UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

November 13, 2023

 

Commission File Number 001-37909

 

 

 

AZURE POWER GLOBAL LIMITED

 

 

 

5th Floor, Southern Park, D-II,

Saket Place, Saket, New Delhi 110017, India

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒     Form 40-F 

 

 

 

 

 

 

On November 10, 2023, Azure Power Global Limited (the “Company” or “Azure”) filed the audited annual results for fiscal year ended March 31, 2022 of its subsidiaries Azure Power Solar Energy Private Limited and Restricted Group entities (collectively referred as Restricted Group-II), and Azure Power Energy Limited and Restricted Group entities (collectively referred as Restricted Group-III), with the Singapore Stock Exchange.

 

A copy of the same is available at the Company’s website www.azurepower.com.

 

Forward-Looking Statements

 

This filing contains forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and the US Private Securities Litigation Reform Act of 1995, including statements regarding the bringing of a fresh perspective and valuable guidance, driving growth and success, driving the Company forward, and achieving Company goals. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions are used to identify forward-looking statements. These statements are based on current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements in this press release. All forward-looking statements in this filing are based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statements.

 

Exhibit Index

 

Exhibit Number   Description
99.1   Audited Combined Financial Statements of Restricted Group-II for the year ended March 31, 2022
99.2   Audited Combined Financial Statements of Restricted Group-III for the year ended March 31, 2022

 

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  AZURE POWER GLOBAL LIMITED
     
Date: November 13, 2023 By: /s/ Sugata Sircar
    Name:  Sugata Sircar
    Title: Group Chief Financial Officer

 

 

2

 

 

Exhibit 99.1

 

  Tel: +91 22 6228 0817 HO
The Ruby, Level 9, North West Wing
www.bdo.in Senapati Bapat Marg, Dadar (W)
  Mumbai 400028, INDIA

 

INDEPENDENT AUDITOR’S REPORT

 

Report on Special Purpose Combined Financial statements of Restricted Group

 

To the Board of Directors of Azure Power Solar Energy Private Limited (“APSEPL”)

 

Qualified Opinion

 

We have audited the special purpose combined financial statements of Restricted Group which consist of Azure Power Solar Energy Private Limited (“the Company”), a wholly owned subsidiary of Azure Power Global Limited (“the Parent”) and certain entities under the common control of the Parent as listed in Note 1 to the special purpose combined financial statements (collectively known as “the Restricted Group” or “the RG”), which comprise the combined Balance Sheet as at March 31, 2022, the combined Statements of Profit & Loss including other comprehensive income, the combined Cash Flow Statements and the combined Statement of Changes in Equity for the year ended March 31, 2022 and a summary of the significant accounting policies and other explanatory information (together hereinafter referred to as “special purpose combined financial statements”). These special purpose combined financials statements have been prepared in accordance with the basis of preparation as set out in Note 3 to the special purpose combined financials statements.

 

In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of report of other auditor, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the special purpose combined financial statements of the Restricted Group for the year ended March 31, 2022 are prepared in all material respects, in accordance with the basis of preparation described in Note 3 to these special purpose combined financial statements.

 

Basis for Qualified Opinion

 

The matters in Paragraph 1 below should be read with Note 46 to the accompanying special purpose combined financial statements which discusses certain key events of the year.

 

1.During the year and subsequent to the year end, the Parent, Azure Power India Private Limited (the subsidiary of the Parent) and certain entities under common control of the Parent (collectively referred to as the ‘Group’), have received several complaints via the Group’s common whistleblower mechanism. In response, the Board of Directors and Audit and Risk Committee of the Parent appointed external legal counsels to conduct investigations into the significant issues highlighted by the complaints. These issues include, but are not limited to, lapses in key control areas, governance issues, and problems with vendor management. Specifically, the whistleblower complaints allege misconducts such as obtaining invalid commissioning certificates through the submission of falsified information to regulatory bodies in one project and the concealment and misrepresentation of facts by former senior management to the Board of Directors of the Parent.

 

A special committee was constituted by the Board of Directors of the Parent (‘Special Committee’), to review certain material projects and contracts for anti-corruption and related compliance issues. Independent external counsel and forensic advisors were engaged to support the Special Committee. The Special Committee’s investigation has identified evidence that certain former senior management of the Parent may have been involved and certain former directors of the Parent may have had the knowledge of an apparent scheme with persons outside the Company to make improper payments in relation to certain projects. The Special Committee’s investigation is not yet complete. The current Board of Directors of the Parent has represented to us that none of them were aware of such apparent scheme. As informed by the management, no adjustments would be necessary in the financial statements of the Group for the financial year ended March 31, 2022. Refer to Annexure 1 for the representation. In view of pending investigation, we are unable to comment whether the outcome of the investigation will result in possible adjustments and/or disclosures to the special purpose combined financial statements, and the status of compliance with the applicable laws and regulations.

