1. CORPORATE INFORMATION

Energy Development Company Limited ('the company') is a public limited company domiciled and incorporated in India under the provisions of Companies Act. The shares of the company are listed on National Stock Exchange of India Limited ['NSE'] and The Bombay Stock Exchange Limited ['BSE']. The registered office of the company is at Harangi Hydro Electric Project Village-Hulugunda, Taluka- Somawarpet District- Kodagu, Karnataka-571233. The company is primarily engaged in (a) generation and sale of bulk power to various electricity boards; (b) construction development, implementation, operation & maintenance of projects and consultancies and (c) trading of Power equipments, metals etc.

NOTE 2

STATEMENT OF COMPLIANCE AND RECENT PRONOUNCEMENTS

2.1 Statement of Compliance

The Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 ("the Act") with effect from April 1, 2017 and therefore Ind AS issued, notified and made effective till the financial statements are authorised have been considered for the purpose of preparation of these financial statements.

These are company's first Ind AS Financial Statements and the date of transition to Ind AS as required has been considered to be April 1, 2016. The Financial Statement upto March 31, 2017 were prepared as per the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles (Previous GAAP) and Accounting Standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 then applicable to the Company. Previous GAAP figures in the financial statements have now been restated in compliance to Ind AS.

In accordance with Ind AS 101- "First Time adoption of Indian Accounting Standards" (Ind AS 101), the company has presented (Note No. 38), a reconciliation of Shareholders' equity as given earlier under Previous GAAP and those considered in these accounts as per Ind AS as at March 31, 2017 and April 1, 2016 and also the Net Profit as per Previous GAAP and that arrived including Other Comprehensive Income under Ind AS for the year ended March 31, 2017. The mandatory exceptions and optional exemptions availed by the Company on First-time adoption have been detailed in Note No. 38 of the financial statement.

2.2 Recent Pronouncements

On March 28, 2018, Ministry of Corporate Affairs ("MCA") has issued the Companies (Indian Accounting Standards) Amendment Rules, 2018 notifying Ind AS 115, "Revenue from Contract with Customers" and Appendix B to Ind AS 21 "Foreign currency transactions and advance consideration" which are applicable with effect from financial periods beginning on or after April 1, 2018.

Ind AS 115 - Revenue from Contract with Customers

The standard requires that an entity should recognise revenue to depict the transfer of promised goods or services to customers for an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts with customers. The effect of this amendment on the financial statements of the Company is being evaluated.

Ind AS 21 - Appendix B "Foreign currency transactions and advance consideration"

This Appendix applies to a foreign currency transaction (or part of it) when an entity recognises a non-monetary asset or nonmonetary liability arising from the payment or receipt of advance consideration before the entity recognises the related asset, expense or income (or part of it). The effect of this amendment on the financial statement of the Company is being evaluated.

Note : (a) The Company has availed the deemed cost exemption in relation to the property, plant and equipment on the date of transition and hence the net carrying amount has been considered as the gross carrying amount on that date. Further, in case of Windmill, due to application of IND AS 17 'Leases' land appurtenant to the windmill is reclassified as an operating lease.

(b) Transmission Lines, Transformers, Cable network etc. include Power Evacuating facilities put tip in relation to the Hydro Electric Generating Station, which has been handed over to the Electricity Board for transmission of Electricity and maintenance thereof.

(c) Fixed Asset includes Rs. 285,475,336 (as at March 31, 2017: Rs.303,216,231 , as at April 1, 2016: Rs.320,957,127) pertaining to Power Generating plant which in terms of implementation agreement with various authorities will be handed over on completion of effective useful life of the assets in terms of respective agreements.

Note :

(a) The shares held in Ayyappa Hydro Power Limited, a subsidiary are pledged (3,00,00,000 equity shares and 2,20,00,000 preference shares) with the lender of the said subsidiary.

(b) The company has pledged 2,700 (out of 5,100) equity shares held in Eastern Ramganga Valley Hydel Projects Company Private Limited and 2,700 (out of 5,100) equity shares held in Sarju Valley Hydel Projects Company Private Limited, subsidiaries of the company with other investors of these subsidiaries till implementation of the agreement mentioned in (c) below. The company has also received in advance consideration on sale of these investments as shown in Note 16C.

