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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 533122ISIN: INE399K01017INDUSTRY: Power - Generation/Distribution

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2.87
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5.79
Year End :2018-03 

1. Corporate Information Nature of Operations

RattanIndia Power Limited (formerly known as Indiabulls Power Limited.) (“the Company”, “RPL”) is principally engaged in the business of dealing in power generation, distribution, trading and transmission and other ancillary and incidental activities.

General information and statement of compliance with Ind AS

The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (‘MCA’)). The Company has uniformly applied the accounting policies during the periods presented.

The standalone financial statements for the year ended 31 March 2018 were approved by the Board of Directors on 18 May 2018.

2. Recent accounting pronouncements Notification of Ind AS 115:

The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:

a. Identify the contract(s) with a customer;

b. Identify the performance obligations;

c. Determine the transaction price;

d. Allocate the transaction price to the performance obligations;

e. Recognize revenue when or as an entity satisfies performance obligation.

The Company does not have its impact on the financial statements.

Insertion of Appendix B to Ind AS 21:

This Appendix applies to a foreign currency transaction (or part of it) when an entity recognizes a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income (or part of it). The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability), for recognising related expense/income on the settlement of said asset/liability.

This Appendix does not apply when an entity measures the related asset, expense or income on initial recognition:

a. At fair value; or

b. At the fair value of the consideration paid or received at a date other than the date of initial recognition of the nonmonetary asset or non-monetary liability arising from advance consideration.

An entity is not required to apply this Appendix to:

a. income taxes; or

b. insurance contracts (including reinsurance contracts) that it issues or reinsurance contracts that it holds.

The Company does not have its impact on the financial statements.

Amendment to Ind AS 12

The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit.

The Company does not have its impact on the financial statements.

(i) 27,097,246 (31 March 2017: 27,097,246) equity shares of RattanIndia Nasik Power Limited (formerly known as Indiabulls Realtech Limited) (RNPL) and Nil (31 March 2017: 493,020) equity shares of Amravati Power Transmission Company Limited are pledged in favour of the Project Lenders of its subsidiaries,

(ii) During the year, for the purpose of securing repayment of inter company loan, the Company has pledged 50,000 share of Poena Power Development Limited in favour of lendors of inter company loan.

(iii) During the year company has written off its value of investment in a wholly owned subsidiary, Poena Power Development Limited, amounting to Rs. 4,629.48 lakhs.

b) Rights/restrictions attached to equity shares

The Company has only one class of equity shares with voting rights, having a par value of Rs. 10 per share. Each shareholder of equity shares is entitled to one vote per share held. Each share is entitled to dividend, if declared, in Indian Rupees. The dividend, if any, proposed by Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. 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. The distribution will be in proportion to the number of equity shares held by the Shareholders.

Nature and purpose of other reserves Capital reserve

Capital reserve is created out of the capital profits. It is created out of the profits earned from some specific transactions of capital nature. Capital reserve is not available for the distribution to the shareholders. (refer note 45)

Securities premium reserve

Securities premium reserve represents premium received on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Employee’s stock options reserve

The reserve account is used to recognise the grant date value of options issued to employees under Parent Company Employee stock option plan.

(i) Loans from Consortium of Banks aggregating to Rs. 295,261.99 lakhs (31 March 2017: Rs. 299,026.32 lakhs) & from Financial Institutions aggregating to Rs. 270,335.49 lakhs (31 March 2017: Rs. 277,057.67 lakhs) are secured by way of first mortgage and charge on all immovable and movable assets, both present and future, of the Amravati Project. The aforesaid Phase I Loan Facility is further secured by the pledge of 1,181,173,342 (31 March 2017: 1,181,173,342) equity shares (40% of the total equity share capital) of the Company held by RattanIndia Infrastructure Limited (“RIL”) (formerly known as Indiabulls Infrastructure and Power Limited) and RR Infralands Private Limited through execution of a Deed of Pledge amongst RIL and RR Infralands Private Limited (Pledgers), Company and Vistra (ITCL) India Limited (Formerly known as IL&FS Trust Company Limited) (IDBI Trusteeship Services Limited upto 26 March 2015) with a condition that these pledged shares must constitute 60% of the Project Equity Capital in favour of Power Finance Corporation Limited (PFC) - the lead consortium lender. Also, disbursements against cost overrun underwritten portion is secured by a pledge of 219,050,000 (31 March 2017: 219,050,000) equity shares held by Indiabulls Real Estate Limited in the Company. Additionally, the Company is required for negative lien on 11% equity shares in the Company with a condition that effective voting rights of the shares pledged and over which a negative lien is created in aggregate does not fall below 51% of the Equity Share Capital.

(ii) (a) Loan from IDBI Bank aggregating of Rs. 13,750.00 lakhs (31 March 2017: Rs. 13,750.00 lakhs) is secured by way of hypothecation of movable fixed assets, both present and future, of the Amravati Project Phase II. The aforesaid Phase II Loan Facility is further secured by pledge of 30,000,000 (31 March 2017: 30,000,000) equity shares of the Company held by RR Infralands Private Limited.

(b) Financial assistance to meet the funding requirement for Capital Expenditure and Long Term Working Capital requirements from ICICI Bank aggregating to Rs. 1,795.82 lakhs (31 March 2017: ‘ Rs. 9,700.00 lakhs) is secured by way of pledge of Nil (31 March 2017: 100,000,000) equity shares of the Company held by RR Infralands Private Limited.

