1. COMPANY INFORMATION
Inox wind Limited (“the Company”) is a public limited company incorporated in India. The Company is engaged in the business of manufacture and sale of Wind Turbine Generators (“WTGs”). It also provides Erection, Procurement & Commissioning (“EPC”), Operations & Maintenance (“O&M) and Common Infrastructure Facilities services for WTGs and wind farm development services. The area of operations of the Company is within India. The Company’s parent company is Gujarat Fluorochemicals Limited and its ultimate holding company is Inox Leasing and Finance Limited. The shares of the Company are listed on the Bombay Stock Exchange and the National Stock Exchange of India.
The Company’s registered office is located at Plot No.1, Khasra No.264-267 Industrial Area, Near Power house Village Basal Dist. Una, Himachal Pradesh, India and the particulars of its other offices and plants are disclosed in the annual report.
2. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION AND PRESENTATION
2.1 STATEMENT OF COMPLIANCE
These financial statements are the separate financial statements of the Company (also called standalone financial statements) and comply in all material aspects with the Indian Accounting Standards (“Ind AS”) notified under section 133 of the Companies Act, 2013 (“the Act”) and other relevant provisions of the Act.
2.2 BASIS OF MEASUREMENT
These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest lakhs, unless otherwise indicated.
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the significant accounting policies.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 BASIS OF PREPARATION AND PRESENTATION
Effective 1 April 2016, the Company has adopted all the Ind AS Standards and the adoption was carried out in accordance with Ind AS 101 ‘First time adoption of Indian Accounting Standards’, with 1 April 2015 as the transition date. The transition was carried out from the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) which was the previous GAAP
Accounting Policies have been consistently applied except where a newly issued accounting standards initially adopted or a revision to an existing accounting standard requires a change in the accounting policies hitherto in use.
The financial statements have been prepared on accrual and going concern basis. .
Any asset or liability is classified as current if it satisfies any of the following conditions:
- the asset/liability is expected to be realized/settled in the Company’s normal operating cycle;
- the asset is intended for sale or consumption;
- the asset/liability is held primarily for the purpose of trading;
- the asset/liability is expected to be realized/settled within twelve months after the reporting period
- the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
- in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of products and services and the time between the acquisition of assets or inventories for processing and their realisation in cash and cash equivalents.
These financial statements were authorized for issue by the Company’s Board of Directors on 18 May 2018.
3 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.
3.1 Following are the critical judgements that have the most significant effects on the amounts recognised in these financial statements:
a) Leasehold land
Considering the terms and conditions of the leases in respect of leasehold land, particularly the transfer of the significant risks and rewards, it is concluded that they are in the nature of operating leases.
3.2 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 re-assessing categorization at the end of each reporting period and discloses the same.
When the fair values of financials 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 involve 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 38.
c) Other assumptions and estimation uncertainties, included in respective notes are as under:
- Estimation of current tax expense and payable, recognition of deferred tax assets and possibility of utilizing available tax credits - see Note 39
- Measurement of defined benefit obligations and other long-term employee benefits: - see Note 36
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources - see Note 20 and Note 40
- Impairment of financial assets - see Note 38
(b) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having par value of Rs.10 per share. Each shareholder is eligible for one vote per share held and entitled to receive dividend as declared from time to time. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, in proportion of their shareholding.
The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments designated as cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss when the hedged transaction affects the profit or loss, included as a basis adjustment to the non -financial hedged item, or when it becomes ineffective.
The amount that can be distributed by the Company as dividends to its equity shareholders is determined considering the requirements of the Companies Act, 2013 and is subject to levy of dividend distribution tax, if any. Thus, the amounts reported above may not be distributable in entirety.
4. EMPLOYEE BENEFITS:
(a) Defined Contribution Plans
The Company contributes to the Government managed provident and pension fund for all qualifying employees.
Contribution to provident fund of Rs.225.29 Lakhs (31 March 2017: Rs.249.91 Lakhs) is recognized as an expense and included in “Contribution to provident and other funds” in Statement of Profit and Loss .
(b) Defined Benefit Plans:
The Company has defined benefit plan for payment of gratuity to all qualifying employees. It is governed by the Payment of Gratuity Act, 1972. Under this Act, an employee who has completed five years of service is entitled to the specified benefit. The level of benefits provided depends on the employee’s length of service and salary at retirement age.The Company’s defined benefit plan is unfunded.
There are no other post retirement benefits provided by the Company.