(c) In terms of an agreement dated 9th November, 2015, for transfer of 76% of the Company's investment in various erstwhile wholly owned subsidiaries undertaking hydel power plants in the State of Arunachal Pradesh and Uttarakhand having aggregate capacity of 660 MW approximately (herein referred to as Arunachal Pradesh and Uttarakhand Undertaking respectively), to another strategic investor, certain investments in equity shares of these subsidiaries/associate of Rs. 11,25,78,000 [out of (iii), (iv) and (vi)/(viii) above] and preference shares of Rs. 58,38,73,000 (including '13,82,40,000 sold during the year) [out of (x) to (xxi) above] have been sold to the said investor. In terms of the above, company's investment of Rs. 22,00,03,137 as on 31st March, 2018 representing 24% and 51% of the equity in Arunachal Pradesh and Uttarakhand undertaking respectively and 24% in preference shares have been continued to be held by the company. These being investment in subsidiaries and associates and also long term and strategic in nature, have been carried at cost.

(d) Evaluation of impairment in the value of investment as given in (c) above and loans of Rs. 6,09,21,035 (Refer Note 6B(b) (iv), (iv) & (c)(i)) outstanding from the above subsidiaries and associate, pending completion of the project, have not been carried out. Impact in this respect as such, is presently not ascertainable which will be determined depending upon implementation status of the project.

(e) The company has purchased equity shares in EDCL Arunachal Hydro Project Private Limited and consequently, it ceased to become a subsidiary of Arunachal Hydro Power Limited and has become a wholly-owned subsidiary of the company w.e.f. 1st October, 2016.

(g) In pursuance of Section 187(2)(c ) of the Companies Act, 2013, investments purchased [ mentioned in (xiii), (xx) and (xxi)] by the Company, during the year are still lying in the name of transferor for want of performance of obligation undertaken by the Company, as per agreement entered with the seller.

(h) The Company has elected to continue with the carrying value of its investments in subsidiaries and associates, measured as per the Previous GAAP and use that carrying value on the transition date April 1, 2016 in terms of Ind AS 101 'First -time Adoption of Indian Accounting Standards'.

(i) Includes Rs. 67,468/- (Previous Year as on 31st March, 2017: Rs. 22,980/- & as on 1st April, 2016: Rs. 6,29,000/-) recoverable from subsidiaries and associate (Refer Note 31)

(ii) Includes Rs.NIL/- (Previous Year as on 31st March, 2017 Rs. 3,194/- & as on 1st April, 2016: Rs. 75,643/-) recoverable from other related parties (Refer Note 31)

*Held by clearing member due for transfer to Mr. Amar Singh & Mrs. Panakaja Kumari Singh increasing their shareholding to 1,04,58,453 shares (22.02%) and 29,36,414 shares (6.18%) respectively.

Rights, Preferences and Restrictions attaching to each classes of shares including restrictions on the distribution of dividends and the repayment of capital

a) The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity is entitled to one vote per share. The dividend, if any proposed by the Board of Directors of the Company is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to the number of equity shares held by them.

b) The Board of Directors has recommended payment of dividend @ 5% (Rs. 0.50) per equity share on the paid-up share capital of the company for the financial year 2017-2018 subject to approval of members at the ensuing Annual General Meeting.

Capital Reserve Capital Reserve includes:

(a) Rs. 124,000,000 ( as at 31st March, 2017 Rs. 124,000,000, as at 1st April, 2016 Rs. 124,000,000) representing the reserves arising on forfeiture of 75,00,000 share warrants issued on preferential basis.

(b) Rs. 1,165,345 (as at 31st March, 2017 Rs. 1,165,345, as at 1st April, 2016 : Rs. 1,165,345) representing reserves arising on amalgamation pursuant to the scheme of arrangement with erstwhile Dhanashree Projects Limited. The said scheme was sanctioned by the Honorable High Court of Bangalore and Kolkata vide order dated August 12, 2010 and September 15, 2010 respectively.

Securities Premium Reserve :

Securities Premium Reserve represents the amount received in excess of par value of equity shares issued by the company and is to be utilised for as specified under Section 52 of Companies Act, 2013.

General Reserve :

The general reserve is created from time to time by appropriating profits from retained earnings. The general reserve is created by transfer from one component of equity to another and accordingly it is not reclassified to the Statement of profit and loss.