(v) The above mentioned loans from consortium of banks and financial institutions carry floating rates of interest ranging from 12.65% p.a. to 14.00% p.a. (31 March 2017: from 12.90% p.a. to 15.00% p.a.) and the term loan from other banks carries a floating rate of interest of 11.45% p.a. to 16% p.a. (31 March 2017: floating rate of interest 11.45% p.a. to 16% p.a.)

(i) The facilities are secured by hypothecation charges on all movables and mortgage of immovable assets, present and future, of the project under implementation by way of first charge ranking pari passu.

(ii) Short term loan facility from financial institution - Power Finance Corporation Limited is secured by Pari passu charge over the Company’s immovable assets and movables assets relating to the Project (current & fixed) including movable plant, machinery, equipments, machinery spares, tools, accessories, furniture, fixtures, vehicles and all other movable assets, both present and future, the stock of raw materials, semi-finished and finished goods, consumable goods relating to the project site, intangible assets, book debts, operating cash flow, revenue & receivables of the Company relating to the project and all current assets, commissions and any revenue of any nature, trust and retention account, letter of credit, other reserves and any other bank accounts in relation to the project and on all rights, titles, interest, benefits, claims and demands relating to the project.

(iii) During the year, for the purpose of securing repayment of inter company loan, the Company has pledged 50,000 share of Poena Power Development Limited in favour of lenders of inter company loan.

(iv) The company has defaulted in repayment of interest in respect of cash credit facility and short term loan as mentioned below:

3. Details of contingent liabilities, pending litigations and other matters:

A. Contingent Liabilities of pending litigations not provided for in respect of:

1 The Water Resource Department (‘WRD’ or “Respondent’) vide their letter dated 29 January 2013 raised a demand of Rs. 23,218 lakhs on Company for payment of irrigation restoration charges @ Rs. 1 lakh per hectare as per Government Resolution (GR) dated 6 March 2009 instead of Rs. 0.50 lakh per hectare as provided in circular from Water Resources Department, Government of Maharashtra dated 21 February 2004. The Company had paid Rs. 11,657 lakhs (@ Rs. 0.50 lakh per hectare) and filed a Writ Petition with the Hon’ble Bombay High Court on 13 February 2013 challenging the validity of demand so raised by WRD. The Mumbai bench of Hon’ble Bombay High Court vide its Order dated 3 August 2015 transferred the matter to the Nagpur Bench. The Nagpur bench vide its order dated 5 May 2016 has partly allowed the petition and declared that demand at revised rate i.e. as per GR dated 6 March 2009 from the petitioner is illegal and unsustainable. As per Nagpur Bench order, the rate prescribed in the GR dated 6 March 2009 is applicable prospectively from 1 April 2009 and is not applicable in case of the Company to whom water allocation was finalized on 12 December 2007.

Pursuant to this, Maharashtra State Government filed a Special Leave Petition (“SPL”) before the Hon’ble Supreme Court of India. The Hon’ble Court after hearing parties granted time to the Company to file its Counter Affidavit. The Company is ready with its reply which will be filed on or before next date of hearing which is likely to be listed on 27 August 2018.

2 During the year ended 2010-11, the Company entered into a contract with Bharat Heavy Electrical Limited (‘BHEL’) for erection and supply of certain material for phase II of its power project at Amravati. Subsequent to this contract, BHEL supplied certain materials which were not warranted at that time and there were various communication made by the Company with BHEL to take off these materials from the site. Against this, BHEL initiated arbitration proceeding against the Company, alleging the payment outstanding against the Company in respect of the materials so supplied by them. The Hon’ble High Court also disposed off the petition upon the instruction to the parties that petition before Hon’ble High Court be treated as an application under Section 17 of the Arbitration and Conciliation Act, 1996 before the Arbitral Tribunal. Subsequent to this, BHEL filed the following applications on 14 April 2016 with Arbitral Tribunal:

1. Application under Section 17 of the Arbitration and Conciliation Act, 1996 seeking an interim prayer of release of bank guarantees.

2. Application seeking amendment of the Claim petition.

3. Application under Section 31(6) of the Arbitration and Conciliation Act, 1996 seeking an interim award on the basis of admissions.

On BHEL’s application for seeking interim award based on admissions, the tribunal has heard the arguments of both BHEL and the Company and the tribunal has passed an interim award of Rs. 11,500 lakh against the Company vide its order dated 27 July 2017.

A Petition has also been filed by BHEL praying the Hon’ble High Court to issue warrants of attachment/ or auction sale of immovable and movable assets of the Company for realizing the amount payable/due as per the Interim award dated 27 July 2017. The matter is listed for hearing post the decision on the validity of the interim award which is slated on 17 July 2018.

The Company filed an appeal against the said interim award on 16 October 2017 with the Hon’ble High Court. Based on the legal appraisal of the case, Company is confident that the matter will be disposed off in their favour.

3. The Company had developed a railway line track and constructed a boundary wall around the railway yard and power plant at Amravati on the land allotted to the Company by MIDC. In this respect, Mr. Keshav Puranlal Bundele and others (‘Plaintiffs’) alleged that the approach road to their land has been obstructed and they are unable to access their land for cultivation. A suit for seeking declaration/ injunction for right of way was been filed before the Civil Judge, Senior Division, Amravati by the Plaintiffs against the Company during the year 2015-16. The Company denied the allegations in its written statement and is contesting the suit and the Hon’ble Court also declined the prayer of the Plaintiffs for grant of temporary injunction.