The most recent actuarial valuation of the present value of the defined benefit obligation were carried out as at 31 March 2018 by Mr. G. N. Agarwal, Fellow of the Institute of the Actuaries of India. The present value of the defined benefit obligation, the related current service cost and past service cost, were measured using the projected unit credit method.
Estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
These plans typically expose the Company to actuarial risks such as interest rate risk and salary risk.
a) Interest risk: a decrease in the bond interest rate will increase the plan liability.
b) Salary risk: the present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, a variation in the expected rate of salary increase of the plan participants will change the plan liability.
Significant actuarial assumptions for the determination of defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumption would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
The average duration of the defined benefit plan obligation at the end of the reporting period is 14.30 years.
(c) Other short term and long term employment benefits:
Annual leave & short term leave
The liability towards compensated absences (annual and short term leave) for the year ended 31 March 2018 based on actuarial valuation carried out by using Projected accrued benefit method resulted in decrease in liability by Rs.11.08 lakhs (31 March 2017: increase in liability by Rs.100.09 lakhs ), which is included in the employee benefits in the Statement of Profit and Loss.
5. RELATED PARTY DISCLOSURES:
(i) Where control exists :
Gujarat Fluorochemicals Limited (GFL) - holding company
Inox Leasing and Finance Limited - ultimate holding company
Inox Wind Infrastructure Services Limited (IWISL) - subsidiary company
Subsidiaries of IWISL -
1. Marut Shakti Energy India Limited
2. Satviki Energy Private Limited
3. Sarayu Wind Power (Tallimadugula) Private Limited
4. Vinirrmaa Energy Generation Private Limited
5. Sarayu Wind Power (Kondapuram) Private Limited
6. RBRK Investments Limited -(incorporated on 30 August 2016)
7. Wind One Renergy Private Limited (incorporated on 26 April 2017)
8. Wind Three Renergy Private Limited (incorporated on 20 April 2017)
9. Suswind Power Private Limited (incorporated on 27 April 2017)
10. Vasuprada Renewables Private Limited (incorporated on 27 April 2017)
11. Ripudaman Urja Private Limited (incorporated on 28 April 2017)
12. Haroda Wind Energy Private Limited (incorporated on 16 November 2017)
13. Vigodi Wind Energy Private Limited (incorporated on 20 November 2017)
14. Vibhav Energy Private Limited (incorporated on 10 July 2017)
15. Vuelta Wind Energy Private Limited (incorporated on 17 January 2018)
16. Tempest Wind Energy Private Limited (incorporated on 17 January 2018)
17. Aliento Wind Energy Private Limited (incorporated on 17 January 2018)
18. Flutter Wind Energy Private Limited (incorporated on 18 January 2018)
19. Flurry Wind Energy Private Limited (incorporated on 18 January 2018)
(ii) Other related parties with whom there are transactions during the year
Key Management Personnel (KMP)
Mr. Devansh Jain - Whole-time director
Mr. Rajeev Gupta - Whole-time director
Mr. Kailash Lal Tarachandani-Chief Executive Officer
Ms. Bindu Saxena - Non Executive Director
Mr. V. Sankaranarayanan - Non Executive Director - w.e.f. 2 September 2016
Mr. Chandra Prakash Jain - Non Executive Director Mr. Deepak Asher - Non Executive Director Mr. Shanti Prasad Jain - Non Executive Director Mr. Siddharth Jain - Non Executive Director
Inox Renewables Limited (IRL) - Subsidiary of GFL Inox Renewables (Jaisalmer) Limited - Subsidiary of IRL Inox Leisure Limited (ILL) - Subsidiary of GFL
Enterprises over which KMP or their relatives have significant influence
Inox FMCG Private Limited
6. FINANCIAL INSTRUMENTS
(i) Capital management
The Company manages its capital structure with a view to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimization of the debt and equity balance.
The capital structure of the Company consists of net debt (borrowings as detailed in notes 18 and 23 offset by cash and bank balances excluding bank deposites kept as lien) and total equity of the Company.
The Company is not subject to any externally imposed capital requirements. However, under the terms of the major borrowings, the Company is required to keep the debt to equity gearing ratio of not more than 300% and the ratio of debt to EBITDA must not be more than 300%. The Company has complied with these covenants during the year ended 31 March 2017. During the current year, the Company could not comply with the covenant in respect of EBITDA ratio on account of losses incurred during the year.
The Company’s management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.
The carrying amount reflected above represents the Company’s maximum exposure to credit risk for such financial assets.
(iii) 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 Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. 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.