 

 

BDO India LLP, an Indian limited liability partnership firm, with LLP Identity No. AAB 7880, is a member of BDO International Limited,
a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

Head Office: The Ruby, Level 9, North West Wing, Senapati Bapat Marg, Dadar (W), Mumbai 400028, INDIA | Tel: +91 22 6228 0817

 

 

 

 

 

 

 

In a complaint directly related to the one of entity forming part of the Restricted Group, the external counsels have identified instances of irregularities in the process of selecting, approving scope of work, making payments to land aggregators for acquisition of land and land use rights through improper payments, and suspected involvement of the Company employees and the former senior management. The said acts may not be in compliance with the relevant applicable laws and regulations in India and the United States. Further, based on a review exercise of significant projects with respect to land aggregator costs, the Company has written off INR 1,349 lakhs in its books of accounts.

 

The Restricted Group functions within a shared control environment, and there are identified design deficiencies noted in some of the key controls in significant areas. These deficiencies constitute material weaknesses. These weaknesses could have impacted the external legal counsels’ capacity to ascertain the completeness of the information provided.

 

The issues mentioned above could lead to contractual, civil, and criminal consequences under both Indian and U.S. law, potentially affecting the Restricted Group. The impact, if any, on the Restricted Group’s special purpose combined financial statements is currently not unascertainable.

 

2.Refer Note 4 (i) of the accompanying special purpose combined financial statements, which describes the current accounting policy of the Viability Gap Funding. The Restricted Group has not accounted for Viability Gap Funding received under the government scheme in accordance with the requirements of Ind AS 20 - Government Grants and Ind AS 109 - Financial Instruments. Had the Restricted Group appropriately accounted for the Viability Gap Funding, the deferred revenue would have been lower by INR 72 million, Government Grant Receivable would have been lower by INR 21 million, and Retained Earnings would have been higher by INR 51 million as at March 31, 2021. Consequently, the current year’s revenue would have been higher by INR 39 million, interest income would have been higher by INR 13 million and profit before tax would have been higher by INR 52 million. Further, the deferred revenue would have been lower by INR 102 million and Government Grant Receivable would have been higher by INR 33 million as at March 31, 2022.

 

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Restricted Group in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

 

Emphasis of Matter

 

a)We draw attention to the Note 2 and 3 of the accompanying special purpose combined financial statements, which describes that the Restricted Group has not formed a separate legal group of entities during the year ended March 31, 2022, which also describes the basis of preparation, including the approach to and the purpose for preparing them. Consequently, the Restricted Group’s special purpose combined financial statements may not necessarily be indicative of the financial performances and financial position of the Restricted Group that would have been presented has consolidated financial statements been prepared for the Restricted Group. The special purpose combined financial statements has been prepared solely to comply with financial reporting requirements under the indenture governing the Senior Notes. As a result, the special purpose combined financial statements may not be suitable for any other purpose.

 

b)Note 40 to the accompanying special purpose combined financial statements regarding the restatements carried out by the Restricted Group, in accordance with the requirements of Ind AS 8 - “Accounting Policies, Changes in Accounting Estimates and Errors” on account of retrospective adjustments pertaining to the matters as described in detail in the aforesaid note.

 

c)Note 49 to the accompanying special purpose combined financial statements which describes one of the covenants of the indentures for submission of Consolidated Annual Financial Statements by the Parent to the Securities Exchange Commission (‘SEC’) within the stipulated time. On October 31, 2023, the New York Stock Exchange (‘NYSE’) filed Form-25 notification of removal from listing with the SEC. The Restricted Group believes that the delisting would not have any impact on the above-mentioned terms of the indentures, as the Parent would continue to be a registrant with the SEC and accordingly, there would not be any breach of any covenants.

 

Our Opinion is not modified in respect of these matters.

 

 

BDO India LLP, an Indian limited liability partnership firm, with LLP Identity No. AAB 7880, is a member of BDO International Limited,
a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

Head Office: The Ruby, Level 9, North West Wing, Senapati Bapat Marg, Dadar (W), Mumbai 400028, INDIA | Tel: +91 22 6228 0817

 

 

 

 

 

 

Responsibilities of Management and Those Charged with Governance for the special purpose combined financial statements

 

Management is responsible for the preparation of these special purpose combined financial statements in accordance with the basis of preparation as set out in note 3 to the special purpose combined financial statements and for such internal control as management determines is necessary to enable the preparation of special purpose combined financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the special purpose combined financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the special purpose combined financial statements

 

Our objectives are to obtain reasonable assurance about whether the special purpose combined financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these special purpose combined financial statements.

 

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

 

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

 

BDO India LLP, an Indian limited liability partnership firm, with LLP Identity No. AAB 7880, is a member of BDO International Limited,
a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

Head Office: The Ruby, Level 9, North West Wing, Senapati Bapat Marg, Dadar (W), Mumbai 400028, INDIA | Tel: +91 22 6228 0817

 

 

 

 

 

 

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

Other Matters

 

a)We did not audit the financial statements of three entities forming part of these special purpose combined financial statements, whose financial statements reflect total assets of INR 1,635.16 million, total revenues of INR 216.14 million and total loss after tax of INR 30.66 million, as considered in the special purpose combined financial statements. The financial statements and other information have been audited by other auditors whose reports have been furnished to us by the Management and our conclusion on the special purpose combined financial statements, in so far as it relates to the amounts and disclosures included in respect of these entities are based on the reports of the other auditors.