The Plaintiffs then filed a civil appeal with regard to this matter against the Court’s order of declining the prayer of the Plaintiffs for grant of temporary injunction. The matter is now listed for hearing on 16 July 2018.

The pecuniary risk involved in the present case cannot be quantified. Further, based on legal appraisal, the management believes that no liability will not devolve on the Company.

4. The Company is using various Microsoft programs/ softwares. During the year ended 31 March 2015, Microsoft Corporation alleged that there is shortfall in the entitled software licenses being used by the Company in its offices and thus the Company has infringed copyright in the Microsoft program/software titles. A suit has been filed by Microsoft Corporation before Hon’ble High Court of Delhi on 18 December 2015 against the Company praying for permanent injunction against the Company and further prayed for rendition of accounts of profits and for damages. The matter is currently listed for evidence of the parties. The next date of hearing in the matter is 31 July 2018 before the Ld. Joint Registrar. The pecuniary risk involved in the present case cannot be quantified. Further, based on legal appraisal, the management believes that no liability will not devolve on the Company.

5. A vendor had done work for supply, plantation and maintenance of 100,000 trees at the Company’s power plant pursuant to work order dated 25 May 2012. The Company terminated the contract vide letter dated 6 February 2014 due to unsatisfactory performance and also claimed liquidated damages from the vendor. On termination of contract by the Company, vendor alleged that the contract was wrongly terminated by the Company, only to avoid outstanding payment. The vendor has filed an Civil Suit on 3.12.2015 before Civil Judge Senior Division, Amravati claiming Rs. 116.25 Lakhs and court fees of Rs. 1.54 Lakhs against the work done. The Company has filed an application under section 8 of the Arbitration and conciliation Act for the dismissal of the suit. The matter is now listed for Order. The pecuniary risk involved in the present case cannot be quantified. Based on the legal appraisal of the case, Company is confident that the matter will be disposed off in their favour.

6. During the year ended 2015-16, Tahsildar of Amravati vide it’s order dated 24 February 2016 directed the Company to deposit the amount of Rs. 400 Lakhs towards the payment of royalty for using the minor minerals excavated during the construction of the power plant of the Company and utilized in the embankment work of railway line on the plot of MIDC allotted to the Company. The Company has filed a writ petition before the Nagpur bench of Hon’ble Bombay High Court against the order passed by Tahsildar. The Hon’ble Court vide its Order dated 15 December 2016 has issued a stay in the matter. The pecuniary risk involved in the present case cannot be quantified. Further, based on legal appraisal, the management believes that no liability will devolve on the Company.

7. Becquerel Industries Private Limited has filed a suit for recovery of Rs. 20.73 Lakhs against M/s Preeti Engineering before Civil Court at Nagpur on 15 April 2015 alleging that their dues are pending against M/s Preeti Engineering to whom the Non-Distractive Testing work had been sublet by M/s Brothers Engineering. The work to M/s Brothers Engineering was been sublet by BHEL to whom contract was awarded by the Company. The summon were serviced to M/s Preeti Engineering, M/s Bothers Engineering, BHEL and the Company. The Company has filed its reply and the matter is now listed for hearing. The pecuniary risk involved in the present case cannot be quantified. Further, based on legal appraisal, the management believes that no liability will not devolve on the Company.

8. A Suo Moto Public Interest Litigation (‘PIL’) has been registered before Hon’ble Bombay High Court on 27 August 2014 with regard to the occupation hazards of the employees working in various thermal power plants stations in the country. The Company (due to it’s plant at Amravati) has been made a party in the said PIL. The Company has filed its reply before Bombay High Court. One of the parties (Respondent) has filed an Application for Intervention. The matter is listed for hearing in respect to the Application for Intervention along with the PIL. The pecuniary risk involved in the present case cannot be quantified.

B. Contingent Liabilities of Demand pending under the Income Tax Act, 1961 and other matters not provided for in respect of:

I Under the Income Tax Act, 1961

1 The Company received a demand of Rs. 77.38 Lakhs under section 143(3) of the Income Tax Act, 1961 (“IT Act”) in respect of the FY 2009-10 for disallowance u/s 14A of the IT Act, against which appeal had been filed by the Company during the FY 2015-16 which is pending before ITAT Delhi. The aforesaid demand of Rs. 77.38 Lakhs had been adjusted against refund for the AY 2013-14 by the Income Tax department against which Company filed another appeal during the FY 2015-16 which is also pending before ITAT Delhi as at 31 March 2018.

2 During the year, the Company filed income tax returns for the assessment year from 2011-12 to 2016-17 pursuant to notice received under section 153 of Income-tax Act, 1961.

II Others

1 Company has provided a commitment bank guarantee of Rs. 5,903.79 Lakhs (31 March 2017: Rs. 5,903.79 Lakhs) on behalf of RattanIndia Nasik Power Limited (formerly known as Indiabulls Realtech Limited) (RNPL), a wholly owned subsidiary of the Company, to subsidiaries of Coal India Limited for issuance of Letter of Assurance for supply of coal for RNPL’s Nashik Thermal Power Project, partly secured by way of bank lien on fixed deposits of Rs. 442.95 Lakhs (31 March 2017: Rs. 442.95 Lakhs) of the Company and partly by way of bank lien on fixed deposits of Rs. 152.44 Lakhs (31 March 2017: Rs. 152.44 Lakhs) of RattanIndia Nasik Power Limited.

