3.12 Provisions and Contingencies
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which the likelihood of the outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of the subsequent period, such contingent liabilities are measured at the higher of the amounts that would be recognised in accordance with Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with Ind AS 18 Revenue, if any.
3.13 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs are directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
A] Financial assets
a) Initial recognition and measurement:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. On initial recognition, a financial asset is recognised at fair value, in the case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in
the Statement of Profit and Loss. In other cases, the transaction costs are attributed to the acquisition value
of the financial asset.
b) Effective interest method:
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the “Other
income” line item.
c) Subsequent measurement:
For subsequent measurement, the Company classifies a financial asset in accordance with the below criteria:
i. The Company's business model for managing the financial asset and
ii. The contractual cash flow characteristics of the
financial asset.
Based on the above criteria, the Company classifies its financial assets into the following categories:
i. Financial assets measured at amortized cost:
A financial asset is measured at the amortized cost if both the following conditions are met:
a) The Company's business model objective for managing the financial asset is to hold financial assets in order to collect contractual
cash flows, and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
This category applies to cash and bank balances, trade receivables, loans other financial assets and certain investments of the Company. Such financial assets are subsequently measured at amortized cost using the effective interest method.
The amortized cost of a financial asset is also adjusted for loss allowance, if any.
ii. Financial assets measured at FVTOCI:
A financial asset is measured at FVTOCI if both of the following conditions are met:
a) The Company's business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVTOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument are recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVTOCI.
This category does not apply to any of the financial assets of the Company other than the derivative instrument for the cash flow hedges.
iii. Financial assets measured at FVTPL:
A financial asset is measured at FVTPL unless it is measured at amortized cost or FVTOCI as
explained above.
This is a residual category applied to all other investments of the Company. Such financial assets are subsequently measured at fair value at each reporting date. Fair value changes are recognized in the Statement of Profit and Loss. Dividend income on the investments in equity instruments is recognised as ‘other income' in the Statement of Profit and Loss.
d) Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency-denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
e) Derecognition:
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is derecognized (i.e. removed from the Company's Balance Sheet) when any of the following occurs:
i. The contractual rights to cash flows from the financial asset expires;
ii. The Company transfers its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risks and rewards of ownership of the financial asset;
iii. The Company retains the contractual rights to receive cash flows but assumes a contractual obligation to pay the cash flows without material delay to one or more recipients under a ‘passthrough' arrangement (thereby substantially transferring all the risks and rewards of ownership of the financial asset);
iv. The Company neither transfers nor retains substantially all risk and rewards of ownership and does not retain control over the financial asset.
In cases where the Company has neither transferred nor retained substantially all of the risks and rewards of the financial asset, but retains control of the financial asset, the Company continues to recognize such financial asset to the extent of its continuing involvement in the financial asset. In that case, the Company also recognizes an associated liability.
The financial asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
f) Impairment of financial assets:
The Company applies the expected credit losses (ECL) model for measurement and recognition of loss allowance on the following:
i. Trade receivables
ii. Financial assets measured at amortized cost (other than trade receivables)
iii. Financial assets measured at fair value through other comprehensive income (FVTOCI)
In the case of trade receivables, the Company follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognized as a loss allowance.
In the case of other assets (listed as ii and iii above), the Company determines if there has been a significant
increase in the credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as a loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
Subsequently, if the credit quality of the financial asset improves such that there is no longer a significant increase in credit risk since initial recognition, the Company reverts to recognizing impairment loss allowance based on a 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset.
ECL is measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
As a practical expedient, the Company uses a provision matrix to measure lifetime ECL on its portfolio of trade receivables. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables and is adjusted for forward-looking estimates. At each reporting date, the historically observed default rates and changes in the forwardlooking estimates are updated.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in the Statement of Profit and Loss under the head ‘Other expenses'/’other income’.
B] Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability
and an equity instrument.
i. Equity instruments:-
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.
ii. Financial Liabilities:-
a) Initial recognition and measurement:
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured
at fair value.
b) Subsequent measurement:
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss is measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
The Company has not designated any financial liability at FVTPL other than the derivative instrument.
c) Foreign exchange gains and losses:
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the closing rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
d) Derecognition of financial liabilities:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
3.14 Derivative financial instruments and hedge accounting
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps. Further details of derivative financial instruments are disclosed in Note 40.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates certain hedging instruments, which include derivatives, as either fair value hedges, or cash flow hedges.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
The hedge relationship so designated as fair value is accounted for in accordance with the accounting principles prescribed for hedge accounting under Ind AS 109, ‘Financial Instruments’.
a) Fair value hedge:
The hedging instrument is initially recognized at fair value on the date on which a derivative contract is entered into and is subsequently measured at fair value at each reporting date. Gain or loss arising from changes in the fair value of the hedging instrument is recognized in the Statement of Profit and Loss. A hedging instrument is recognized as a financial asset in the Balance Sheet if its fair value as at reporting date is positive as compared to carrying value and as a financial liability if its fair value as at reporting date is negative as compared to carrying value.
Hedged item is initially recognized at fair value on the date of entering into contractual obligation and is subsequently measured at amortized cost. The gain or loss on the hedged item is adjusted to the carrying value of the hedged item and the corresponding effect is recognized in the Statement of Profit and Loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting.
Note 40 sets out details of the fair values of the derivative instruments used for hedging purposes.
b) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity relating to (effective portion as described above) are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, such gains and losses are transferred from equity (but not as a reclassification adjustment) and included in the initial measurement of the cost of the non-financial asset or nonfinancial liability.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting.
Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
3.15 Earnings Per Share
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
3.16 Recent Pronouncement
Recent accounting pronouncements:
Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During the year March 31, 2024 MCA has not notified any new standards or amendment to the existing standards applicable to the Company.
4 Critical accounting judgements and use of estimates
In application of Company's accounting policies, which are described in Note 3, the directors of the Company are required to make judgements, estimations and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision or future periods if the revision affects both current and future periods.
4.1 Following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
a) Useful lives of Property, Plant & Equipment (PPE) and intangible assets (other than goodwill):
The Company has adopted useful lives of PPE and intangible assets (other than goodwill) as described in Note 3.8 above. The Company reviews the estimated useful lives of PPE at the end of each reporting period.
b) Fair value measurements and valuation processes
The Company measures financial instruments at fair value in accordance with the accounting policies
mentioned above.
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization at the end of each reporting period and discloses the same.
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash flow model, which involves various judgements and assumptions. Where necessary, the Company engages third-party qualified valuers to perform the valuation.
Information about the valuation techniques and inputs used in determining the fair values of various assets and liabilities are disclosed in Note 40.
c) Other assumptions and estimation uncertainties, included in respective notes are as under:
• Recognition of deferred tax assets is based on estimates of taxable profits in future years. The Company prepares detailed cash flow and
profitability projections, which are reviewed by the board of directors of the Company. Estimation of current tax expense and payable, recognition of deferred tax assets and the possibility of utilizing available tax credits - see Note 10 and Note 41
• Measurement of defined benefit obligations and other long-term employee benefits: - see Note 37
• Assessment of the status of various legal cases/ claims and other disputes where the Company does not expect any material outflow of resources and hence these are reflected as contingent liabilities Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources - see Note 23 and Note 42
• Impairment of financial assets - see Note 40
(b) Rights, preferences and restrictions attached to 0.0001% Compulsorily Convertible Preference share :
(i) The CCPS shall carry a preferential right vis-a-vis equity share of H 10/- each of the Company (“Equity Shares”) with respect to payment of dividend and repayment in case of a winding up or repayment of capital;
(ii) The CCPS shall not be redeemable as the same are compulsorily convertible;
(iii) The CCPS shall be non-participating in the surplus funds and in surplus assets and profits, on winding-up which may remain after the entire capital has been repaid;
(iv) The CCPS shall be paid dividend on a non-cumulative basis at the rate of 0.0001%;
(v) The Equity Shares to be issued on conversion of the CCPS shall rank pari-passu in all respects including entitlement to dividend with the existing Equity Shares of the Company;
(vi) The CCPS will not have any voting rights. Only once the CCPS are converted to Equity Shares, the Equity shares will have voting rights in accordance with the provisions of the Companies Act, 2013.