 

b)The special purpose combined financial statements of the Restricted Group for the year ended March 31, 2021 were audited by another auditor, whose report dated July 28, 2021 expressed an unmodified opinion on those statements.

 

Our opinion is not modified in respect of these matter.

 

/s/ BDO India LLP  
BDO India LLP  
   
Place: Mumbai  
Date: November 10, 2023  

 

 

BDO India LLP, an Indian limited liability partnership firm, with LLP Identity No. AAB 7880, is a member of BDO International Limited,
a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

 

Head Office: The Ruby, Level 9, North West Wing, Senapati Bapat Marg, Dadar (W), Mumbai 400028, INDIA | Tel: +91 22 6228 0817

 

 

 

 

 

Annexure 1

 

Azure Power Global Limited

 

 

 

Certified Extract of the Minutes of the Board Meeting of Azure Power Global Limited (the “Company”) held on 06 November 2023 at 05:00 p.m. (Mauritius Time).

 

“…4. Note of Representation for Auditors

 

It was noted that a Special Committee of the Board of Directors (the “Special Committee”) was convened in August 2022 to review certain material projects and contracts over a three-year period for anti-corruption and related compliance issues. Independent outside counsel and forensic advisors were engaged to support the Special Committee. The Special Committee’s investigation has identified evidence that individuals formerly affiliated with the Company may have had knowledge of, or were involved in, an apparent scheme with persons outside the Company to make improper payments in relation to certain projects. To date, the Special Committee has not identified related improper payments or transfers by the Group. The Special Committee’s investigation was still ongoing. The Special Committee’s review and its findings could impact the decision-making of the Company, in connection with such projects. The Company has disclosed the details of the Special Committee’s investigation to the SEC and the U.S. Department of Justice, and the Group continues to cooperate with those agencies.

 

In this context, the directors currently on the Board of the Company and its subsidiary company, Azure Power India Private Limited, have confirmed that none of them were aware of the apparent scheme referred to above other than through the Special Committee investigation.

 

Further, after due deliberation, it was concluded by the ARC that no adjustments would be necessary in the financial statements of the Company for FY 2022 as approved by the Board…”

 

CERTIFIED TRUE EXTRACT

 

/s/ Eric Ng Yim On  
Eric Ng Yim On  
For and on behalf of  
AAA Global Services Ltd  
Company Secretary  
   
Date: 09 November 2023  

 

C/o AAA Global Services Ltd

4th Floor, Iconebene, Rue de L’Institut, Ebene, 80817, Mauritius.

Tel : 4543200      Fax : 4543202

 

 

 

 

Restricted Group - II        
Special Purpose Combined Balance Sheet        
(All amount in INR millions, unless otherwise stated)        

 

    As at   As at   As at 
Particulars  Notes  March 31,
2022
   March 31,
2021*
   April 1,
2020*
 
Assets               
Non-current assets               
Property, plant and equipment  5   31,976    33,006    34,950 
Right-of-use assets  30   1,071    1,186    1,265 
Capital work-in-progress  5   145    63    514 
Financial assets  6               
- Investments  6.1   221    221    221 
- Trade receivables  6.2   151    -    - 
- Loans  6.3   1,062    493    6 
- Other financial assets  6.4   1,229    782    814 
Deferred tax assets (net)  18.2   298    317    241 
Income tax assets (net)  7   26    11    8 
Other non-current assets  8   70    79    289 
Total non-current assets      36,249    36,158    38,308 
                   
Current assets                  

Financial assets

  9               
- Trade receivables  9.1   1,443    1,001    1,001 
- Cash and cash equivalents  9.2   661    451    1,261 
- Other bank balances  9.3   1,719    1,333    346 
- Loans  9.4   30    41    46 
- Other financial assets  9.5   225    37    38 
Other current assets  10   56    55    12 
Total current assets      4,134    2,918    2,704 
                   
Total assets      40,383    39,076    41,012 
                   
Equity and liabilities                  
Equity                  
Equity share capital  11.1   73    73    73 
Other equity  11.2   4,941    5,905    7,341 
Total equity      5,014    5,978    7,414 
                   
Non-current liabilities                  
Financial liabilities  12               
- Borrowings  12.1   30,871    29,760    30,422 
- Lease liabilities  30   735    731    739 
- Other financial liabilities  12.2   735    533    104 
Provisions  13.1   249    260    316 
Other non-current liabilities  14   826    405    389 
Deferred tax liabilities (net)  18.1   822    332    190 
Total non-current liabilities      34,238    32,021    32,160 
                   
