FUTURE RELIANCE POWER Notes to Accounts

27 lakhs. There is no impact on the total equity as at March 31, 2016,


ix. Investments carried at Amortized cost


Under the Previous GAAP, investment in preference shares of wholly owned subsidiary being long term investment were carried at cost less provision for other than temporary decline in the value of such investments. Under Ind AS, as the Company has opted to recognize such investments at fair value on initial recognition and subsequent measurement at amortized cost, the Company has recognized a gain of Rs, 30,639 lakhs in the Retained Earnings on the date of transition.


x. Other Comprehensive Income


Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the Statement of Profit and Loss as Rs,Other Comprehensive Income'''' includes remeasurements of post-employment benefit obligation and fair valuation of investments in subsidiaries,


xi. Retained Earnings


Retained Earnings as at April 01, 2015 has been adjusted consequent to the above Ind AS transition adjustments,


7.5% Compulsory Convertible Redeemable Non-Cumulative Preference Shares (CCRPS)


1The issuer companies shall have a call option on the CCRPS which can be exercised by them in one or more tranches and in part or in full before the end of agreed tenure (20 years) of the said shares. In case the call option is exercised, the CCRPS shall be redeemed at an issue price (i.e. face value and premium). The Company, however, shall have an option to convert the CCRPS into equity shares at any time during the tenure of such CCRPS. At the end of tenure and to the extent the issuer Companies or the CCRPS holders thereof have not exercised their options, the CCRPS shall be compulsorily converted into equity shares. On conversion, in either case, each CCRPS shall be converted into equity shares of corresponding value (including the premium applicable thereon). In case the Issuer companies declare dividend on their equity shares, the CCRPS holders will also be entitled to the equity dividend in addition to the coupon rate of dividend. Considering the said terms, these investments have been classified as equity and fair valued through Other Comprehensive Income,


Nature and purpose of other reserves:


a) Capital Reserve


The Capital Reserve had arisen pursuant to the composite scheme of arrangement on account of net assets taken over from Reliance Futura Limited (Refer note e(i) below).


b) Capital Reserve (arisen pursuant to scheme of amalgamation)


The Capital Reserve had arisen pursuant to the composite scheme of arrangement with erstwhile Reliance Clean Energy Private Limited. The said scheme was sanctioned by Hon''''ble High Court of Bombay vide order dated April 05, 2013. The Capital Reserve shall be a reserve which arose pursuant to the above scheme and shall not be and shall not for any purpose be considered to be a reserve created by the Company.


c) Securities Premium Account


Securities premium account is created to record premium received on issue of shares. The reserve is utilized in accordance with the provision of the Companies Act, 2013,


d) General Reserve


General Reserve is a free reserve created by the Company by transfer from Retained earnings,


e) General Reserve (arisen pursuant to various schemes)


All below General Reserve arisen pursuant to schemes and shall not be and shall not for any purpose be considered to be a reserve created by the Company.


i. General Reserves (arisen pursuant to composite scheme of arrangement)


The General Reserve had arisen pursuant to the composite scheme of arrangement between the Company, Reliance Natural Resources Limited, erstwhile Reliance Futura Limited and four wholly owned subsidiaries viz. Atos Trading Private Limited, Atos Mercantile Private Limited, Reliance Prima Limited and Coastal Andhra Power Infrastructure Limited. The said scheme was sanctioned by Hon''''ble High Court of Judicature at Bombay vide order dated October 15, 2010,


ii. General Reserve (arisen pursuant to scheme of amalgamation with erstwhile Sasan Power Infraventures Private Limited)


The General Reserve had arisen pursuant to the scheme of amalgamation with erstwhile Sasan Power Infraventures Private Limited, sanctioned by the Hon''''ble High Court of Bombay vide order dated April 29, 201 1. The scheme was effective from January 01, 2011.


iii. General Reserve (arisen pursuant to scheme of amalgamation with erstwhile Sasan Power Infrastructure Limited)


The General Reserve had arisen pursuant to the scheme of amalgamation with erstwhile Sasan Power Infrastructure Limited, sanctioned by the Hon''''ble High Court of Bombay, vide order dated December 23, 201 1. The scheme was effective from September 01, 2011.


f) Debentures Redemption Reserve


The Company is required to create a Debenture Redemption Reserve out of the profits of the Company for the purpose of redemption of debentures,


g) Foreign currency monetary item translation difference account


The Company has opted to continue the Previous GAAP policy for accounting of foreign exchange differences on long term monetary items. This reserve represents foreign exchange accumulated on long term monetary items which are for other than depreciable assets. The same is amortized over the balance period of such long term monetary assets. (Refer note 2.1(l ii))


h) Treasury Shares


The reserve for the Company''''s treasury shares comprises the cost of the Company''''s shares held by the ESOS Trust. The RPET held 8,500,000 shares (March 31,201 6: 8,500,000 shares; April 01, 2015: 8,500,000 shares) (Refer note 10),


i) Equity instruments through Other Comprehensive Income:


The Company has elected to recognize changes in the fair value of investments in equity instruments in subsidiaries in Other Comprehensive Income. The changes are accumulated within the FVOCI equity instruments reserve within equity. The Company transfers amount from this reserve to retained earnings when the relevant equity securities are derecognized, 4.10(a1) Nature of security for term loans


(i) Rupee loans from banks of Rs, 32,000 lakhs (March 31, 2016 Rs, 32,000 lakhs; April 01, 2015 Rs, 32,000 lakhs) are secured by first charge over long term loans and advances of the Company on pari passu basis,


(ii) Rupee loans from banks of Rs, 2,463 lakhs (March 31, 2016 Rs, 1 9,288 lakhs; April 01, 2015 Rs, 1 9,695 lakhs) and foreign currency loan of Rs, 10,950 lakhs (March 31, 2016 Rs, 12,568 lakhs; April 01, 2015 Rs, 13,124 lakhs) are secured / to be secured by first charge on all the immovable and movable assets of the 45 MW wind power project at Vashpet on pari passu basis.