(c) Allotment of CCPS by way of Conversion of NCPRPS
On Novemeber 2, 2021, IWL Committee of the Board of Directors for operations of the Company has alloted 83,33,51,137 number of shares @ 10 each into 0.01% Non-Convertible, Non-Cumulative, Participating, Redeemable Preference Shares (NCRPS) amounting to H 83,335.11 lakhs at par for consideration other than cash in lieu of advance from customer, intercorporate deposit including interest.
Further, On March 9, 2022, IWL Committee of the Board of Directors for operations of the Company has proposed “to vary the terms and nature of 91,83,51,137 (Ninety-One Crore Eighty-Three Lakh & Fifty-One Thousand One Hundred and Thirty-Seven) 0.01% Non-Convertible, Non-Cumulative, Participating, Redeemable Preference Shares of the face value of H 10/- each of the Company ("NCPRPS") held by Inox Wind Energy Limited and Devansh Trademart LLP, 'Promoter/ Promoter Group' entities, so as to result into 91,83,51,137 (Ninety-One Crore Eighty-Three Lakh & Fifty-One Thousand One Hundred and Thirty-Seven) 0.0001% Compulsorily Convertible Preference Shares of the face value of H 10/- each of the Company ("CCPS")”.
(d) Conversion of CCPS into Equity share
The Company has converted 83,33,51,137 CCPS held by promoter company i.e. Inox Wind Energy Limited) into equity shares of the Company at a price of H 126/- (Rupees One Hundred and Twenty Six only) per Equity Share (including a premium of H 116/-(Rupees One Hundred and Sixteen only) for each CCPS as per the terms and conditions of CCPS.
The Company has converted 8,50,00,000 CCPS held by Devansh Trademart LLP (Eight Crore Fifty Lakh) into equity shares of the Company at a price of H 126/- (Rupees One Hundred and Twenty Six only) per Equity Share (including a premium of H 116/-(Rupees One Hundred and Sixteen only) for each CCPS as per the terms and conditions of CCPS.
"During the Previous Financial Year company had issued share warrant to Sameena Green Ltd. - 90,90,909 nos by the resolution passed on 25-05-2022 and Lend lease (India) Limited - 53,03,030 by the resolution passed on 01-06-2022. An amount equivalent to 25% of the warrant price are received at the time of subscription and allotment of each warrant (“Warrant subscription price”), and balance 75% of warrant issued price shall be payable by the warrant holder on exercise of the warrant.
After the allotment the warrant are converted as follow
- Sameena Green Ltd, 89,77,153 nos was converted into equity share, out of 90,90,909 and for balance warrant of 1,13,756 nos was not opted for the conversion by the Sameena Green Ltd., So the application money of H 37,53,948/- received by the company against the allotment of share warrant was forfeited by the company and the forfeited amount was transfered to capital reserve.
(ii) Financial risk management
The Company's corporate finance function provides services to the business, coordinates access to financial market, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of the risk. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.
The use of financial derivatives is governed by the Company's policies approved by the Board of Directors of the Company, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments and the investment of the excess liquidity. Compliance with policies and exposure limits is reviewed by the Company on a continuous basis. The Company does not enter into or trade financial instruments including derivative financial instruments for speculative purpose.
(iii) Market Risk
The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
The Company is subject to the risk that changes in foreign currency values mainly impact the Company's cost of imports of materials/capital goods, royalty expenses and borrowings etc.
Foreign exchange transactions are covered with in limits placed on the amount of uncovered exposure, if any, at any point in time. The aim of the Company's approach to management of currency risk is to leave the Company with minimised residual risk.
iv) (b) Foreign Currency sensitivity analysis
The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to US Dollar and Euro.