Current liabilities                  
Financial liabilities  15               
- Lease liabilities  30   70    68    68 
- Trade payables                  
Total outstanding dues of micro and small enterprises  15.1   2    2    1 
Total outstanding dues of creditors other than micro and small enterprises  15.1   364    293    252 
- Other financial liabilities  15.2   606    637    1,056 
Current tax liabilities (net)  16   10    3    1 
Other current liabilities  17   77    71    58 
Provisions  13.2   2    3    2 
Total current liabilities      1,131    1,077    1,438 
                   
Total liabilities      35,369    33,098    33,598 
                   
Total equity and liabilities      40,383    39,076    41,012 

 

*Refer note 40 and 41 for restatement and reclassification respectively

 

See accompanying notes to the financial statements

 

The accompanying notes are an integral part of the special purpose combined financial statements.

 

  For and on behalf of Restricted Group - II
         
  Director   Director  
  Place: Place:
  Date: Date:
     
  Mauritius, 10 Nov 2023 Mauritius, 10 Nov 2023

 

Page 1 of 70

 

 

Restricted Group - II        
Special Purpose Combined Statement of profit and loss        
(All amount in INR millions, unless otherwise stated)        

 

        For the year ended     For the
year ended
 
    Notes   March 31,
2022
    March 31,
2021*
 
Revenue                
Revenue from operations   19     4,967       4,472  
Other income   20.2     99       20  
Total revenue (I)         5,066       4,492  
Expenses                    
Employee benefits expense   21     30       34  
Other expenses   24     905       487  
Total expenses (II)         935       521  
Earnings before interest, tax, depreciation and amortisation (EBITDA) (I)-(II) (A)         4,131       3,971  
Depreciation and amortisation expense- (B)   22     1,094       2,047  
Impairment loss- (C)   42     -       644  
Interest income-(D)   20.1     147       65  
Finance cost- (E)   23     2,905       2,917  
Profit/(Loss) before tax (A-B-C+D-E)         279       (1,572 )
Tax expense:                    
Current tax expense   18     179       169  
Deferred tax charge   18     471       106  
Total tax expense         650       275  
                     
Loss after tax         (371 )     (1,847 )
Other Comprehensive Income                    
Items that will be reclassified to profit or loss                    
Effective portion of cash flow hedge         251       (268 )
Income tax effect         (38 )     40  
          213       (228 )
Exchange differences in translating the financial statements of foreign operations         (806 )     640  
Items that will not be reclassified to profit or loss                    
Re-measurement gains/(losses) on defined benefit plans         -       (1 )
Income tax effect         -       -  
Total other comprehensive (expense)/income         (593 )     411  
                     
Total comprehensive expense         (964 )     (1,436 )

 

*Refer note 40 and 41 for restatement and reclassification respectively

 

See accompanying notes to the financial statements

 

The accompanying notes are an integral part of the special purpose combined financial statements.

 

  For and on behalf of Restricted Group - II
         
  Director   Director  
  Place: Place:
  Date: Date:
     
  Mauritius, 10 Nov 2023 Mauritius, 10 Nov 2023

 

Page 2 of 70

 

 

Restricted Group - II      
Special Purpose Combined Statement of cash flows      
(All amount in INR millions, unless otherwise stated)      

 

Particulars       For the
year ended
March 31,
2022
    For the
year ended
March 31,
2021*
 
A Cash flows from operating activities                
Profit/(Loss) before tax       279     (1,572 )
Adjustment to reconcile loss before tax to net cash flows                    
Depreciation and amortisation expense         1,094       2,047  
Impairment loss         -       644  
Inter-company assets written off         167       -  
Interest income         (137 )     (65 )
Loss on sale of property, plant and equipment ( net)         1       11  
Loss on lease modification         -       1  
Liabilities no longer required written back         (65 )     (10 )
Government grants related to assets         (15 )     (6 )
Deferred viability gap funding income         -       (25 )
Interest income on performance bank guarantee         (1 )     -  
Allowance for doubtful trade receivables         61       19  
Bad debts written off         9       2  
Loss on account of modification of contractual cash flows         18       -  
Finance cost         2,886       2,917  
Operating profit before working capital changes         4,297       3,963  
Movements in working capital:                    
Decrease/ (increase) in trade receivables         (681 )     (21 )
Decrease/ (increase) in other current/non-current financial assets         (313 )     (12 )
Decrease/ (increase) in Security deposit         -       (4 )
Decrease/ (increase) in other current assets         (1 )     (11 )
Increase/ (decrease) in other current/non-current financial liabilities         613       409  
Increase/ (decrease) in other current liabilities         6       13  
Increase/ (decrease)Increase in trade payables         136       201  
Increase/ (decrease) in other non-current liabilities         436       47  
Decrease/ (increase) in other non-current assets         3       5  
(Decrease)/ increase in current provisions         (1 )     1  
Increase/ (decrease) in non-current provisions         1       10  
Cash generated from operations         4,496       4,601  
Income taxes paid (net of refunds)         (187 )     (173 )
Net cash flow from operating activities   (A)     4,309       4,428  
                     