2 Guarantee provided on behalf of RNPL, jointly with RattanIndia Infrastructure Limited (RIL) favoring Axis bank towards credit facility of Rs. 39,783.00 Lakhs. In the event of any default on the part of RNPL in payment/ repayment or any of the monies, guarantors shall ensure that the borrower shall duly and punctually repay the credit facility together with all interest, liquidated damages, premium on prepayment or on redemption, costs, expenses and other monies in accordance with the facility documentation, or in the event of any default on the part of the RNPL to comply with or perform any of the terms, conditions and covenants contained in the facility documentation, the guarantors unconditionally and irrevocably undertakes to pay the bank forthwith on demand without protest or demur and without proof or condition shall, upon demand, forthwith pay to bank all the amounts payable by RNPL under the facility documentation together with interest at 2% above the rate as per Axis Bank sanction terms on the amounts so demanded from them in the event of any delay in making the payment to the bank.

3 For the purpose of further disbursement against Cost Over Run -1 facility and Cost Over Run-2 sanctioned by Power Finance Corporation (PFC) to RNPL, the Company, RIL, RR Infralands Private Limited (RIPL) and Mr. Rajiv Rattan (Individual promoter) has irrevocably and unconditionally acknowledge, represent, accept, certify undertake declare, confirm and assure :

a. to bear cost, if any, arising out of non-supply of power to MSEDCL under PPA signed by RNPL in April, 2012 for supply of 650 MW power from the project from their own sources without any recourse to the project assets and lenders.

b. to bear cost/penalities payable, if any, to SPTCL or any other entity, arising due to delay in completion of generation project beyond commissioning of its transmission system, from their own sources without any recourse to project assets and lenders.

4 Undertaking provided by the Company on behalf of RNPL, jointly with RIL and RIPL, in favour of Rural Electrification Corporation Limited (REC). Parties to the undertaking irrevocablly and unconditionally declare and assure that they shall (jointly and severally), in the event there is shortfall in servicing of the facility including applicable interest, arrange for additional funds from their own resources without any recourse to the project assets/lenders.

Parties to the undertaking irrevocably and unconditionally declare and assure that in the event they fail to fulfill their obligations listed in undertaking document, in the manner and time stipulated therein in the underwritten and consolidated facility agreement, there would be recourse against the borrower, and it shall be an event of default under the underwritten and consolidated facility agreement and Secured Parties/ Lenders may take such other action as may be contemplated thereunder.

Future cash outflows in respect of the above, if any, is determinable only on receipt of judgement/ decision pending with the relevant authorities. The Company does not expect the outcome of the matters stated above to have a material adverse impact on its financial condition, results of operations and cash flows.

The Company is involved in various legal proceedings and other regulatory matters relating to conduct of its business. In respect of the other claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defenses, the ultimate disposition in these matters will not have material adverse effect on its Financial Statements.

C. Other pending litigations as on 31 March 2018 are:

1 The Company is supplying power to Maharashtra State Electricity Distribution Company Limited (MSDCL) based on two power purchase agreements (PPAs) for supply of 1200 MW (450 MW 750 MW respectively) of power for 25 years. The PPAs were executed based on the fuel supply agreement (FSA) which provided that domestic coal linkages would be available to meet the fuel requirements. However, adequate coal supply was not made available which adversely impacted cost as Company had to source fuel from alternate sources to meet the shortfall of coal supplied under FSA with coal supplier. The Cabinet Committee of Economic Affairs (CCEA) approved mechanism where after Ministry of Coal amended the National Coal Distribution Policy (NCDP) and communicated its decision to allow pass through of the incremental cost of procuring coal from alternative sources to meet the shortfall in supply of domestic coal under coal linkage.

The Company filed a petition before Maharashtra Electricity Regulatory Commission (‘MERC’ or ‘the Commission’) in year 2013 for realizing the shortfall in supply under NCDP. MERC vide its Order on 15 July 2014 laid down methodology to recover compensatory fuel charges and vide Order dated 20 August 2014.

On 28 August 2014, the Company filed a review petition before MERC against the Orders dated 15 July 2014 as well as Order dated 20 August 2014 and MSEDCL further filed review petition against the Orders of MERC dated 20 August 2014. The review petition filed by MSEDCL got dismissed vide Order dated 16 July 2015 and the review petition filed by the Company also got dismissed vide Order 30 October 2015. As at the balance sheet date, the Company has accounted such claim in the books of accounts aggreegating to Rs. 28,658.80 lakh and related late payment surcharge thereon.

The Company then filed appeals before Appellate Tribunal for Electricity (APTEL) against Orders dated 15 July 2014, 20 August 2014 and 30 October 2015. The said appeals were disposed off by the Hon’ble Tribunal on 4 May 2017, remanding the matters to the Maharashtra Electricity Regulation Commission (‘MERC’) for fresh adjudication in the light of the direction of the Hon’ble Supreme Court in case of Energy Watchdog and Ors v/s CERC and ors. Dated 11 April 2017. MERC heard the matter on 15 November 2017 and reserved it’s Order. Subsequent to the balance sheet date, on 3 April 2018, MERC has passed the said Order, whereby MERC principally held that the Company is entitled to compensation and a methodology to recover compensatory fuel charges has been laid down. The Company is in process of challenging the said order as in it’s view, the order passed by MERC is not fully on the principle of “restoration of the affected party to the same economic position as if the change in law event didn’t not occur”. Company is confident that when an appeal is filed with APTEL, the Hon’ble Tribunal is likely to set out a mechanism for compensation restoring the Company to the same economic position as if such Change in Law has not occurred.