The following table details the Company's sensitivity to a 10% increase and decrease in the Rupees against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes unhedged external loans, receivables and payables in currency other than the functional currency of the Company.
A 10% strengthening of the INR against key currencies to which the Company is exposed (net of hedge) would have led to additional gain in the Statement of Profit and Loss. A 10% weakening of the INR against these currencies would have led to an equal but opposite effect.
Interest rate risk refers to the possibility that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company is exposed to interest rate risk because it borrows funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
(v) (b) Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates for floating rate liabilities at the end of the reporting period. For floating rate liabilities, a 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in
interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company's profit for the year ended 31st March 2024 would decrease/increase by H 95.25 Lakhs net of tax (for the year ended 31st March 2023 decrease/increase by H 84.78 Lakhs net of tax). This is mainly attributable to the Company's exposure to interest rates on its variable rate borrowings.
Credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, investment in mutual funds, derivative financial instruments, other balances with banks, loans and other receivables.
(a) Trade receivables
Credit risk arising from trade receivables is managed in accordance with the Company's established policy, procedures and control relating to customer credit risk management. The Company supplies wind turbine equipments to customers which are installed and commissioned generally by a group company and it involves various activities such as civil work, electrical & mechanical work and commissioning activities. The payment terms with customers are fixed as per industry norms. The above activities lead to certain amounts becoming due for payment on completion of related activities and commissioning. The Company considers such amounts as due only on completion of related milestones. However, the group company has also long term operation and maintenance contract with such customers. Accordingly, risk of recovery of such amounts is mitigated. Customers who represents more than 5% of the total balance of Trade Receivable as at 31st March 2024 is H 88,745.14 lakhs (as at 31st March 2023 is H 50,859.81 lakhs) are due from 6 major customers (5 customers as at 31st March 2023 ) who are reputed parties. All trade receivables are reviewed and assessed for default at each reporting period.
For trade receivables, as a practical expedient, the Company computes credit loss allowance based on a provision matrix. The provision matrix is prepared based on historically observed default rates over the expected life of trade receivables from PSU-Non disputed and others and is adjusted for forward-looking estimates. The provision matrix at the end of the reporting period is as follows and during the year the Company has changed the provision matrix considering the long term outstanding and
credit risk for PSU-non disputed and others
b) Loans and other receivables
The Company applies expected credit losses (ECL) model for measurement and recognition of loss allowance on the loans given by the Company to the external parties. ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate.
The Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized
as loss allowance.
12 months ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a
financial asset.
ECL are measured in a manner that they reflect unbiased and probability weighted amounts determined by a range of outcomes, taking into account the time value of money and other reasonable information available as a result of past events, current conditions and forecasts of future economic conditions.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in the Statement of Profit and Loss under the head ‘Other expenses'/'other income'.
c) Other financial assets
Credit risk arising from investment in debt funds, derivative financial instruments and other balances with banks is limited because the counterparties are banks and recognised financial institutions with high credit ratings assigned by the various credit rating agencies. There are no collaterals held against such investments.
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the committee of board of directors of the Company, which has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Liquidity and interest risk tables
The following table detail the analysis of derivative as well as non-derivative financial liabilities of the Company into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
42 : Contingent liabilities:
(a) Claims against the Company not acknowledged as debts: claims made by vendors - H 1,232.35 lakhs plus interest thereon if any (as at 31st March 2023: H 1,704.55lakhs)
Some of the suppliers have raised claims including interest on account of non payment in terms of the respective contracts. The Company has contended that the suppliers have not adhered to some of the contract terms. At present the matters are pending before the jurisdictional authorities or are under negotiations.
(b) In respect of claims made by customers for operational matters- H 4,138.24 lakhs plus interest thereon if any (as at 31st March 2023: H 3,832.74 lakhs) (to the extent of oustanding balances). In view of the management, the company may be liable only to the extent of outstanding receivable balance from respective customers and possibility of an outflow of resources for any claims made by customers over and above of outstanding balances are remote.