(iii) Rupee loans from banks of Rs, 20,000 lakhs (March 31, 2016 Rs, 20,000 lakhs; April 01, 2015 Rs, Nil) are secured by first pari passu charge over current assets of the Company including receivable excluding the assets acquired under scheme of amalgamation with erstwhile Reliance Clean Power Private Limited,


(iv) Rupee loans from banks of Rs, 19,500 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil) are secured by the residual charge over current assets of the Company including receivable excluding the assets acquired under scheme of amalgamation with erstwhile Reliance Clean Power Private Limited,


(v) Rupee loans from banks of Rs, 12,407 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil) are secured / to be secured by first charge on all the immovable and movable assets and receivables of the 45 MW wind power project at Vashpet on pari passu basis.


(vi) Rupee loans from banks of Rs, 10,500 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil) are secured by the first pari passu charge over long term loans and advances including receivables accrued out of such long term loans and advances of the Company .


(vii) Rupee loans from banks of Rs, 33,800 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil) are secured by the first pari passu charge over long term loans and advances of the Company,


(viii) Rupee loans from banks of Rs, 71,335 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil) are secured by the first pari passu charge over long term loans and advances of the Company,


(ix) Current maturities of long term borrowings have been classified as other financial liabilities (Refer note 4.13(c)),


1.(a2) Terms of Repayment and Interest


(i) Rupee loans from banks of Rs, 32,000 lakhs (March 31, 2016 Rs, 32,000 lakhs; April 01, 2015 Rs, 32,000 lakhs) is repayable in one installment on September 30, 201 7 and carry an interest rate of 11.23% per annum payable on a monthly basis,


(ii) Rupee term loans is repayable in 59 quarterly installments commenced from March 2015 and carry an interest rate of 11.75% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 2,463 lakhs (March 31, 2016 Rs, 1 9,288 lakhs; April 01, 2015 Rs, 1 9,695 lakhs).


(iii) Foreign currency loans is repayable in 42 quarterly installments commenced from September 2013 and carry an interest rate of USD 6 month LIBOR plus 4.5% per annum payable on a half yearly basis. The outstanding balance as at year end is Rs, 10,950 lakhs (March 31, 2016 Rs, 12,568 lakhs; April 01, 2015 Rs, 13,124 lakhs).


(iv) Rupee term loans from bank is repayable in 16 quarterly installments commencing from June 2017 and carry an interest rate of 10.55% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 20,000 lakhs (March 31, 2016 Rs, 20,000 lakhs; April 01, 2015 Rs, Nil).


(v) Rupee term loans from bank is repayable in 40 monthly installments commenced from March 2017 and carry an interest rate of 10.80% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 19,500 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil).


(vi) Rupee term loans from bank is repayable in 53 structured quarterly installments commenced from September 2016 and carry an interest rate of 11.60% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 12,407 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil).


(vii) Rupee term loans from bank is repayable in 12 quarterly installments commencing from December 2019 and carry an interest rate of 11.37% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 10,500 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil).


(viii) Rupee term loans from bank is repayable in 16 structured monthly installments commencing from July 2017 and carry an interest rate of 10.50% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 33,800 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil).


(ix) Rupee term loans from bank is repayable in 11 structured quarterly installments commencing from July 2017 and carry an interest rate of 10.50% per annum payable on a monthly basis. The outstanding balance as at year end is Rs, 71,335 lakhs (March 31, 2016 Rs, Nil; April 01, 2015 Rs, Nil).


2.(a3) The Amortized cost disclosed above is net off incidental cost of borrowings aggregating of Rs, 3,048 lakhs (March 31,2016 Rs, 2,322 lakhs; April 01,2015 Rs, 1,850 lakhs).


3.(a1) Nature of security and terms of repayment


(i) Working capital loan is secured by first hypothecation and charge on all receivables of the Company, (excluding assets acquired under the merger scheme with erstwhile Reliance Clean Power Private Limited) both present and future on pari passu basis and is repayable on demand and carry an interest rate of 12.65% per annum payable on a monthly basis,


(ii) Series I (201 7) 10.60% listed redeemable non convertible debentures is secured by pledge of 2.30% of outstanding equity shares of a subsidiary Rosa Power Supply Company Limited which is redeemable within a period of 364 Days from the date of allotment (i.e. January 24, 2017) and carry an interest rate of 10.60% per annum payable on a quarterly basis,


(iii) Series II (201 7) 10.60% listed redeemable non convertible debentures is secured by pledge of 9.50% of outstanding equity shares of a subsidiary Rosa Power Supply Company Limited which is redeemable within a period of 364 Days from the date of allotment (i.e. March 16, 2017) and carry an interest rate of 10.60% per annum payable on a quarterly basis,