B Cash flows from investing activities                    
Purchase of property, plant and equipment (including capital work in         (637 )     (432 )
progress, capital advances and capital creditors)                    
Interest received         51       71  
Net investment in bank deposits (having the original maturity of more than three months)         (514 )     (847 )
Loan to holding/fellow subsidiary companies         (557 )     (483 )
Proceeds from repayment of loan by holding/fellow subsidiary companies         -       1  
Net cash flows used in investing activities   (B)     (1,657 )     (1,690 )
C Cash flows from financing activities                    
Proceeds from borrowings         232       -  
Repayments of non-current borrowings         -       (5 )
Payment of lease liabilities         73       (4 )
Payment of interest on lease liabilities         (77 )     (73 )
Payment for hedging arrangements         (847 )     (1,190 )
Finance cost paid         (1,819 )     (2,274 )
Net cash flows used in financing activities   (C)     (2,438 )     (3,546 )
                     
Effect of exchange rate changes on cash and cash equivalents   (D)     (4 )     (2 )
Net increase/(decrease) in cash and cash equivalents   (A+B+C+D)     210       (810 )
Cash and cash equivalents at the beginning of the year         451       1,261  
Cash and cash equivalents at the end of the year         661       451  
Components of cash and cash equivalents                    
Balances with schedule banks:                    
- On current accounts         234       36  
- Deposits with original maturity of less than 3 months         427       415  
Total cash and cash equivalents         661       451  

 

*Refer note 40 and 41 for restatement and reclassification respectively

Page 3 of 70

 

 

Restricted Group - II      
Special Purpose Combined Statement of cash flows      
(All amount in INR millions, unless otherwise stated)      

 

Change in liabilities arising from financing activities

 

Particulars   Opening balance as at
April 01,
2021
    Cash flow
(net)
    Change in foreign exchange rate     Other changes**     Closing
balance as at
March 31,
2022
 
Non-current borrowings (including current maturities)     29,760       232       799       80       30,871  
Lease liabilities     799       73       -       (67 )     805  
Total liabilities from financing activities     30,559       305       799       13       31,676  
                                         
Particulars  Opening balance as at
April 01,
2020
   Cash flow
(net)
  

Change in foreign exchange rate

   Other changes**   Closing
balance as at
March 31,
2021
 
Non-current borrowings (including current maturities)   26,513    (5)   (645)   3,897    29,760 
Lease liabilities   807    (4)   -    (4)   799 
Total liabilities from financing activities   27,320    (9)   (645)   3,893    30,559 

 

**Including adjustments of ancillary borrowing cost, accrual of interest on lease liabilities and amortization of redemption premium.

 

See accompanying notes to the financial statements

 

Notes:

 

1.The Statement of Cash Flows has been prepared under the indirect method as set out in Indian Accounting Standard (Ind AS 7) on “Statement of Cash Flows” referred to Section 133 of Companies Act 2013.

 

2.The accompanying notes are an integral part of the special purpose combined financial statements.

 

  For and on behalf of Restricted Group - II
         
  Director   Director  
  Place: Place:
  Date: Date:
     
  Mauritius, 10 Nov 2023 Mauritius, 10 Nov 2023

 

Page 4 of 70

 

 

Restricted Group - II      
Special Purpose Combined Statement of Changes in Equity      
(All amount in INR millions, unless otherwise stated)      

 

(a) Statement of changes in equity*

 

Shares (Aggregate of Restricted Group - II entities):

 

    Number of
shares
    Amount
(In million)
 
At April 01, 2020     71,26,399       73  
Changes during the period     -       -  
At March 31, 2021     71,26,399       73  
Changes during the period     -       -  
At March 31, 2022     71,26,399       73  

 

*Equity share capital represents the aggregate amount of share capital of Restricted Group - II entities as at the respective year ends and does not necessarily represent legal share capital for the purpose of the Restricted Group - II.

 

(b) Other equity**

 

For the year ended March 31, 2022:-

 

   Reserves and surplus   Items of other comprehensive income     
Particulars  Deficit in the combined statement of profit and loss   Securities premium reserve   Exchange differences on translating the financial statements of foreign operations  

Defined benefit plans

(refer note 38)

  

Effective 
portion of
Cash flow
hedges

(refer note 32)

   Total
equity
 
At April 01, 2021 (as previously reported)   (3,295)   9,872    (1,202)   (1)   681    6,055 
Adjustment relating to prior period errors*   (150)   -    -    -    -    (150)
Restated balance as at April 1, 2021   (3,445)   9,872    (1,202)   (1)   681    5,905 
Loss for the year   (371)   -    -    -    -    (371)
Other comprehensive income/(loss)   -    -    (806)   -    213    (593)
At March 31, 2022   (3,816)   9,872    (2,008)   (1)   894    4,941 

 

For the year ended March 31, 2021:

 