Some of the customer have raised claims including interest on account of non compliance of terms of the respective contracts. At present the matters are pending before the jurisdictional authorities or are under negotiations.
(c ) Claim against the Company not acknowledged as debts from customers H 314.75 lakhs plus interest thereon if any (as at 31st March 2023 : H 314.75 lakhs)
(d) Claims made by vendors in National Company Law Tribunal (NCLT) for H 4,518.76 lakhs plus interest thereon if any (as at 31st March 2023 : H 4,883.61 lakhs)
(e) In respect of VAT matters - H 324.31 lakhs (as at 31st March 2023: H 2,550.59 lakhs) plus interest thereon if any.
The Company had received orders for the financial years ended 31st March 2017 , in respect of Andhra Pradesh on account of Entry Tax and CST demand on the issue of non-deposit of Entry Tax and non-submission of Statutory Forms for H 84.25 lakhs and H 343.56 lakhs and penalty of Rs 84.06 lakhs has been recovered from Input tax Credit (ITC). The Company had obtained stay from Hon'ble High Court of Tirupati against entry tax and deposited 25% of the demand and filed appeals before the first appellate authority in the matter of CST Addition of H 343.56 Lakhs and also for stay of demand by depositing H 82.45 Lakhs and a refund of H 315.89 Lakhs has been appropriated towards demand of H 659.46 Lakhs.
The company had obtained VAT demand from GUJ VAT for H 1,304.88 lakhs on account of VAT Assessments due to mismatch of ITC and non-submission of Statutory forms for FY 2014-2015 and 2015-2016 and filed appeal before the joint commissioner, Ahmedabad in this matter and the appeal has been decided in our favour.
The company has received VAT demand orders from Kerala VAT on account of probable suppression and omision on purchase of goods in kerala state and levied demand on the enhanced assessment in Kerala and has demand VAT of H 417.94 lakhs and the company had preferred appeal before VAT appellate authority, Kochi and appellate authroity has desposed of the appeal with direction to AO to reassess the case and the case has been completed with Nil demand.
(f) In respect of Service/central Excise tax matter - H 3,959.60 lakhs plus interest thereon if any (as at 31st March 2023: H 3,313.83 lakhs)
The Company has received orders for the period September 2011 to March 2016, in respect of Service Tax, levying demand of H 1,401.63 lakhs on account of disallowance of exemption of Research & Development cess from payment of service tax. The Company has received adverse order from CESTAT, Allahabad Bench.
The company has preferred an appeal before Hon'ble Bench of Allahabad High Court and the Hon'ble Bench of Allahabad High Court has stayed the proceedings subject to submission of the Security before the Assessing officer.
The Company has estimated the amount of demand which may be ultimately sustained at H 32.19 lakhs and provision for the same is made during the year and carried forward as “Disputed service tax liabilities” in Note 23.
The Company has received order for the period April to March 2017, in respect of Service Tax, levying demand of H 11.19 lakhs on account of disallowance of exemption of Research & Development cess from payment of service tax in the month of March, 2021 and has preferred an appeal before Noida Commissioner of Appeals.
The company has received order from central Excise orders from MP and GUJ rejecting the concessional duty claims on steel purchased in MP and Gujrat, not treating the steel as main input material in relation to the final products and had levied demand of H 1,128.70 lakhs and H 772.31 lakhs respectively and filed appeal before the CESTAT, Delhi and Ahmedabad respectively.
The Company has received Service tax demand order of H 645.77 Lakh from central GST commissionerate (Noida) dated 29th March 2023 including the penalty of H 322.83 lakh.
(g) In respect of Income tax matters - H 1,444.16 lakhs (31st March 2023: H 4,742.51 Lakhs) plus interest thereon if any.