2 There has been an increase in cost of power generation owing to increase in various statutory taxes, duties, levies, cess, surcharge etc. Based on various judgements from CERC involving similar situations, management has concluded that these charges are recoverable from MSEDCL under “Change in Law” clause of PPA and during the year the Company has recorded revenue of Rs. 1,439.42 Lakhs (31 March 2017: Rs. 207.09 Lakhs). The Company filed a petition with MERC on 15 June 2016 claiming approval of additional components of costs under change in law. Subsequent to the balance sheet date, MERC has issued order dated 5 April 2018 in this respect.

3 During the year 2015-16, Water Resource Department (‘WRD’) demanded water commitment charges amounting to Rs. 595.72 Lakhs, for water connection being used by the Company. The Company filed a petition before the Nagpur bench of Hon’ble Bombay High Court challenging the said demand of water commitment charges and also sought for refund of Rs. 593.22 Lakhs commitment charges already paid by the Company to WRD prior to the aforesaid demand. On 14 July 2017, the Hon’ble High Court disposed off the case in Company’s favour quashing the demand notice and upholding/ declaring that the amount of Rs. 593.22 Lakhs collected by Irrigation Department, Government of Maharashtra from the Company towards commitment charges up till now, is without any authority of law and therefore, the Company is entitled to get refund of the same along with penal interest. Against this order, WRD filed an SLP before Hon’ble Supreme Court of India. The matter is still sub-judice, however, based on legal appraisal, the management is confident of favourable order.

4 Estimated amount of contracts remaining to be executed on account of capital and other commitments towards the Project not provided for: Rs. 13,078.57 lakhs (31 March 2017: Rs. 570,308.09 lakhs) - advances made there against Rs. 735.80 lakhs (31 March 2017: Rs. 59,871.21 lakhs).

5 The Company is covered under Section 135 of the Companies Act, 2013 and accordingly constituted a Corporate Social Responsibility Committee of the Board. However, as the Company did not have average net profits based on the immediately preceding three financial years, the Company is not required to spend amounts towards Corporate Social Responsibility in terms of the Companies Act, 2013.

6 Employee Stock Options Schemes

The Company has formulated ESOS/ ESOP schemes for applicable/ eligible employees. The schemes so formulated are also applicable to the eligible employees of its subsidiaries and of other Companies under common control with the Company. The subsidiaries have adopted the said schemes of the Company which are administered by a Compensation Committee constituted by the Board of Directors of the Company. The Company does not seek reimbursement of expenses from subsidiary companies for ESOP granted to employees of subsidiary companies.

Stock Option Schemes of RattanIndia Power Limited (“RPL”):

RPL ESOP - 2008

On 10 January 2008 the erstwhile IPSL, had established the IPSL ESOS Plan, under which, IPSL was authorised to issue upto 20,000,000 equity settled options at an exercise price of Rs. 10 per option to eligible employees. Employees covered by the plan were granted an option to purchase equity shares of IPSL subject to the requirements of vesting. A Compensation Committee constituted by the Board of Directors of IPSL administered the plan. All these options were outstanding as at 1 April 2008.

Pursuant to a Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956, duly approved by the Hon’ble High Court of Delhi at New Delhi vide its order dated 1 September 2008, IPSL was amalgamated with Sophia Power Company Limited (“SPCL”). With effect from the Appointed Date the IPSL ESOS Plan was terminated and in lieu, in terms of Clause 14 (c) of the Scheme of Amalgamation, SPCL - IPSL Employees Stock Option Plan - 2008 (“SPCL - IPSL ESOP - 2008”) was established in SPCL for the outstanding, unvested options for the benefit of the erstwhile IPSL option holders, on terms and conditions not less favorable than those provided in the erstwhile IPSL ESOS Plan and taking into account the share exchange ratio i.e. one equity share of SPCL of face value Rs. 10 each for every one equity share of IPSL of face value Rs. 10 each. All the option holders under the IPSL ESOS Plan on the Effective Date were granted options under the SPCL - IPSL ESOP - 2008 in lieu of their cancelled options under the IPSL ESOS Plan. The SPCL - IPSL ESOP - 2008 was treated as a continuation of the IPSL ESOS Plan and all such options were treated outstanding from their respective date of grant under the IPSL ESOS Plan. During the year ended 31 March 2015, pursuant to the name change of the Company from Indiabulls Power Limited. to RattanIndia Power Limited, the name of the ESOP scheme SPCL - IPSL Employees’ Stock Option Plan 2008 (“SPCL-IPSL ESOP 2008”) was changed to RattanIndia Power Limited Employees’ Stock Option Plan 2008 (“RPL ESOP 2008”). These options vest uniformly over a period of 10 years commencing one year after the date of grant.

RPL ESOS 2009

During the financial year ended 31 March 2010, the Company had established the “Indiabulls Power Limited Employees’ Stock Option Scheme 2009” (“IPL ESOS 2009”). The Company had issued 20,000,000 equity settled options at an exercise price of Rs. 14 per option under the IPL ESOS 2009 to eligible employees which gave them the right to subscribe to stock options representing an equal number of equity shares of face value Rs. 10 each of RPL. During the year ended 31 March 2015, pursuant to the name change of the Company from Indiabulls Power Limited. to RattanIndia Power Limited, the name of the ESOS scheme IPL ESOS 2009 was changed to RattanIndia Power Limited Employees’ Stock Option Scheme 2009 (“RPL ESOS 2009”). These options vest uniformly over a period of 10 years commencing one year after the date of grant.