(iv) Short term rupee loan from bank of Rs, Nil (March 31, 2016: Rs, 15,000 lakhs; April 01, 2015: Rs, Nil) is secured by first pari passu charge over the current assets of the Company including receivables excluding assets acquired under the merger scheme with erstwhile Reliance Clean Power Private Limited. The loan is repayable in 5 equal monthly instalments of Rs, 1,500 lakhs each commencing from April 30, 2016 and ending on August 31, 2016 and bullet repayment of Rs, 7,500 lakhs on September 30, 201 6 and carry an interest rate of 11.65% per annum payable on a monthly basis,


(v) Loan against fixed deposit is secured by first pari passu charge over the fixed deposit of the Company. The loan is repayable in full on June 15, 2017 and carry an interest rate of 7.50% per annum payable on a monthly basis,


Unsecured


(i) 2,500 Series I (201 6) 10.20% unsecured redeemable non convertible debentures are redeemable within a period of 364 days and carry an interest rate of 10.20% per annum payable on a quarterly basis,


(ii) i. Commercial paper of Rs, 2,000 lakhs have a tenure of 174 days from the date of issue i.e. January 31, 2017 and


discount rate of 9.75% per annum.


ii. Commercial paper of Rs, 1,000 lakhs have a tenure of 179 days from the date of issue i.e. March 17, 2017 and discount rate of 9.50% per annum,


(iii) Inter corporate deposits from Reliance Nippon Life assets management are repayable within one year and carry an interest rate of 13.50% per annum,


(iv) Inter corporate deposits from Reliance Infrastructure Limited are repayable within one year and carry an interest rate of 12.50% per annum.


5) Contingent liabilities and commitments


(a) Guarantees including corporate guarantee issued for subsidiary companies aggregating to Rs, 701,915 lakhs (March 31,


2016 Rs, 800,110 lakhs; April 01, 2015 Rs, 877,203 lakhs). Refer note 7(a) with respect to Coastal Andhra Power Limited,


(b) I n respect of subsidiaries, the Company has committed/guaranteed to extend financial support in the form of equity or debt as per the agreed means of finance, in respect of the projects being undertaken by the respective subsidiaries, including any capital expenditure for regulatory compliance and to meet shortfall in the expected revenues/debt servicing,


Future cash flows in respect of the above matters can only be determined based on the future outcome of various uncertain factors,


(c) Estimated amount of contracts remaining unexecuted on capital account (net of advances paid) and not provided for Rs, Nil (March 31, 2016 Rs, Nil; April 01, 2015 Rs, 75 lakhs).


4) Project status of Subsidiaries


(a) Coastal Andhra Power Limited (CAPL)


CAPL, a wholly owned subsidiary, has been incorporated to develop an Ultra Mega Power Project (UMPP) of 3,960 MW capacity located in Krishnapatnam, District Nellore, based on imported coal,


CAPL had entered into a firm price fuel supply agreement which envisaged supply of coal from Indonesia with Reliance Coal Resources Private Limited (RCRPL), a wholly owned subsidiary of the Company. In view of below mentioned new regulation, RCRPL cannot supply coal at the agreed price, because of which there is a risk of inability to pass through market linked prices of imported coal for the project, whereas the power needs to be supplied at a pre-agreed tariff as per the terms of Power Purchase Agreement (PPA) dated March 23, 2007. The Government of Indonesia introduced a new regulation in September, 2010 which prohibits sale of coal, including sale to affiliate companies, at below Benchmark Price which is linked to international coal prices and requires adjustment of sale price every 12 months. This regulation also mandates to align all existing long-term coal supply contracts with the new regulations within one year i.e. by September, 2011. The said issue was communicated to the power procurers and also to the Government of India through the Association of Power Producers to arrive at a suitable solution to the satisfaction of all the stakeholders,


Since no resolution could be arrived, CAPL invoked the dispute resolution provision of PPA. The procurers have also issued a notice for termination of PPA and have raised a demand for liquidated damages of Rs, 40,000 lakhs (including bank guarantee of Rs, 30,000 lakhs, which has been issued by the holding company on behalf of CAPL),


CAPL has filed a petition before the Hon''''ble High Court at Delhi, inter-alia for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996. The Court vide its order dated March 20, 2012 has prohibited the Procurers from taking any coercive steps against the CAPL. The single judge of the Delhi High Court vide order dated July 02, 2012 dismissed the petition and the appeal filed by CAPL against the said order is pending before the Division Bench of the Delhi High Court. The interim protection against encashing bank guarantees continues to be available.


CAPL has also filed a petition before the Central Electricity Regulatory Commission (CERC) without prejudice to the proceedings pending before the Delhi High Court and the arbitration process has already been initiated. During the course of the CERC proceedings, the power procurers contended that the petition could not be taken up for hearing by CERC since the matter was pending at High Court. CAPL, in response contended that both proceedings are different and independent. The CERC petition did not raise the issue of notice of termination. Considering appeal is pending before the Delhi High Court, CERC has disposed off the petition vide its order dated August 06,2015 with a liberty to the Petitioner to approach the Commission at an appropriate stage in accordance with law.