Retained earnings :

Retained earnings generally represents the undistributed profit/ amount of accumulated earnings of the company. Any actuarial gains and losses arising on defined benefit obligations have been recognised in retained earnings.

a) The Company has not received information from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable under the Act has not been given.

b) Payables for goods and services includes acceptances amounting to Rs. 8,41,09,175/- (Previous Year as on 31st March, 2017: Rs. 18,09,06,500 /- & as on 1st April, 2016: Rs. 10,00,75,310/-)

(c) Includes Rs. 15,280 (Previous Year as on 31st March, 2017: Rs.NIL /- & as on 1st April, 2016 Rs. 5,24,000 /-) payable to Subsidiaries and Associate (Refer Note 31)

(d) Includes Rs. 86,900 (Previous Year as on 31st March 2017: Rs. 117,643/- & as on 1st April, 2016: Rs.NIL/-) payable to other related parties (Refer Note 31)

Note :

Revenue from sale of power, is accounted for on the basis of billing to Electricity Board in Karnataka as per Tariff approved by State Electricity Regulatory Commission in accordance with the provisions of the Long Term Power Purchase Agreement executed in this respect.

B) Defined Benefit Scheme :

The employee's Gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligations is determined based on actuarial valuation using projected unit credit method which recognises each period of services as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.

Notes: (As certified by Independent Actuary)

1 Assumptions relating to future salary increases, attrition, interest rate for discount and overall expected rate of return on assets have been considered based on relevant economic factors such as inflation, seniority, promotion, market growth and other factors as applicable to the period over which the obligation is expected to be settled.

2 The expected return on Plan assets is based on market expectation at the beginning of the year. The rate of return on long term Government Bonds is taken as reference for this purpose.

3 In respect of Funded Gratuity, the funds are managed by the insurer and therefore the percentage or amount that each major category constitutes the fair value of total plan assets and effect thereof on overall expected rate of return on asset is not ascertainable.

4. Acquisition adjustment represents amount in respect of certain employees transferred into/ transferred from the company.

NOTE 3

EXCEPTIONAL ITEMS

Exceptional items represents profit on investments sold during the previous period/ year.

NOTE 4 OPERATING LEASE

(a) The company has entered into arrangements of lease of land which has been classified as operating leases. These lease arrangements are non-cancellable in nature. Rental expenses towards such non- cancellable operating lease charged to statement of profit and loss amounts to 3,72,100/- (Previous Year Rs. 3,72,100/-) and has been disclosed as "Rent" in Note 27 of the financial statement.

(b) The company has taken several premises under cancellable operating leases. The lease term is upto 5 years and have the option of renewal on expiry of the lease period based on mutual agreement of both the parties. Certain lease arrangements have been terminated during the year based upon mutual agreement of both the parties. Rental expenses towards cancellable operating lease charged to statement of profit and loss amounts to Rs. 65,44,200 /- (Previous year Rs. 88,66,000/-) and has been disclosed as "Rent" in Note 27 of the financial statement.

(c) The Company has taken certain machineries under cancellable operating leases. The lease term has an option of renewal on expiry of the lease period based on the mutual agreement of both the parties. The lease arrangement has been terminated during the year based upon mutual agreement of both the parties. Rental expenses towards such cancellable operating lease charged to statement of profit and loss amounts to Rs.NIL/- (Previous Year Rs. 5,40,000 /-) and has been disclosed as "Rent" in Note 27 of the financial statement

NOTE 5

SEGMENT REPORTING

Segments have been identified in line with the Indian Accounting Standards AS-108 taking into account the organization structure as well as the differencing risk and return. The Company's business segment comprises of (a) Generating Division - generation and sale of bulk power to various electricity boards; (b) Contract Division - construction development, implementation, operation & maintenance of projects and consultancies and (c) Trading Division - trading of Power equipments, metals etc. These have been identified by the Chief Operating Decision Maker (CODM) on the basis of the type of their respective sales and services rendered.

(a) Revenue and expenses have been identified to segment on the basis of their relationship to the operating activities of the segment. Revenue and expenses which relates to enterprise as a whole and not allocable to segment on a reasonable basis have been included under the head other common expenses.