    Reserves and surplus     Items of other comprehensive income        
Particulars   Deficit in the combined statement of profit and loss     Securities premium reserve     Exchange differences on translating the financial statements of foreign
operations
    Defined benefit plans (Refer note 38)     Effective portion of Cash flow hedges
(refer note 32)
    Total
equity
 
At April 01, 2020 (as previously reported)     (1,678 )     9,872       (1,842 )             -       909       7,261  
Adjustment relating to prior period errors*     80       -       -       -       -       80  
Restated balance as at April 1, 2020     (1,598 )     9,872       (1,842 )     -       909       7,341  
Loss for the year*     (1,847 )     -       -       -       -       (1,847 )
Other comprehensive income/(loss)     -       -       640       (1 )     (228 )     411  
Restated balance as at March 31, 2021     (3,445 )     9,872       (1,202 )     (1 )     681       5,905  

 

**Other equity represents the aggregate amount of other equity of Restricted Group - II entities as at the respective year ends.

 

*Refer note 40 and 41 for restatement and reclassification respectively

 

Note:

 

Deficit in the statement of profit and loss are the losses of the Restricted Group - II incurred till date net of appropriations.

 

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

 

Exchange differences arising on translation of the foreign operations are recognised in other comprehensive income as described in accounting policy and accumulated in a separate reserve within equity.

 

  For and on behalf of Restricted Group - II
         
  Director   Director  
  Place: Place:
  Date: Date:
     
  Mauritius, 10 Nov 2023 Mauritius, 10 Nov 2023

 

Page 5 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

1. General Information

 

Azure Power Solar Energy Private Limited (“APSEPL” or “the Company”) was incorporated on April 02, 2018 as a private company limited by shares incorporated under laws of Mauritius. The Company is a wholly-owned subsidiary of Azure Power Global Limited (the “Parent”) and has its registered office at C/o. AAA Global Services Ltd., 1st Floor, The Exchange 18 Cybercity, Ebene, Mauritius.

 

The Parent and its subsidiaries (herein collectively referred to as the “Group” carry out business activities relating to generation of electricity through non-conventional renewable energy sources engaged in the ownership, maintenance and management of solar power plants and generation of solar energy based on long-term contracts (power purchase agreements or “PPA”) with Indian government entities as well as other non-governmental energy distribution companies and commercial customers.

 

APSEPL and 10 Indian subsidiaries (as listed below) of Azure Power Global Limited (APGL) form part of “Restricted Group - II”. During the year ended March 31, 2020, the Company issued US$ Senior Notes to institutional investors and same are listed on Singapore Exchange Securities Trading Limited (SGX-ST). APSEPL invested the proceeds, net of issue expenses in Non- Convertible Debentures (“NCDs”) and External commercial borrowings (“ECBs”) to replace existing Rupee and external debt of Restricted Group entities- II. Restricted entities are directly or indirectly under common control of the parent.

 

The Restricted Group - II entities which are all under the common control of the Parent company comprise the following entities:

 

         % Held by Parent 
Entities  Principal Activity  Country of
Incorporation
  Date of
Incorporation
  March 31,
2022
   March 31,
2021
 
Azure Power Solar Energy Private Limited  Debt financing  Mauritius  02-Apr-18   100%   100%
Azure Power Earth Private Limited  Generation of Solar power  India  09-Dec-14   100%   100%
Azure Power Makemake Private Limited  Generation of Solar power  India  03-Jan-15   100%   100%
Azure Power Mercury Private Limited *  Generation of Solar power  India  10-Dec-14   51.4%   100%
Azure Power Uranus Private Limited  Generation of Solar power  India  05-Jan-15   100%   100%
Azure Power Venus Private Limited  Generation of Solar power  India  05-Jan-15   100%   100%
Azure Power Saturn Private Limited *  Generation of Solar power  India  20-Dec-14   51.4%   100%
Azure Power Thirty Three Private Limited  Generation of Solar power  India  30-Apr-16   100%   100%
Azure Power Thirty Four Private Limited  Generation of Solar power  India  31-May-16   100%   100%
Azure Power Thirty Six Private Limited  Generation of Solar power  India  05-May-16   100%   100%
Azure Power Forty Four Private Limited *  Generation of Solar power  India  01-Feb-17   51.4%   100%

 

*During the current year, 48.6% shareholding of entities have been transferred to Radiance Renewables Private Limited pursuing to sales agreement entered during the current year.

 

Page 6 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

2. Purpose of the special purpose combined financial statements

 

These are special purpose combined financial statements, which have been prepared for the purpose of complying with financial reporting requirements under the indenture governing the US$ Senior Notes. This Special Purpose combined financial statements presented herein reflect the Restricted Group - II’s results of operations, assets and liabilities and cash flows for the year presented. The basis of preparation and significant accounting policies used in preparation of these special purpose combined financial statements are set out in note 3 and 4 below.