Based on the impairment assessment, the Company had provided for diminution in the value of equity investments amounting to '''' 52,500 lakhs in the Previous GAAP financial statements for the year ended March 31, 2016,


Pursuant to the Scheme of Amalgamation (Scheme) sanctioned by the High Court of Bombay on April 05, 2013, the Company is permitted to offset any exceptional / extraordinary items, as determined by the Board of Directors, debited in the Statement of Profit and Loss by a corresponding withdrawal from General Reserve. The said provision for diminution of value of investments being exceptional in nature, in the opinion of the Board, was offset by withdrawal of equivalent amount from General Reserve in the statement of Profit and Loss in the Previous GAAP financial statements for the year ended March 31, 2016.


On adoption of Ind AS, the Company has opted to carry equity investments in the subsidiaries at fair value through Other Comprehensive Income. Considering the said policy, the diminution in the value of the investments with respect to CAPL has been recorded in the Other Comprehensive Income for the year ended March 31, 2016 and consequentially, as per the above referred Scheme, equivalent amount of General Reserve has been withdrawn to offset the charge in the Other Comprehensive Income, which may be considered to override the relevant provisions of Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, Ind AS 109 - Financial Instruments and Ind AS 1 - ''''Presentation of Financial Statements'''',


(b) Samalkot Power Limited (SMPL)


With respect to 1508 Mega Watt (MW) (2 units of 754 MW each) Plant:


There is continued uncertainty regarding availability of natural gas in the country for operation of the plant, and while the SMPL, is actively pursuing with relevant authorities for securing gas linkages / supply at commercially viable prices / generation opportunities, it is also evaluating alternative arrangements / approaches to deal with the situation. SMPL is confident of arriving at a positive resolution to the foregoing in the foreseeable future and therefore the carrying amount of capital work in progress is considered recoverable,


With respect to 754 MW Plant:


The Company, in the previous year, had entered into a Memorandum of Understanding with the Government of Bangladesh (GoB) for developing a gas project of 3000 MW capacity. Pursuant to the above, Reliance Bangladesh LNG and Power Limited (RNLG), a step down subsidiary of the Company, is taking steps to conclude a long term Power Purchase Agreement (PPA) for supply of 750 MW power from a gas based power plant to be set up in Bangladesh, SMPL has entered into a MOU on March 21, 2017 for sale of the Plant to RNLG, for a consideration not less than its carrying amount. SMPL expects to enter into definitive sale agreement in the ensuing financial year. SMPL is confident that RLNG will be able to achieve financial closure and remit the sale proceeds,


Having regard to the above plans and the continued financial support from the Company, management believes that the SMPL would be able to meet its financial and other obligations in the foreseeable future. Accordingly, the financial statements of the SMPL have been prepared on a going concern basis,


(c) Jharkhand Integrated Power Limited (JIPL)


J IPL, a wholly owned subsidiary, has been set up to develop Ultra Mega Power Project (UMPP) of 3960 MW located in Tilaiya, Hazaribagh District, Jharkhand. The project being developed by JIPL was awarded to the Company through International Competitive Bidding (ICB), under the UMPP regime. JIPL was handed over to the Company on August 07, 2009 by Power Finance Corporation (PFC). JIPL has signed Power Purchase Agreement (PPA) with 18 procurers in 10 states for 25 years. For fuel security, the project was allocated Kerendari BC captive coal mine block,


As per the Power Purchase Agreement (PPA) between JIPL and the Procurers, the Procurers were obligated to comply with conditions subsequent in the PPA which inter-alia required providing requisite land for the Project within 6 months of the Project Transfer. Considering the status of the project and updates from the Procurers, the Company terminated the PPA on April 28, 2015 as per the option available therein. The Procurers have also agreed to the termination of the PPA by JIPL and have agreed to pay certain expenditure incurred by JIPL on the project pursuant to the minutes of meeting dated November 03, 2015. It has also been agreed that the shares held by the Company in JIPL would be transferred to the Procurers upon completion of the final settlement,


Considering the said settlement process, the Company has taken over the balance expenditure of Rs, 13,186 lakhs in the books of JIPL and charged off the same in the Statement of Profit and Loss as an exceptional item in the Previous GAAP financial statements for the year ended March 31, 2016,


Pursuant to the Scheme of Amalgamation (Scheme) sanctioned by the High Court of Bombay on April 05, 2013, the Company is permitted to offset any exceptional/extraordinary items, as determined by the Board of Directors, debited in the Statement of Profit and Loss by a corresponding withdrawal from General Reserve. The said write off of pre-operative expenditure being exceptional in nature, in the opinion of the Board, was offset by withdrawal of equivalent amount from General Reserve in the Statement of Profit and Loss in the Previous GAAP financial statements for the year ended March 31, 2016.


On adoption of Ind AS also, as per the requirements under the Scheme, the Company has offset the charge of Rs, 13,186 lakhs in the Statement of Profit and Loss of previous year by withdrawal of an equivalent amount from General Reserve, which may be considered to override the relevant provisions of Ind AS 8- ''''Accounting Policies, Changes in Accounting Estimates and Errors'''' and Ind AS 1- ''''Presentation of Financial Statements,


5) During the year, the Company had no specified bank notes or no other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 and there were no transactions during the period from November 8, 2016 to December 30, 2016.