(iv) 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 enters into the variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk including:
1. Interest rate swaps to mitigate the risk of rising interest rates.
2. Principal only swaps, Currency Swaps, Options and forwards contracts to mitigate foreign currency risk of foreign currency borrowings and payables foreign currency.
(v) (a) Foreign Currency risk management
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. Exchange rate exposures are managed within approved policy parameters by entering into foreign currency forward contracts, options and swaps.
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 Compnay with minimised residual risk.
The Company does not have any foreign currency monetary assets .
(v) (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.
(vi) (a) Interest rate risk management
Interest rate risk refers to the possibility that the fair value or future cash flows of a fnancial 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, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
As per the Company’s risk management policy to minimize the interest rate cash flow risk on foreign currency long term borrowings, interest rate swaps are taken for most of the borrowings to convert the variable interest rate risk into rupee fixed interest rate. Thus, There is no major interest rate risks associated with foreign currency long term borrowings. In respect of foreign currency short term borrowings and rupee loans the Company does not have any borrowings at variable rate of interest.
Interest rate senstivity 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 31 March 2018 would decrease/increase by INR 22.98 Lakhs net of tax (for the year ended 31 March 2017 decrease/increase by INR 19.49 Lakhs). This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings.
(vi) (b) Interest rate swap contract
Under interest rate swap contracts, the Company agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Company to mitigate the risk of changing interest rates. The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the curves at the end of the reporting period and the credit risk inherent in the contract, and is disclosed below. The average interest rate is based on the outstanding balances at the end of the reporting period.
The interest rate swaps settle on quarterly basis. The floating rate on the interest rate swaps is the local interbank rate of India.
All interest rate swap contracts exchanging floating rate interest amounts for fixed rate interest amounts are designated as cash flow hedges in order to reduce the Company’s cash flow exposures resulting from variable interest rates on borrowing. The interest rate swaps and the interest payments on the loan occur simultaneously and the amount accumulated in equity is reclassified to profit or loss over the period that floating rate interest payments on debt affect profit or loss.
The line-items in the Standalone balance sheet that include the above hedging instruments are “Other financial assets”and “Other financial liabilities”.
(vii) Other price risks
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Other price risk arises from financial assets such as investments in equity instruments and mutual funds. The Company does not have investment in equity instruments, other than investments in subsidiary which are held for strategic rather than trading purposes. The Company does not actively trade these investments. The Company’s investment in mutual funds are in debt funds. Hence the Company’s exposure to equity price risk is minimal.
(viii) Credit risk management
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 31 March 2018 is Rs.54,461.18 lakhs (as at 31 March 2017 of Rs.94,511.05 lakh) are due from 6 major customers (7 customers as at 31 March 2017 ) who are reputed parties. All trade receivables are reviewed and assessed for default on a quarterly basis.
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 and is adjusted for forward-looking estimates. The provision matrix at the end of the reporting period is as follows:
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-month 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.
The above liabilities will be met by the Company from internal accruals, realization of current and non-current financial assets (other than strategic investments). Further, the Company also has unutilised financing facilities.
(ix) Forward Foreign Exchange Contracts
The Company enters into call spread option contract and Cross Currency Swap agreement to hedge the foreign currency risk and interest rate risk.
(xi) Fair value of financial assets and financial liabilities that are not measured at fair value (but fair value disclosures are required)
The carrying amount of financial assets and financial liabilities measured at amortised cost in the financial statements are a resonable approximation of their fair values since the company does not anticipate that the carrying amounts would be significantly different from the values that would eventually be received or settled.
The tax rate used for the year ended 31 March 2018 and 31 March 2017 in reconciliations above is the corporate tax rate of 34.608% payable by corporate entities in India on taxable profits under the Indian tax law.
The increase in corporate tax rate applicable to the company from 34.608% to 34.944% on account of increase in cess was substatially enocted before 31st March 2018 and will be effective from 1 April 2018. As a result, the deferred tax balance have been remeasured and the effect of the same is reflected in the above reconcillation.
7. CONTINGENT LIABILITIES:
(a) Claims against the Company not acknowledged as debts: claims made by contractors - Rs.679.77 lakhs (as at 31 March 2017: Rs.488.40 lakhs)
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 four (previous year three ) customers for non-commissioning of WTGs, the amount is not ascertainable.