This includes demand for assessment year 2013-14 of H 272.64 lakhs received in the previous year by the Company, mainly on account of reduction in the amount of tax incentive claimed, against which the company has obtained favourable order from CIT-Appeals on the substantial issues and filed second appeal before ITAT, Bench, Chandigarh in June 2020 against the issues on which relief has not been granted.
This includes demand for assessment year 2014-15 of H 4,096.78 lakhs (including interest) received by the Company, mainly on account of Transfer Pricing Adjustment, disallowance of deduction u/s 80IC of from sale of scrap, insurance claim, interest income and interest disallowance u/s 36(i) (iii) etc. The assessee company has filed appeal before CIT (Appeals) Palampur, which is pending for disposal. The AO has rectified the demand to nil vide rectification order passed in this regard and the AO has passed a penalty order of Rs 798 lakhs vide order dated 29/03/2024 and we have filed writ petition before Hon'ble High Court, Shimla and Hon'ble High Court has stayed the proceedings.
This includes demand for assessment year 2013-14 of H 373.09 lakhs received in the current year by the Company, mainly on account of less deduction on payment made to subsidiary company u/s 194C, rather it should have been deducted u/s 194J, in the assessment order passed by the Assessing officer. The Company has preferred an appeal before CIT (Appeals) Palampur and hopeful to get favourable judgement in view of supported Judgement of Hon'ble Punjab and Haryana High Court and CBDT instructions.
(h) In respect of Labour Cess under Building and Other Construction Workers Act, 1966 - H 61.11 lakhs (as at 31st March 2023: H 61.11 Lakhs)
The Company has received the order for the financial year ended 31st March 2015, 31st March 2016 in respect of Labour Cess on construction work at Relwa Khurd MP plant.
(i) Corporate Guarantee of H 20,199.11 lakhs (as at 31st March 2023: H 16,438.69 lakhs) given to financial institution and Bank against loan taken by Subsidiary Companies.
(j) In respect of custom duty of H 1,000.00 lakhs (as at 31st March 2023: H 1,000.00 lakhs) paid to Directorate of Revenue Intelligence.
(k) Amount of customs duty exemption availed by the Company under EPCG Scheme for which export obligations have not been fulfilled within stipulated period H757.01 lakhs (as at 31st March 2023: H 757.01 )
In respect of above matters, no additional provision is considered necessary as the Company expects favourable outcome. Further, it is not possible for the Company to estimate the timing and amounts of further cash outflows, if any, in respect of these matters.
43 : Capital and other Commitments
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) is H 3,946.34 lakhs (as at 31st March 2023: H 3,433.06 lakhs).
b) Amount of customs duty exemption availed by the Company under EPCG Scheme for which export obligations are required to be fulfilled within stipulated period H632.90 lakhs (as at 31st March 2023: H 632.90 lakhs).
c) Bank guarantees issued by the Company to its customers/Government bodies for H 69,719.86 lakhs (as at 31st March 2023 : H 48,893.55 lakhs).
(d) Corporate Guarantee of H 1,799.11 lakhs (as at 31st March 2023: H 2,831.00 lakhs) given to Customer.
44: Balance confirmation
The balance confirmation letters as referred to in the Standard on Auditing (SA) 505 (Revised) ‘External Confirmations', were sent to balances from banks, trade receivables/payables/advances to vendors and other parties (other than disputed parties) and certain party's balances are subject to confirmation/reconciliation. Adjustments, if any will be accounted for on confirmation/reconciliation of the same, which in the opinion of the management will not have a material impact.
45 : Segment information
The Company has presented segment information in the consolidated financial statements which are presented in the same financial report. Accordingly, in terms of Paragraph 4 of Ind AS 108 ‘Operating Segments', no disclosures related to segments are presented in this standalone financial statements.
Three customers contributed more than 10% of the total Company's revenue amounting to H 1,15,111.48 lakhs (as at 31st March 2023: Four customers amounting to H 35,403.33 lakhs).