RPL ESOS 2011

During the financial year ended 31 March 2012, the Company has established the “Indiabulls Power Limited Employee Stock Option Scheme -2011” (“IPL ESOS -2011”). The Company had issued 50,000,000 equity settled options at an exercise price of Rs. 12 per option equivalent to the fair market value of the equity shares of RPL on the date of grant of option under the IPL ESOS -2011 to the eligible employees of the Company which gave them the right to subscribe an equal number of equity shares of face value of Rs. 10 each of RPL. During the year ended 31 March 2015, pursuant to the name change of the Company from Indiabulls Power Limited. to RattanIndia Power Limited, the name of the ESOS scheme IPL ESOS 2011 was changed to RattanIndia Power Limited Employees’ Stock Option Scheme 2011 (“RPL ESOS 2011”). These options vest uniformly over a period of 10 years commencing one year after the date of grant.

The Fair values of the options under the RPL ESOP - 2008, RPL ESOS 2009 and RPL ESOS 2011 using the binomial pricing model based on the following parameters, is Re. 1.00 per option for RPL ESOS 2009, as certified by an independent firm of Chartered Accountants. The fair value of the re-granted options under the RPL ESOP - 2008 plan is Rs. 1.58 per option and under RPL ESOS 2011 plan is Rs. 1.78 per option as certified by an independent firm of Chartered Accountants.

7 Employee Benefits Defined contribution:

Contributions are made to the Government Provident Fund and Family Pension Fund which cover all regular employees eligible under applicable Acts. Both the eligible employees and the Company make pre-determined contributions to the Provident Fund. The contributions are normally based upon a proportion of the employee’s salary. The Company has recognized in the statement of profit and loss an amount of Rs. 34.26 lakhs (31 March 2017: Rs. 32.95 lakhs) and in capital work-in- progress Rs. 0.35 lakhs (31 March 2017: Rs. 1.37 lakhs) towards employer’s contribution towards Provident Fund.

Defined benefits:

Provision for unfunded gratuity payable to eligible employees on retirement/ separation is based upon an actuarial valuation as at the year ended 31 March 2018. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. The commitments are actuarially determined using the ‘Projected Unit Credit Method’ as at the year end. Gains/ losses on changes in actuarial assumptions are accounted for in the statement of profit and loss/ capital work-in-progress, as applicable and as identified by the management of the Company.

Other benefits:

Provision for unfunded compensated absences payable to eligible employees on retirement/ separation is based upon an actuarial valuation as at the year ended 31 March 2018. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. The commitments are actuarially determined using the ‘Projected Unit Credit Method’ as at the year end. Gains/ losses on changes in actuarial assumptions are accounted for in the statement of profit and loss/ capital work-in-progress, as applicable and as identified by the Management of the Company.

8 Disclosures in respect of Related Parties :

As per Ind AS-24 “Related Party Disclosure”, the related parties where control exist or where significant influence exists and with whom transactions have taken place are as below:

** Sale of 9 wholly owned subsidiaries were effected during the year to a Company over which Key Management Personnel have significant influence.

*** Sale of 10 wholly owned subsidiaries were effected during the previous year to a Company over which Key Management Personnel have significant influence.

Other related parties:

III. Enterprise over which Key Management Personnel have significant influence -

(with whom transactions have been entered during the year/ previous year):

IIC Limited

Sepset Constructions Limited Citra Real Estate Limited

RattanIndia Solar Private Limited (Formerly known as RattanIndia Solar Limited)

Ashkit Power Limited (w.e.f. 5 August 2015)

Notus Infrastructure Limited RR Infralands Private Limited

RattanIndia Finanace Private Limited (Formerly known as Vikhyat Finlease And Trading Private Limited)

Tupelo Builders Private Limited Priapus Infrastructure Limited Priapus Real Estate Private Limited #

Priapus Properties Private Limited#

Priapus Developers Private Limited#

V. Interest in Trust -

IPL-PPSL Scheme Trust

# During the previous year, Priapus Properties Private Limited (‘PPPL’) and Priapus Real Estate Private Limited (‘PREPL’) were merged with Priapus Developers Private Limited (‘PDPL’).

9 Financial instruments

i) Fair values hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

ii) Financial assets and liabilities measured at fair value - recurring fair value measurements

(iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a reasonable approximation of their fair values (Refer note 41(i)).

(iv) Valuation process and technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

(a) Mutual funds: Use of NAV’s obtained from the asset manager.

10 Financial risk management

i) Financial instruments by category

Investment in subsidiaries are measured at cost as per Ind AS 27, ‘Separate financial statements’ and hence, not presented here.

ii) Risk Management

The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities by category are summarised in note 41(i). The main types of risks are market risk, credit risk and liquidity risk. The most significant financial risks to which the Company is exposed are described below:

The Company’s risk management is carried out by a central finance department (of the Company) under direction of the Board of Directors. The Board of Directors provides principles for overall risk management, and covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

A) Credit risk

Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. Credit risk arises from cash and cash equivalents, trade receivables, investments carried at amortised cost and deposits with banks and financial institutions. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at 31 March, as summarised below:

The Company continuously monitors defaults of customers and other counterparties, and incorporates this information into its credit risk controls. The Company’s policy is to deal only with creditworthy counterparties.

The Company’s management considers that all of the above financial assets are not impaired and/ or past due for each of the above assets reporting dates under review are of good credit quality.