(b) As the company operates entirely in India no secondary segment has been identified for the above purpose.

NOTE 6

FINANCIAL INSTRUMENTS

Capital Management

The Company follows a capital management strategy. The primary objective is to ensure that Company maintains a healthy capital ratio in order to support its business operations, have sufficient financial flexibility for borrowing requirements, if any, in future and to maximise shareholder value. The Company's objective when managing capital is to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and benefits for other stake holders.

The management considers that the above carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

Fair Valuation Techniques

The fair values of the financial assets and liabilities are included at the amount 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 following methods and assumptions were used to estimate the fair values :

1. The fair value of cash and cash equivalents, trade receivables, trade payables, current borrowings, current financial liabilities and assets approximate their carrying amount largely due to the short-term nature of these instruments. The Management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost/amortised cost in the financial statements approximate their fair values.

2. Long-term debts are from Body Corporate and the rate of interest are reviewed annually.

Fair value hierarchy

The Company categorizes assets and liabilities measured at fair value into one of three levels as mentioned in Note 3.1 depending on the ability to observe inputs employed in their measurement.

During the year ended 31st March 2018; 31st March, 2017 and 1st April 2016, there was no transfer between Level 3 fair value measurements. Further, there is no transaction / balance for Level 1 and Level 2 categories.

Unquoted investments in shares have been valued based at cost as the latest audited financial statements were not available. There were no external unobservable inputs or assumptions used in such valuation.

Financial Risk Factors

The Company's activities expose it to a variety of financial risks - market risk, credit risk and liquidity risk. The Board of Directors reviews and approves policies for managing each of these risks, which are summarized below :

Market Risk

Market risk is the risk or uncertainty arising from possible market price movements resulting in fluctuation of the fair value of future cash flows of a financial instrument. The major components of Market risks are price risk, interest rate risk and foreign currency exchange risk.

Financial instruments affected by market risk includes borrowings.

a. Foreign Currency Risk

The company does not have significant transaction in foreign currency and accordingly it is not exposed to foreign currency risk. There are certain old outstanding balances which are unhedged. The details of the unhedged foreign currency exposures are given in Note No. 35. The management continuously reviews the exchange rates and are in process of setteling the balances.

b. Interest Rate Risk

The Company's exposure in market risk relating to change in interest rate primarily arises from floating rate borrowing with banks and financial institutions.

With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings and excluding loans on which interest rate swaps are taken.

A decrease in 0.50 basis point in Cash Credit & 0.25 basis point in Other Loans would have an equal and opposite effect on the company's financial statements.

c. Other price risk

The company is not exposed to any other price risk.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Trade Receivables of the company mainly comprises of receivables from state electricity boards and government department and hence such risk is negligible. Trade receivales in case of trading operations are from various private parties and are therefore exposed to general credit risk. The company has a policy to monitor such risk on an ongoing basis. However the Company is exposed to credit risk from its lending activities to it's subsidiaries.

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of receivables.

The carrying amount of respective financial assets recognised in the financial statements, (net of impairment losses) represents the Company's maximum exposure to credit risk.

Financial assets that are neither past due nor impaired

Cash and cash equivalents, investment and deposits with banks are neither past due nor impaired. Cash and cash equivalents with banks are held with reputed and credit worthy banking institutions.

Financial assets that are past due but not impaired

Trade receivables disclosed include amounts that are past due at the end of the reporting period but against which the Company has not recognised an allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still considered recoverable.

Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company's operations and to mitigate the effects of fluctuations in cash flows.

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.

The company has current financial assets which will be realised in ordinary course of business and unused line of credits as given above. The Company monitors its rolling forecast of its liquidity requirements to ensure it has sufficient cash to meet expected operational requirements.

The company relies on mix of borrowings and operating cash flows to meet its need for funds and ensures that it does not breach any financial covenants stipulated by the lender.

b) Disclosure as per Ind AS 101 First-time adoption of Indian Accounting Standards :

(I) Overall principle :

The Company has prepared the opening balance sheet as per Ind AS as of 1st April, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities.

However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below :

(II) Mandatory exceptions and optional exemptions

(i) Classification and measurement of financial asset:

The Company has classified the financial assets in accordance with Ind AS 109 on the basis of facts and circumstances that exist at the date of transition to Ind AS.