6) Applicability of NBFC Regulations


The Company, based on the objects given in the Memorandum of Association, its role in construction and operation of power plants through subsidiaries and other considerations, has been legally advised that it is not covered under the provisions of Non-Banking Financial Company as defined in Reserve Bank of India Act, 1934 and accordingly, is not required to be registered under section 45 IA of the said Act,


7) Employee Stock Option Scheme (ESOS)


Pursuant to the approval accorded by the shareholders on September 30, 2007 under Section 81(1A) of the Companies Act, 1956, the Company has administered and implemented Employee Stock Option Scheme (ESOS) in terms of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The Board of Directors of the Company have constituted its ESOS Compensation Committee to operate and monitor the ESOS Scheme which is administered through Reliance Power ESOS Trust ("RPET"). The ESOS Scheme mentions that the employees of the Company are entitled for grant of stock options (equity shares), based on the eligibility criteria set in ESOS Plan of the Company


The ESOS Compensation Committee of the Board of Directors (the Board) of the Company approved a grant of 20,000,000 stock options to the eligible employees of the Company and its subsidiaries on May 08, 2010. The options were granted to the


employees of the Company and its subsidiaries on satisfying the performance and other eligibility criteria set out in ESOS Plan, In accordance with the ESOS Scheme, each option entitles an employee to apply for one fully paid equity share of '''' 10 of the Company at an exercise price of '''' 162 per share. Pursuant to the amendments made to the ESOS Scheme as approved by the ESOS Compensation Committee of the Board, effective from April 01, 2014, the Independent Directors of the Company shall not be eligible to participate in the Scheme. Further, the exercise period of the vested options may be different for different plans and shall not be longer than ten years from the date of vesting,


Under Previous GAAP, the Company had accounted the employee stock compensation expenses as per the ''''Intrinsic Value Method''''. No expense was required to be recognized as the stock options'''' exercise price was higher than the traded price on the date of grant of those stock options. Under Ind AS, the Company has to recognize such expense based on fair value of the options on the grant date. The Company has elected to take optional exemption in accordance with Ind AS 101 and did not fair value the options which are vested before transition date.


The fair value of stock options granted was determined under Binomial Option Pricing - Hull & White Model. The details pertaining to number of stock options, weighted average price and assumptions considered for fair value are disclosed below:


The expected volatility was determined based on the volatility of the equity share for the period of one year prior to issue of the stock option.


The Company had in earlier years given an advance of Rs, 14,000 lakhs to RPET for purchase of its shares from the open market, as per the ESOS Plan of the Company. RPET had, in turn, in earlier years purchased 8,500,000 equity shares of the Company, Under Previous GAAP, considering the current market value of the shares, option exercise price and other factors, the Company had written down the value of investment held by RPET of Rs, 9,801 lakhs in the Treasury Shares as an exceptional item during the year ended March 31, 2016.


Pursuant to the Composite Scheme of Amalgamation (Scheme) sanctioned by the High Court of Bombay on October 15, 2010, the Company is permitted to offset any expense or loss which in the opinion of the Board of the Company is related to factors such as variation in exchange rates which are beyond the control of the Company, debited in the Statement of Profit and Loss by a corresponding withdrawal from General Reserve.


During the year ended March 31, 2016, under Previous GAAP, the Board of Directors of the Company, in terms of the aforesaid Scheme had identified the write down in the value of investment held by Reliance Power ESOS Trust of Rs, 9,801 lakhs as an exceptional item, which is beyond the control of the Company and accordingly, the write down in the value of advances to ESOS trust in the Statement of Profit and Loss was offset by withdrawal of an equivalent amount from General Reserve (arisen pursuant to the Scheme),


On adoption of Ind AS with transition date of April 1, 2015, the Company treats the RPET as its extension and shares held by RPET are treated as treasury shares and accordingly, the face value of shares has been reduced from share capital and balance amount has been disclosed as treasury shares. Accordingly, for the year ended March 31, 2016 and thereafter, the diminution in value of treasury shares so provided for has now been adjusted in the value of treasury shares and an equivalent amount has been withdrawn from General Reserve (arisen pursuant to the Scheme) to offset the adjustment recorded in the treasury shares, which may be considered to override the relevant provisions of Ind AS 102 - ''''Share based Payment'''' and Ind AS 1-Presentation of financial statements,


8) Status of Dadri Project


The Company proposed developing a 7,480 MW gas-fired power project to be located at the Dhirubhai Ambani Energy City in Dehra village, Dadri, Uttar Pradesh in the year 2003. The state of Uttar Pradesh (The State) in the year 2004 acquired 2,100 acres of land and conveyed the same to the Company in the year 2005. The acquisition of land by the State for the project was challenged by certain land owners in the Allahabad High Court. The High Court quashed a part of acquisition proceedings by the State and directed them to fulfill certain compliances. Subsequent to the judgment of High Court on compliances and procedures relating to land acquisition the Company filed an appeal before Supreme Court. Before the pronouncement of judgment by the Supreme Court, the Company submitted an affidavit stating its inability to continue with the project because of the difficulty in securing the gas supply for the project. The Supreme Court in its order disposed off the appeal and upheld the right of the Company to recover the amount paid towards the land acquired and conveyed to it by the State on its return to the State.


The Company has already conveyed its intent to return the acquired land to Government of Uttar Pradesh (GoUP) and raised the claim for the cost incurred on the land acquisition as well as other incidental expenditure thereto,


Considering the above facts, the Company has classified assets related to Dadri project under head ''''Non-current assets classified as held for sale''''.


The Company has realized amount of Rs, Nil (previous year Rs, 2,522 lakhs) from the Government of Uttar Pradesh (GoUP) and the balance amount is expected to be recovered in the future,


Based on correspondence received from GoUP in current year towards compensation for land and interest thereon. The Company has recognized an interest income of Rs, 7,500 lakhs,


9) Employee benefit obligations


The Company has classified various employee benefits as under: a) Leave obligations


The leave obligations cover the Company liability for sick and privileged leave,


The provident fund and the state defined contribution plan are operated by the regional provident fund commissioner and the superannuation fund is administered by the trust. Under the schemes, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.


The Company has recognized the following amounts in the Statement of Profit and Loss for the year:


c) Post employment obligation Gratuity


The Company has a defined benefit plan, governed by the Payment of Gratuity Act, 1972. The plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days basic salary for every completed years of services or part thereof in excess of six months, based on the rate of basic salary last drawn by the employee concerned,


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. While calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.


(iv) The above defined benefit gratuity plan was administrated 100% by Life Insurance Corporation of India (LIC) as at March 31, 2017, March 31, 2016 as well as April 01, 2015.


(v) Defined benefit liability and employer contributions:


The Company will pay demand raised by LIC towards gratuity liability on time to time basis to eliminate the deficit in defined benefit plan,


The weighted average duration of the defined benefit obligation is 8.43 years (201 6 - 8.98 years, 2015- 8.64 years),


(vi) The Company has seconded certain employees to the subsidiaries. As per the terms of the secondment, liability towards salaries, provident fund and leave encashment will be provided and paid by the respective subsidiaries and gratuity will be paid / provided by the Company. Accordingly, provision for gratuity includes cost in respect of seconded employees,


(vii) The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets under perform this yield, this will create a deficit,


10) Related party transactions:


As per Indian Accounting Standard 24 (Ind AS-24) ''''Related Party Transactions'''' as prescribed by Companies (Indian Accounting


Standards) Rules, 2015, the Company''''s related parties and transactions are disclosed below:


A. Parties where control exists:


Subsidiaries: (Direct and step-down subsidiaries)


1 Sasan Power Limited (SPL)


2 Rosa Power Supply Company Limited (RPSCL)


3 Maharashtra Energy Generation Limited (MEGL)


4 Vidarbha Industries Power Limited (VIPL)


5 Tato Hydro Power Private Limited (THPPL)


6 Siyom Hydro Power Private Limited (SHPPL)


7 Chitrangi Power Private Limited (CPPL)


8 Urthing Sobla Hydro Power Private Limited (USHPPL)


9 Kalai Power Private Limited (KPPL)


10 Coastal Andhra Power Limited (CAPL)


11 Reliance Coal Resources Private Limited (RCRPL)


12 Amulin Hydro Power Private Limited (AHPPL)


13 Emini Hydro Power Private Limited (EHPPL)


14 Mihundon Hydro Power Private Limited (MHPPL)


15 Jharkhand Integrated Power Limited (JIPL)


16 Reliance CleanGen Limited (RCGL)


17 Rajasthan Sun Technique Energy Private Limited (RSTEPL)


18 Dhursar Solar Power Private Limited (DSPPL)


19 Moher Power Limited (MPL)


20 Samalkot Power Limited (SMPL)


21 Reliance Prima Limited (RPrima)


22 Atos Trading Private Limited (ATPL)


23 Atos Mercantile Private Limited (AMPL)


24 Coastal Andhra Power Infrastructure Limited (CAPIL)


25 Reliance Power Netherlands BV (RPN)


26 PT Heramba Coal Resources (PTH)


27 PT Avaneesh Coal Resources (PTA)


28 Reliance Natural Resources Limited (RNRL)


29 Reliance Natural Resources (Singapore) Pte Limited (RNRL- Singapore)


30 Reliance Solar Resources Power Private Limited (RSRPPL)


31 Reliance Wind Power Private Limited (RWPPL)


32 Reliance Green Power Private Limited (RGPPL)


33 PT Sumukha Coal Services (PTS)


34 PT Brayan Bintang Tiga Energi (BBE)


35 PT Sriwijiya Bintang Tiga Energi (SBE)


36 Shangling Hydro Power Private Limited (SPPL)


37 Sumte Kothang Hydro Power Private Limited (SKPL)


38 Teling Hydro Power Private Limited (TPPL)


39 Lara Sumta Hydro Power Private Limited (LHPPL)


40 Purthi Hydro Power Private Limited (PHPPL)


41 Reliance Geothermal Power Private Limited (RGTPPL) (w.e.f. January 17, 2015)


42 RPL Sun Power Private Limited (Formerly known as Reliance Biomass Power Private Limited)


(RSUNPPL) (w.e.f. July 16, 2015 up to February 16, 2016)


43 RPL Photon Private Limited (Formerly known as Reliance Renewable Power Private Limited)


(RPHOTONPL) (w.e.f. July 16, 2015 up to February 16, 2016)