46 : Revenue from contracts with customers as per Ind AS 115 (A) Disaggregated revenue information
In the following table, revenue from contracts with customers is disaggregated by primary major products and service lines Since the Company has only one reportable business segment, no reconciliation of the disaggregated revenue is required:
(c) The reason of shortfall: The Company's business experienced abrupt stoppage for around three years due to sectoral issues, related to policy (shifting from feed-in-tariff regime to reverse auction based regime) and grid related delays amongst others. The wind power sector was virtually shut down during this period. This led to mismatch of cash flows in the Company as inventories increased due to drop in sales. The limited funds available were used to complete the pending projects and to meet the day to day expenditures and therefore the Company could not allocate/spend the required CSR expenditure.
(d) The nature of CSR activities undertaken:NA (Figures in brackets pertain to previous year)
54: The Company incorporated 6 wholly-owned subsidiaries (hereafter referred to as SPVs), through a request for selection (Rfs) process under the Solar Energy Corporation of India (SECI) to set up wind farm projects. The company invested funds in the SPVs through Inter-Corporate deposits for project execution, amounting to H 1,004 Lakh, and also provided bank guarantees of H 5,578 Lakh. The management believes that once the projects are commissioned and subject to pending regulatory matters and operational performance improvement, the company will be able to recover the funds from the SPVs and release the bank guarantees. However, as at March 31, 2024, the SPVs' project completion date had expired and applications for extensions are pending with regulators. In annual general meeting held on September 29, 2023 & September 29, 2023 of the Company and (IGESL) subsidairy company respectively approves that if the group is unable to recover the funds provided as Inter-Corporate deposits and Bank Guarantee from the SPVs, the holding company will bear the costs.
55: During previous financial year, the company has written off the amount recoverable from Trade receivables as Bad Debts in Financial Statements. The company is in the process of seeking legal opinion for the applicable provisions of the Income Tax Act, 1961 and the company is confident that there will not be any material impact of the said provisions on the statement.
56: During the year, the Company, as decided vide Board of Directors resolution dated February 10, 2023 and as approved by shareholders in annual genaral meeting held on 29th September, 2023 being related party transactions, has bear the losses of investment in subsidiary amounting to H2,591 Lakh.
During previous financial year, the Company has bear the losess of subsidiary company (Inox Green Energy Services Limited) on account of unrecovered ICD amounting to H1,216 Lakh and reimbursed 'bank guarantee invoked by SECI'/liquidated damages amounting to H6,816 Lakhs and write off ICD amounting to H1,850 Lakh on account of unrecovered Investment made by IGESL in its associate i.e. Wind Five Renergy Limited on behalf of the Company.
57: There have been no delays in transferring amounts required to be transferred to the Investor Education and Protection Fund.
58: Other statutory informations:
(i) The company does not have any transaction with the companies struck off under SEC 248 of the Companies Act 2013 or section 560 of the Companies Act 1956 during the year ended March 31, 2024 and March 31, 2023.
(ii) There are no charges or satisfaction which are to be registered with the registrar of companies during the year ended March 31, 2024 and March 31, 2023 except below:
(iii) The Company complies with the number of layers of companies in accordance with clause 87 of Section 2 of the Act read with the Companies (Restriction on number of layers) rules 2017 during the year ended March 31, 2024 and March 31, 2023.
(iv) The Company has not invested or traded in cryptocurrency or virtual currency during the year ended March 31, 2024 and
March 31, 2023.
(v) No proceedings have been initiated on or are pending against the company for holding Benami property under the Prohibition of Benami Property Transaction Act 1988 (as amended in 2016) (formally the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder during the year ended March 31, 2024 and March 31, 2023.