 

3. Basis of preparation

 

The indenture governing the US$ Senior Notes requires Restricted Group – II to prepare Ind AS combined financial statements of the Restricted Group – II for the purpose of submission to the bond holders. The special purpose combined financial statements of the Restricted Group - II have been prepared in accordance with recognition and measurement principles laid down by the Indian Accounting Standards (Ind AS) and disclosures (except Ind AS – 33 on Earnings Per Share) prescribed under section 133 of the Companies Act, 2013, read with rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto and other accounting principles generally accepted in India and the guidance note on Combined and Carve- out Financial Statements issued by the Institute of Chartered Accountants of India (ICAI).

 

Management of the Company has prepared the Special Purpose Combined Financial Statements, which comprise the Combined Balance Sheet as at March 31, 2022, the Combined Statement of Profit and Loss including other comprehensive income, Combined Statement of Cash Flows and Combined Statement of Changes in Equity for the year ended March 31, 2022, a summary of the significant accounting policies and other explanatory information.

 

The items in the special purpose combined financial statements have been classified considering the principles under Ind AS 1, Presentation of Financial Statements.

 

The special purpose combined financial statements have been prepared on the accrual and going concern basis and the historical cost convention, except for the following assets and liabilities which have been measured at fair value or revalued amount;

 

Derivative financial instruments

 

Certain financial assets measured at fair value (refer accounting policy regarding financial instruments)

 

As per the Guidance Note on Combined and Carve Out Financial Statements, the procedure for preparing combined financial statements of the combining entities is the same as that for consolidated financial statements as per the applicable Indian Accounting Standards. Accordingly, when combined financial statements are prepared, intra-group transactions and profits or losses are eliminated. All the inter group transactions are undertaken on Arms Lengths basis. There is no allocation of expenses within the Restricted Group - II. The information presented in the combined financial statements of the Restricted Group - II may not be representative of the position which may prevail after the transaction. The resulting financial position may not be that which might have existed if the combining businesses had been a stand-alone business.

 

Share capital and reserves disclosed in the combined financial statements is not the legal capital and reserves of the Restricted Group - II and is the aggregation of the share capital and reserves of the individual combining entities. Income taxes are arrived at by aggregation of the tax expenses actually incurred by the combining businesses, after considering the tax effects of any adjustments which is in accordance with the Guidance Note on Combined and Carve-Out Financial Statements issued by the ICAI.

 

Accordingly, the procedures followed for the preparation of the combined financial statements:

 

a)Combined like items of assets, liabilities, equity, income, expenses and cash flows of the combining entities.

 

b)Eliminated in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Restricted Group - II (profits or losses resulting from intragroup transactions that are recognised in assets, such as fixed assets, are eliminated in full).

 

Page 7 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

These Ind AS combined financial statements may not be necessarily indicative of the financial performance, financial position and cash flows of the Restricted Group - II that would have occurred if it had operated as a separate stand-alone Group of entities during the year presented or the Restricted Group - II’s future performance.

 

The special purpose combined financial statements include the operation of entities in the Restricted Group - II, as if they had been managed together for the year presented.

 

Transactions that have taken place with the Unrestricted Group (i.e. other entities which are a part of the Group and not included in the Restricted Group - II of entities) have been disclosed in accordance of Ind AS 24, Related Party Disclosures.

 

The preparation of financial information in conformity with Ind AS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Restricted Group - II’s accounting policies.

 

4. Summary of significant accounting policies

 

a) Current versus non-current classification

 

The Restricted Group - II presents assets and liabilities in the balance sheet based on current/non-current classification.

 

An asset is treated as current when it is:

 

Expected to be realised or intended to sold or consumed in normal operating cycle

 

Held primarily for the purpose of trading

 

Expected to be realised within twelve months after the reporting period, or

 

Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

 

All other assets are classified as non-current.

 

A liability is treated as current when it is:

 

Expected to be settled in normal operating cycle

 

Held primarily for the purpose of trading

 

Due to be settled within twelve months after the reporting period, or

 

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

 

All other liabilities are classified as non-current.

 

Deferred tax assets/liabilities are classified as non-current assets/liabilities.

 

The operating cycle is the time between the acquisition of assets for processing and their realisation/settlement in cash and cash equivalents. The companies have identified twelve months as their operating cycle for classification of their current assets and liabilities.

 

b) Property, Plant and equipment

 

Capital work-in-progress, property, plant and equipment (PPE) are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long- term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Restricted Group - II depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to note 13.1 and 39 regarding significant accounting judgements, estimates and assumptions and provisions for further information about the recorded decommissioning provision.

 

Page 8 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Derecognition

 

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised. The Restricted Group considers the cost of the replacement as the cost of the replaced part, when it was acquired or constructed, in case it is not practicable to determine the separate cost of the component of asset. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

 

c) Depreciation

 

Based on legal opinion obtained, management is of the view that application of CERC and/or SERC rates for the purpose of accounting of depreciation expense is not mandatory. Hence, company is depreciating the assets based on technical assessment made by technical expert and management estimate.

 

Depreciation on property plant and equipment is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. Considering the applicability of Schedule II of the Companies Act, 2013, the management has re-estimated useful lives and residual value of all of its property plant and equipment.