(ii) Derecognition of financial assets and financial liabilities :

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.

(iii) Deemed cost for property, plant and equipment and other intangible assets :

The Company has elected to continue with the carrying value of all of its property, plant and equipment and other intangible assets recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and used that carrying value as its deemed cost as of the transition date except in respect of leasehold land of windmill as given in Note 5A(a).

(iv) Deemed cost of investment in Subsidiaries and Associates :

The Company has elected to continue with the carrying value of all of its investments in Subsidiaries and Associates recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

(v) Determining whether an arrangement contains a lease :

The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.

(vi) Impairment of financial assets :

Ind AS 109 "Financial Instruments" requires the impairment to be carried out retrospectively; however, as permitted by Ind AS 101, the Company, has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date.

Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.

(vii) Business Combinations :

In terms of Ind AS 101 "First Time Adoption of Indian Accounting Standards", the Company has elected to not to apply Ind AS 103 "Business Combination" for past combinations.

c) Explanatory Notes to reconciliation between Previous GAAP and Ind AS

i) Re-classification of Leasehold Land

Under previous GAAP, leasehold land was shown as a part of fixed assets, whereas under Ind AS, the same is considered as an operating lease and hence is shown as prepayments on leasehold land. This reclassification has resulted in decrease in depreciation and increase in rental expense and hence has no impact on other equity.

ii) Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in Other Comprehensive Income instead of profit or loss. Under the Previous GAAP, these remeasurements were forming part of the profit or loss for the year.

iii) Financial Assets accounted at amortised cost method under effective rate of interest

(a) Financial assets such as retention money and deposits have been valued by applying amortised cost method using Effective Interest Rate as per requirements of Ind AS 109 'Financial Instruments'. Subsequent to transition date, the fair valuation difference on financial assets has been recognized in statement of profit & loss under other expenditure. Further, the accounting of such financial assets under the effective interest rate method, has resulted in increase in interest income.

(b) Interest free loan given to subsidiaries and associates were recorded at their transaction value under Previous GAAP. Under Ind AS, such loans are recognized at fair value on the date of transition/disbursements and the difference there against has been charged off against retained earnings/statement of profit & loss account except in case of cetain specific loans which are startegic and in the nature of contribution to subsidiaries. The differential amount in case of such strategic loans have been recognised as deemed investment on the date of transition/ disbursement. Subsequently, the interest free loans has been carried by applying amortised cost method using effective interest rate as per the requirements of IND AS 109 'Financial Instruments' and interest income has been recognised there against. In case of early prepayment, modification adjustment has been recorded and disclosed under Other Expense/Income.

iv) Proposed Divided

Under previous GAAP upto 1st April 2016, proposed dividends including dividend distribution tax are recognised as a liability in the period to which they relate, irrespective of when they are declared. Under IND AS, a proposed dividend is recognised as a liability in the period in which it is declared by the company, usually when approved by the shareholders in a general meeting, or paid.

v) Insurance Contract

Under previous GAAP, corporate guarantee issued by the Company on behalf of the Subsidiary companies was not recognised but disclosed as Contingent Liability.

Under IND AS, such Corporate Guarantee issued by the Company being in the nature of 'Insurance Contracts' has been recognised and disclosed as contingent liability.

vi) Current Tax and Deferred Tax

Under Previous GAAP, deferred taxes were recognised for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognised using the balance sheet for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases. The aforesaid difference, together with the consequential tax impact of other Ind AS transitional adjustments lead to temporary differences and accordingly, deferred tax adjustments have been recognised in correlation to the underlying transaction either in retained earnings or through other comprehensive income.

Further, under Previous GAAP, Minimum Alternate Tax (MAT) Credit Entitlement were shown under Other Non Current Assets and under IND AS, the same has been considered as deferred tax assets. Consequently, utilisation of MAT Credit entitlement relating to the year ended 31st March, 2017 and those prior to the transition date has been netted with the income tax expense and provision for tax respectively and corresponding charge has been made from deferred tax asset under Ind AS.

vii) Previous year figures have been regrouped and rearranged to comply with the IND AS Schedule presentation.

NOTE 7

These financial statements have been approved by the Board of Directors of the Company on 7th June, 2018 for issue to the shareholders for their adoption.