44 RPL Sunshine Power Private Limited (Formerly known as Solar Generation Company (Rajasthan) Private Limited) (RSUNSHINEPPL) (w.e.f. July 16, 2015)


45 RPL Sun Technique Private Limited (Formerly known as Reliance Tidal Power Private Limited)


(RSUNTPL) (w.e.f. July 16, 2015 up to February 16, 2016)


46 RPL Surya Power Private Limited (RSURYAPPL) (w.e.f. July 31, 2015)


47 RPL Solar Power Private Limited (RSOLARPPL) (w.e.f. August 26, 201 5)


48 RPL Sunlight Power Private Limited (RSUNLIGHTPPL) (w.e.f. August 19, 2015)


49 RPL Solaris Power Private Limited (RSOLARISPPL) (w.e.f. September 07, 2015)


50 RPL Aditya Power Private Limited (RADITYAPPL) (w.e.f. August 26, 2015 upto March 03, 2017)


51 RPL Star Power Private Limited (RSTARPPL) (w.e.f. August 07, 2015)


52 Reliance Bangladesh LNG & Power Limited ( RLNG) (w.e.f September 21, 2016)


53 Reliance Power Holding FZC, Dubai (RFZC) (w.e.f. May 15, 2016)


SN Name of Company


1 RPL Sun Power Private Limited (Formerly known as Reliance Biomass Power Private Limited) (RSUNPPL)


(w.e.f. June 16, 2016)


2 RPL Photon Private Limited (Formerly known as Reliance Renewable Power Private Limited) (RPHOTONPL) (w.e.f. June 16, 2016)


3 RPL Sun Technique Private Limited (Formerly known as Reliance Tidal Power Private Limited) (RSUNTPL)


(w.e.f. June 16, 2016)


B (I). Investing parties/promoters having significant influence on the Company directly or indirectly:


(a) Companies


Reliance Infrastructure Limited (R Infra)


(b) Individual


Shri Anil D Ambani


(II). Other related parties with whom transactions have taken place during the year:


(a) Enterprises over which individual described in clause B (I) above have control / significant influence:


1 Reliance Capital Trustee Co Ltd (Rcap Trustee)


2 Reliance Nippon Life Insurance Co Ltd (R Nippon Life) (formerly known as Reliance Life Insurance Company Limited)


3 Reliance Nippon Life Assets Management Limited (R Nippon)


(b) Key Managerial Personnel:


1 Shri Sateesh Seth (Director)


2 Shri Yogendra Narain (Director)


3 Shri D. J. Kakalia (Director)


4 Smt. Rashna Khan (Director)


5 Shri V. K. Chaturvedi (Director)


6 Shri N. Venugopala Rao (Chief Executive Officer) (w.e.f. October 13, 2015)


7 Shri Ramaswami Kalidas (Manager (upto May 26, 2016) and Company secretary)


8 Shri Suresh Nagrajan (CFO) (w.e.f. January 05, 201 7)


9 Shri Ashutosh Agarwala (CFO) (w.e.f. September 26, 2014 up to August 12, 2016)


(iii) Other transactions:


(a) As per the terms of sponsor support agreement entered for the purpose of security of term loans availed by subsidiaries, the Company is required to pledge following percentage of its shareholding in the respective subsidiaries,


- 100% of equity shares of Sasan Power Limited.


- 100% of equity shares of Dhursar Solar Power Private Limited.


- 100% of equity shares of Rajasthan Sun Technique Energy Private Limited.


- 51% of equity shares of Vidarbha Industries Power Limited


- 100% of preference shares of Sasan Power Limited.


- 100% of preference shares of Dhursar Solar Power Private Limited.


- 100% of preference shares of Rajasthan Sun Technique Energy Private Limited.


Also refer note 4.13(a1) (ii) and (iii)


The Company has given commitments / guarantees for loans taken by SPL, SMPL, VIPL, DSPPL and RSTEPL, (Refer note 5(b)).


(iv) The list of investment in subsidiaries along with proportion of ownership interest held and country of incorporation are disclosed in note no. 2 (b) (V) of consolidated financial statement


(v) The above disclosures do not include transactions with public utility service providers, viz, electricity, telecommunications in the normal course of business.


(vi) The above disclosures do not include accounting and balances related to financial guarantee obligation in respect of subsidiaries.


(b) Fair value hierarchy


This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at Amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table,


(f) Valuation technique used to determine fair values


The main level 3 inputs used by the Company are derived and evaluated as follows:


The fair value of financial instruments is determined using discounted cash flow analysis,


The carrying amount of current financial assets and liabilities are considered to be the same as their fair values, due to their short term nature,


The fair value of the long-term Borrowings with floating-rate of interest is not impacted due to interest rate changes and will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk of the Company borrowing (since the date of inception of the loans). Further, the Company has no long-term Borrowings with fixed rate of interest,


For financial assets and liabilities that are measured at fair value, the carrying amount is equal to the fair values.


Note:


Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.


Level 2: The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.


Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3, This is the case for unlisted equity securities which are included in level 3,


There are no transfers between any levels during the year.


The Company''''s policy is to recognize transfer into and transfer out of fair value hierarchy levels as at the end of the reporting period.