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an on-going basis throughout each reporting period. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 30 days past due. A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

(i) The Company’s management considers assets other than trade receivables, which are 30 days past due and analyses facts and circumstances surrounding each such defaults separately. If the facts indicate a probability of loss of value, the asset’s then expected cash flows are plotted in an present value based impairment model to determine the amount of impairment loss. Amounts are written off only in the following circumstances: a) no probable legal recourse is available for recovery, b) the counterparty is bankrupt, c) the cost of recovery is more than the amount or d) after all possible efforts the Company is unable to recover amounts after a period of 3 years.

Similarly, substantial part of Company’s financial assets, other than trade receivables are recoverable from Company’s subsidiaries, which the management of the Company believes are not credit impaired and there are no 12 month expected credit losses that are required to be recognised.

(ii) The Company has no such assets where credit losses have been recognised as none of the assets are credit impaired. Company’s trade receivables are only with a single, government owned counterparty and are to be recovered under the power purchase agreement. Therefore, these trade receivables are considered high quality and accordingly no life time expected credit losses are recognised on such receivables based on simplified approach. Any provisions against such receivables are for liquidated damages and not related to credit worthiness of the counterparty.

(iii) The credit risk for cash and cash equivalents and other bank balances is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities.

Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates.

Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

* Borrowings excludes finance lease obligations, refer note 50 for disclosure of maturity profile of finance lease obligations.

C) Market Risk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the US Dollar. Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional currency.

Foreign currency risk exposure:

The Company’s exposure to foreign currency risk at the end of the reporting periods are as follows:

b) Interest rate risk

i) Liabilities/ assets

The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At 31 March 2017, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. The Company’s fixed deposits are carried at amortised cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

Interest rate risk exposure

Below is the overall exposure of the Company to interest rate risk:

c) Price risk Exposure

The Company is exposed to price risk in respect of its investment in mutual funds(see Note 6). The mutual funds are unquoted investments.

Sensitivity

Below is the sensitivity of profit or loss and equity changes in fair value of investments, assuming no change in other variables:

11 Capital management

The Company’ s capital management objectives are

- to ensure the Company’s ability to continue as a going concern

- to provide an adequate return to shareholders

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of balance sheet.

Management assesses the Company’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. This takes into account the subordination levels of the Company’s various classes of debt. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

The amounts managed as capital by the Company for the reporting periods under review are summarised as follows:

12 During the year, one of the lender of the Company adjusted Rs. 7,789.54 lakh of its dues on the Company, by invoking pledge on 1,000 lakh equity shares of the Company issued to RR Infralands Limited (RRIL), a Company having significant influence. To replenish it, ‘IPL-PPSL scheme trust’ transferred 1,000 lakh equity shares to RRIL. Pursuant to this transaction, corpus of the ‘IPL-PPSL trust’ in the books of the Company is reduced by Rs. 1,000 lakh being value of 1,000 lakh equity shares and balance Rs. 6,789.54 lakh has been credited to Capital Reserve.

The above information and that given in Note 23 - ‘Trade Payables’ regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

13 The disclosure as per Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 related to loans and advances in the nature of loans given to subsidiaries, associates and others and investments in shares of the Company by such parties is covered in the related party disclosures. (Refer Note 39)

14 The Company considers its investment in subsidiaries as strategic and long term in nature and accordingly, in the view of the management, there is no impairment loss that needs to be recorded for such investments other than already recorded in these standalone financial statements .

15 The Company is engaged in power generation and the setting up of power projects for generating, transmitting and supplying all forms of electrical energy and to undertake allied/ incidental activities in connection therewith. Considering the nature of the Company’s business and operations, and the information reviewed by the Chief Operating Decision Maker (CODM) to allocate resources and assess performance, the company has one reportable business segment i.e. “Power generation and allied activities” as per the requirements of Ind AS 108 - ‘Operating Segments’. Revenue of Rs. 201,538.21 Lakhs (31 March 2017 Rs. 133,450.34: Lakhs) are derived from a single external customer and the Company operates in one geography.

16 The Company has taken various premises on operating leases/ leave and license and lease payments recognized in the statement of profit and loss and property, plant and equipment amounting to Rs. 472.37 lakhs and Rs. 7.77 lakhs respectively for the year ended 31 March 2018 (31 March 2017: Rs. 391.63 lakhs for Statement of Profit and Loss and Rs. 84.64 lakhs for Property, Plant and Equipment) in respect of the same. The underlying agreements are executed for a period generally ranging from 11 months to three years, renewable at the option of the Company and are cancellable, by giving a notice generally of 30 to 90 days. An agreement is entered into by the Company for a period of 9 years with non-cancellable period of initial 3 years. There are no restrictions imposed by such leases and there are no subleases. The minimum lease rentals outstanding as at Balance Sheet dates are as under:

The Company has entered into a Power Purchase Agreement with MSEDCL (Lessee) for the supply of electricity for a term of 25 years, which has been considered as an embedded lease arrangement for the Company’s power plant. Such lease is classified as operating lease, and as such the revenue is recognized on straight line basis. Considering that the capacity charges per unit is higher in the initial years, there is a negative impact to P&L on account of straightlining. Accordingly, capacity charges charged by the Company are treated as lease rentals. The minimum lease payments under non-cancellable operating leases to be charged by the Company are as follows:

17 On 10 January 2018, Company has retrospectively amended the Inter Company Deposits (ICD) agreements with subsidiary company and certain other entities in which KMP has significant influence in respect of ICD interest of earlier periods to the extent not paid upto the date of agreement and for the peiod upto 31 March 2018. As per the revised terms unpaid interest, amounting to Rs. 14,017.16 Lakhs up to 31st March 2018, on such loans will accrue and become due only on future uncertain event. Accordingly, during the year ended 31 March 2018, Company has reversed the interest accrued and not paid upto 31 December 2017 aggregating to Rs. 10,995.87 lakhs on such ICDs.