(c) Claim against the Company not acknowledeged as dates from customes ‘3,750 lakhs
(d) In respect of VAT matters - Rs.59.09 lakhs (31 March 2017: Rs.59.09 lakhs)
The Company had received orders for the financial years ended 31 March 2013 and 31 March 2014, in respect of Himachal Pradesh VAT, levying penalty of Rs.112.87 lakhs for delayed payment of VAT. The Company had filed appeals before the first appellate authority. During the year ended 31 March 2015, the company had received appellate order for the year ended 31 March 2014 confiriming the levy of penalty and the Company has filed further appeal against the said order. However, the Company has estimated the amount of penalty which may be utimately sustained at Rs.53.78 lakhs and provision for the same was made during the year ended 31 March 2015. After adjusting the amount of Rs.23.35 lakhs paid against the demands, the balance amount of Rs.30.43 lakhs is carried forward as “Disputed sales tax liabilites (net of payments)” in Note 21.
(e) In respect of Service tax matter- Rs.1,401.63 lakhs (31 March 2017 Rs.1,401.63 lakhs)
The Company has received orders for the period September 2011 to March 2016, in respect of Service Tax, levying demand of Rs.1,401.63 lakhs on account of disallowance of exemption of Research & Development cess from payment of service tax. The Company has filed appeals before the first applellate authority. The Company has estimated the amount of demand which may be ultimately sustained at Rs.32.19 lakhs and provision for the same is made during the year and carried forward as “Disputed service tax liabilities” in Note 21.
(f) In respect of Income tax matters - Rs.3,984.97 lakhs (31 March 2017: Rs.95.02 Lakhs)
This includes demand for assessment year 2013-14 received in the current year by the holding company, mainly on account of reduction in the amount of tax incentive claimed, which is being contested before the first appellate authority.
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.
8. COMMITMENTS FOR EXPENDITURE
a) Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs.4,313.22 lakhs, (31 March 2017: Rs.9,721.19 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 - Rs.2,983.84 lakhs (31 March 2017 Rs.2,983.84 lakhs).
9. OPERATING LEASE ARRANGEMENTS
a) Leasing arrangements in respect of operating lease for office premises / residential premises:
The Company’s significant lease agreements are for a period of 11/60 months and are cancellable. The aggregate lease rentals are charged as “Rent” in the Sandalone Statement of Profit and Loss.
b) Interest in land taken on lease and classified as operating lease:
The leasehold land are generally taken for the period of 30 to 99 years. The entire lease premium is already paid and future rentals are nominal. Amortisation of such lease payments is included in “Rent” in the Standalone statement of Profit and Loss and the balance remaining amount to be amortised is included in the Standalone Balance Sheet as Prepayments- Leasehold land .
10. SEGMENT INFORMATION
Information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and segment performance focuses on single business segment of manufacturing of Wind Turbine Generators (WTG’s) comprising of Erection, Procurement & Commissioning (“EPC”), Operations & Maintenance (“O&M”) and Common Infrastructure Facilities services for WTGs and hence there is only one reportable business segment in terms of Ind AS 108: Operating Segment.
Revenue is net of returns and is reduced for rebates, trade discounts, refunds and other similar allowances. Of the above total revenue, nine external customers contributed more than 10% of the total Company’s revenue amounting to Rs.52,171.70 lakhs (31 March 2017: three customers amounting to Rs.106,415.31 lakhs).
11 INITIAL PUBLIC OFFER
The Company had made an Initial Public Offer (IPO) during the year ended 31 March 2015, for 31,918,226 equity shares of Rs.10 each, comprising of 21,918,226 fresh issue of equity shares by the Company and 10,000,000 equity shares offered for sale by Gujarat Fluorochemicals Limited (GFL), the Company’s holding company. The equity shares were issued at a price of Rs.325 per share (including premium of Rs.315 per share), subject to a discount of Rs.15 per share for eligible employees of the Company and retail investors. Out of the total proceeds from the IPO of Rs.102,053 lakhs, the Company’s share was Rs.70,000 lakhs from the fresh issue of 21,918,226 equity shares. The total expenses in connection with the IPO are shared between the Company and GFL in proporation of the amount received from the IPO proceeds. Accordingly amount of Rs.3,222.15 lakhs, being share of the Company in the IPO expenses, is adjusted against the securities premium account. Fresh equity shares were allotted by the Company on 30 March 2015 and the shares of the Company were listed on the stock exchanges on 9 April 2015.
Subsequently, the members of the Company have passed a special resolution for variations in terms of the Objects of the Issue through postal ballot on 5 September 2017.
12. CORPORATE SOCIAL RESPONSIBILITY (CSR)
(a) The gross amount required to be spent by the Company during the year towards Corporate Social Responsibility (CSR) is Rs.964.52 Lakhs (31 March 2017 Rs.832.02 Lakhs).
(b) Amount spent during the year ended 31 March 2018: