, 2017 and 18th May, 2018 of Hon'ble
Calcutta High Court, Power Trust transferred/sold off
through Offer for Sale 6,57,70,691 equity shares of the
Company. Therefore, Power Trust holds 32,37,45,165
equity shares of the Company as on 31st March, 2023.