18 In respect of amounts as mentioned under Section 125 of the Companies Act, 2013, there are no delays in transfer of dues required to be credited to the Investor Education and Protection Fund as at 31 March 2018. There were no dues required to be credited to the Investor Education and Protection Fund as at 31 March 2017.

19 The Company has incurred a loss of Rs. 41,814.00 Lakhs during the year ended 31 March 2018 (year ended 31 March 2017 Rs. 32,071.25 Lakhs), and as of that date, Company’s accumulated losses from operations amounts to Rs. 132,521.21 Lakhs (as of 31 March 2017 Rs. 90,732.96 Lakhs) and its current liabilities exceed current assets by Rs. 243,830.28 Lakhs (as of 31 March 2017 Rs. 179,200.41 Lakhs). The Company continued to operate at sub-optimal levels due to lower demand form MSEDCL and also short availability of coal during the year resulting in adverse impact on cash flow from operations.

The lenders of the Company invoked Scheme for Sustainable Structuring of Stressed Assets (S4A) as per the Reserve Bank of India (RBI) guidelines for resolution of issues faced by the Company’s project to facilitate long term viability of the project. However, subsequent to RBI’s notification dated 12 February 2018, all debt restructuring schemes (including S4A) were repealed with immediate effect which impacted progress made by the Company under S4A. As per the RBI notification, revised reference date was determined as 01 March 2018 and the Company now has time of six-months from the reference date for finalizing any resolution plan with lenders. The Company is in active discussion with lenders for successful resolution of debt. The lenders have shown interest in resolution of debt which inter alia includes conversion of part of the debt into equity shares and redeemable preferences shares and extension of maturity profile of remaining debt over a longer period. The lenders have appointed consultants to carry out necessary technical and legal due diligence and project valuation for the purpose of aforementioned restructuring.

Conditions explained above, indicate existence of material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern due to which the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. However, on expectation of resolution of debt with lenders and restoration of full operations on higher demand from MSEDCL and availability of coal, these standalone financial statements have been prepared on a going concern basis.

20 The construction activity at Company’s 1350 MW power plant (Phase II) is currently suspended. As of 31 March 2018, Phase II Capital work in progress balance is Rs. 54,889.84 Lakhs (as of 31 March 2017: Rs. 55,232.88 Lakhs) and related Capital advance balance is Rs. 35,399.49 Lakhs (as of 31 March 2017: Rs. 38,791.57 Lakhs). The management believes that the suspension is not likely to lead to impairment of the aforementioned CWIP and Capital advance balances. The Company has all necessary environmental clearances and infrastructure like FSA, land, railway and water connection which are difficult to secure in the current environment. Further the cost of setting up this plant is significantly lower than setting up a new plant due to common facilities available with the Company.

In view of aforesaid factors along with external factors such as increasing power consumption and related demand in market, management is confident that the project is fully viable and hopeful of reviving the project at appropriate time. Considering above factors and the ongoing discussion with suppliers, the management believes, no impairment is required to the aforementioned carrying amount of capital work in progress and capital advance in these standalone financial statements.

21 The Company has a non-current investment of Rs. 302,621.55 lakhs and loan under current financial assets of Rs. 4,865.37 lakhs and trade receivables of Rs. 532.65 lakhs recoverable from, RattanIndia Nasik Power Limited (‘RNPL’), a wholly-owned subsidiary of the Company, as at 31 March 2018.

RNPL has incurred losses since its inception and is yet to commence operations. Subsequent to defaults in debt repayments, RNPL initiated discussion with consortium of lenders for restructuring of debt under Strategic Debt Restructuring Scheme (‘SDR’) as per the Reserve Bank of India (RBI) guidelines. However, as detailed in note 53 above, RBI’s notification dated 12 February 2018 repealed all debt restructuring schemes (including SDR) which also impacted progress made by RNPL under SDR. RNPL is in active discussion with lenders for successful resolution of debt and has time till six-months from the reference date (i.e 01 March 2018) for finalizing any resolution plan with lenders. Lenders have shown interest in restructuring of debt along with exploring the possibility of change of control of RNPL and have appointed consultants to carry out necessary technical and legal due diligence and project valuation. Conditions explained above, indicate existence of uncertainties that may cast significant doubt on the RNPL’s ability to continue as a going concern due to which the RNPL may not be able to realise its assets and discharge its liabilities in the normal course of business. However, on expectation of resolution of debt with lenders within the available time frame and expectation of entering into a PPA soon, management is of the view that RNPL’s going concern basis of accounting is appropriate. Accordingly the investment in the said subsidiary along with loan under current financial assets and trade receivables as stated above are considered good and recoverable by the Company.

22 The Company has a non-current investment of Rs. 43,277.11 lakhs in, and loan under non-current financial assets of Rs. 11,560.76 lakhs recoverable from Bracond Limited, a wholly-owned subsidiary of the Company, as at 31 March 2018. Bracond Limited has further invested in two wholly-owned subsidiaries namely Renemark Limited and Genoformus Limited who have given advances to non-related parties. As these advances are given for business purposes, management is confident of realising full value of these advances and hence, ultimately Company’s investment in Bracond Limited. Accordingly, no impairment in value of such investment and other financial assets has been recorded in these financial statement.