(vi) On June 12, 2023, the scheme of amalgamation of Inox Wind Energy Limited into Inox Wind Limited was approved, subject to various regulatory approvals and compliances. "BSE and NSE, through their letters dated December 27, 2023, have issued Observation Letters as required under Regulations 37 and 59A of the Listing Regulations with 'No adverse observation/No objection' to the proposed scheme." The approved swap ratio for the proposed merger is 158 equity shares of Inox Wind Limited for every 10 equity shares of Inox Wind Energy Limited. Following the approval of the bonus share issue by the Board on April 25, 2024, in the ratio of 3:1 (i.e., three new equity shares for every one equity share held), the swap ratio will be adjusted to 632 equity shares of Inox Wind Limited for every 10 equity shares of Inox Wind Energy Limited. Pursuant to an order from the Honourable NCLT Chandigarh dated April 16, 2024, meetings of the equity shareholders, debenture holders, and secured and unsecured creditors are scheduled to be held on June 1 and June 2, 2024.
(vii) During the year ended March 31, 2024 and March 31, 2023, the Company has not surrendered or disclosed as income any transactions not recorded in the books of accounts in the course of tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act 1961).
(viii) Except below, During the year ended March 31, 2024 and March 31, 2023, the Company has not advanced or loaned or invested funds (either borrowed funds or the share premium or kind of funds) to any other person or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the intermediary shall:
a. directly or indirectly land or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (ultimate beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.
Xi. The Comopany has not been declared a wilfull defaulter by any bank or financial institution or government or any government authorities during the year ened March 31, 2024 and March 31, 2023
59: The company has a system of maintenance of information and documents as required by Goods and Services Act (“GST Act”) and "chapter-xvii" of the Income Tax Act, 1961. Due to the pending filling of certain GST/TDS/TCS returns, the necessary reconciliation is pending to determine whether all transactions have been duly recorded/reported with the statutory authorities. Adjustments, if any, arising while filing the GST/TDS Return shall be accounted for as and when the return is filed for the current financial year. However, the management is of the opinion that the aforesaid return filing will not have any material impact on the financial statements.
60: The Code on Social Security, 2020 (‘Code') relating to employee benefits during employment and post-employment benefits has received Presidential assent on 28th September, 2020. The Code has been published in the Gazette of India. However, the effective date of the Code is yet to be notified and final rules for quantifying the financial impact are also yet to be issued. In view of this, the Company will assess the impact of the Code when relevant provisions are notified and will record related impact, if any, in the period the Code becomes effective.
a) The management has reviewed the carrying amount of inter-corporate deposits given to the subsidiary. After considering the position of losses of the subsidiary, provision is made for impairment in the value of inter-corporate deposits.
b) The company has bear the losses of Investment in subsidiary amounting to H2,591.40 Lakh as decided and approved by the management. (Refer Note 56)
c) The company has recognised ECL amounting to H 10,240 Lakhs due to change in Expected credit loss policy on certain category of customer and same has been considered as an exceptional expense in the financial statement.
d) The company has recognised expenses amounting to H3,600 Lakhs as an exceptional item on account of settlement of dispute/litigation matters.
62: During the year, the company has recognised revenue from the sale of a 3 MW Power Booster Model 3.3 MW, amounting to H 39,030 Lakh. This recognition is based on a provisional type certificate issued by the Ministry of New and Renewable Energy (MNRE), Government of India, which is valid until May 20, 2024.
63. As per RBI Guidelines, remittance against import should be completed not later than six months. As at March 31, 2024 certain party balances of imports are outstanding for more than six months. Considering that the balances are for more than six months, the Company is in process of payments/statutory approval, as applicable for such payments.
64. The Previous year figures have been regrouped, wherever necessary to confirm the respective year presentation. The figures have been rounded off to the nearest rupee and any discrepancies in any note between the total and sums of the amounts are due
to rounding off.
As per our report of even date attached
For Dewan P. N. Chopra & Co. For and on behalf of the Board of Directors
Chartered Accountants
Firm's Registration No 000472N Devansh Jain Manoj Dixit
Whole-time Director Whole-time Director
DIN: 01819331 DIN: 06709232
Sandeep Dahiya Kailash Lal Tarachandani Rahul Roongta
Partner Chief Executive Officer Chief Financial Officer
Membership No 505371
Deepak Banga
Company Secretary
Place :Noida Place : Noida
Date : 03rd May 2024 Date : 03rd May 2024
| 