(a) Credit risk


The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, financial assets carried at Amortized cost and deposits with banks and financial institutions, as well as credit exposures to trade customers including outstanding receivables,


Credit risk management


Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss,


The Company''''s credit risk arises from accounts receivable balances on sale of electricity is based on tariff rate approved by electricity regulator and inter-corporate deposits/loans are given to subsidiaries incorporated as special purpose vehicle for power projects awarded to the Company. The credit risk is very low as the sale of electricity is based on the terms of the PPA, which has been approved by the regulator. With respect to Inter-corporate deposits/loans given to subsidiaries, the Company will be able to control the cash flows of those subsidiaries as the subsidiaries are wholly owned by the Company,


For banks and financial institutions, only highly rated banks/institutions are accepted. Generally all policies surrounding credit risk have been managed at company level. The Company''''s policy to manage this risk is to invest in debt securities that have a good credit rating,


(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 and to close out market positions. Due to the dynamic nature of the underlying businesses, company''''s treasury function maintains flexibility in funding by maintaining availability under committed credit lines.


In respect of its existing operations, the Company funds its activities primarily through long-term loans secured against each power plant and long terms loans and advances. In addition, each of the operating plants has working capital loans available to it which are renewed annually, together with certain intra-group loans. The Company''''s objective in relation to its existing operating business is to maintain sufficient funding to allow the plants to operate at an optimal level.


Management monitors rolling forecasts of the Company''''s liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at the operating subsidiaries level of the Company in accordance with practice and limits set by the Company. These limits vary by location to take into account the liquidity of the market in which the entity operates. In addition, the Company''''s liquidity management policy involves projecting cash flows in major currencies considering the level of liquid assets necessary to meet these monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintained debt financing plans,


(i) Maturities of financial liabilities


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


(c) Market risk


Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of volatility of prices in the financial markets. Market risk can be further segregated as: i) Foreign currency risk and ii) Interest rate risk,


(i) Foreign currency risk


Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company holds monetary assets in the form of investments in US Dollar. Further it has long term monetary liabilities which are in US dollar other than its functional currency.


While the Company has direct exposure to foreign exchange rate changes on the price of non-Indian Rupee-denominated securities and borrowings, it may also be indirectly affected by the impact of foreign exchange rate changes on the earnings of companies in which the Company invests. For that reason, the below sensitivity analysis may not necessarily indicate the total effect on the Company''''s net assets attributable to holders of equity shares of future movements in foreign exchange rates,


* Holding all other variables constant


The above amounts have been disclosed based on the accounting policy for exchange differences (Refer note 2(l)).


(ii) Interest rate risk


Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''''s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During March 31, 2016 and April 01, 2015 the Company''''s borrowings at variable rate were mainly denominated in Rupees.


The Company''''s fixed rate borrowings are carried at Amortized cost. 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.


11) Capital Management


(a) Risk Management


The Company''''s objectives when managing capital are to safeguard the Company''''s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. 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 Company monitors capital on basis of total equity and debt on a periodic basis. Equity comprises all components of equity including the fair value impact. Debt includes long-term loan and short term loans .The following table summarizes the capital of the Company:


(b) The Company is regular in payment of its debt service obligation and the Company has not received any communication from lendors for non compliance of any debt covenant,


(c) Final Dividends for the year ended March 31, 2017 is '''' Nil (March 31, 2016: '''' 28,051 lakhs @ '''' 1 per fully paid up shares).


12) Segment reporting


The Company''''s committee of Chief Executive Officer and Chief Financial Officer examine the Company''''s performance,


Presently, the Company is engaged in only one segment viz ''''Generation of Power'''' and as such, there is no separate reportable segment as per Ind AS 108 ''''Operating Segments''''. Presently, the Company''''s operations are predominantly confined in India,


Information about major customers


Revenue for the year ended March 31, 2017 and March 31, 2016 were from customers located in India. Customers include private distribution entities. Revenue to specific customers exceeding 10% of total revenue for the years ended March 31,


2017 and March 31, 2016 were as follows: (Refer note 2m(i))


13) Exchange Difference on Long Term Monetary Items


As explained above in note 2(l) with respect to accounting policy followed by the Company for recording of foreign exchange differences, the Company has accumulated a gain of Rs, 9,340 lakhs (Previous year Rs, 23,058 lakhs) to "Foreign currency monetary item translation difference account" towards exchange variation on revaluation of long term monetary items other than on account of depreciable assets and has adjusted the value of Plant and equipment by gain of Rs, 243 lakhs (Previous year loss of Rs, 768 lakhs) towards the exchange difference arising on long term foreign currency monetary liabilities towards depreciable assets,


14) Corporate social responsibility (CSR)


As per the section 135 of the Companies Act, 2013, the Company is required to spend Rs, 136 lakhs (previous year March 31, 2016 Rs, 402 lakhs), being 2% of the average net profits during the three immediately preceding financial years, towards CSR activity. The Company has made a contribution of Rs, 136 lakhs (previous year ended March 31, 2016 Rs, 402 lakhs) to a Nonprofit organization to facilitate the setting up of day care oncology centers in different districts of Maharashtra,


15) I n view of section 115-O of the Income Tax Act, 1961, the Company has reduced its dividend tax liabilities to the extent dividend received from RPSCL,


16) Disclosure under Micro, Small and Medium Enterprises Development Act, 2006


Disclosure of amounts payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act, There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly, there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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