 

The management believes that depreciation rates currently used fairly reflects its estimate of the useful lives and residual value of the Property plant and equipment, though these rates in following cases are different from lives prescribed under Schedule II of the Companies Act, 2013 based upon the nature of asset, the operating condition of the asset, the estimated usage of the asset, past history of replacement and anticipated technological changes.

 

Category  Life as per
Schedule II
  Life
considered
Furniture and fittings  10 years  5 years
Buildings  30 years  35 years
Vehicles  8/10 years  5 years
Office equipment  5 years  1-5 years

 

The identified components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.

 

Assets individually costing less than INR 5,000 are fully depreciated in the year of acquisition.

 

The assets’ residual values of not more than 10% of the original cost of the asset and useful lives are reviewed at each financial year end or whenever there are indicators for impairment and adjusted prospectively.

 

d) Capital work in progress (“CWIP”)

 

Capital work-in-progress includes cost of property, plant and equipment that are not ready for use at the balance sheet date.

 

e) Leases

 

The Restricted Group-II assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

 

Page 9 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Where the respective companies under the Restricted Group-II are lessees

 

The Restricted Group-II applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Restricted Group-II recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

 

i) Right of use assets

 

The Restricted Group-II recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of- use assets are depreciated on a straight-line basis over the lease term.

 

If ownership of the leased asset transfers to the Restricted Group-II at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

 

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section Impairment of non-financial assets.

 

ii) Lease Liabilities

 

At the commencement date of the lease, the Restricted Group-II recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Restricted Group-II and payments of penalties for terminating the lease, if the lease term reflects the Restricted Group-II exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Restricted Group-II uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

 

iii) Short term leases and leases of low-value assets

 

The Restricted Group-II applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of assets that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.

 

f) Borrowing costs

 

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the borrowing cost.

 

Hedging cost paid relates to borrowing of the group accordingly has been considered as part of finance cost.

 

g) Financial instruments

 

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

 

Page 10 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Financial assets

 

Initial recognition and measurement

 

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Restricted Group - II commits to purchase or sell the asset.

 

Subsequent measurement

 

For purposes of subsequent measurement, financial assets are classified in three categories:

 

Debt instruments at amortised cost

 

Debt instruments at fair value through other comprehensive income (FVTOCI)

 

Debt instruments, derivatives and equity instruments at fair value through Profit & Loss (FVTPL)

 

Debt instruments at amortised cost

 

A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:

 

a)The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

 

b)Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

 

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. The category applies to the Restricted Group - II’s trade receivables, unbilled revenue, other bank balances, security deposits etc.

 

Debt instrument at fair value through other comprehensive income (FVTOCI)

 

A ‘debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

 

a)The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and

 

b)The asset’s contractual cash flows represent SPPI

 

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Restricted Group - II recognizes interest income, impairment losses and reversals in the statement of profit and loss and in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

 

Debt instrument at fair value through profit and loss (FVTPL)

 

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

 

In addition, the Restricted Group - II may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ‘accounting mismatch’).

 

Debt instrument included within FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.

 

Page 11 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Derecognition:

 

A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e. removed from the Restricted Group - II’s balance sheet) when:

 

a)The contractual rights to receive cash flows from the asset have expired, or

 

b)The Restricted Group - II has transferred its contractual rights to receive cash flows from the financial asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Restricted Group - II has transferred substantially all the risks and rewards of the asset, or (b) the Restricted Group - II has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

 

When the Restricted Group - II has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Restricted Group - II continues to recognize the asset to the extent of the Restricted Group - II’s continuing involvement in the asset. In that case, the Restricted Group - II also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Restricted Group - II has retained.

 

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Restricted Group - II could be required to repay.

 

Impairment of financial assets

 

In accordance with Ind AS 109, the Restricted Group - II applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

 

Financial assets that are debt instruments, and are measured at amortised cost e.g. deposits, trade receivables and contract assets and bank balances

 

Financial asset that are debt instruments and are measured as at FVTOCI

 

Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115.

 

The Restricted Group - II follows ’simplified approach’ for recognition of impairment loss allowance for trade receivables and contract assets.

 

The application of simplified approach does not require the Restricted Group - II to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

 

For recognition of impairment loss on other financial assets and risk exposure, the Restricted Group - II determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in the subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on a 12-month ECL.

 

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events on a financial instrument that is possible within 12 months after the reporting date.

 

Page 12 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

ECL is the difference between all contractual cash flows that are due to the Restricted Group - II 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 EIR. When estimating the cash flows, an entity is required to consider:

 

All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

 

Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms

 

As a practical expedient, the Restricted Group - II uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

 

ECL impairment loss allowance (or reversal) is recognized during the period as expense/ income in the statement of profit and loss. This amount is reflected under the head ‘other expenses’ in the statement of profit and loss. The balance sheet presentation for financial instruments is described below:

 

For financial assets measured at amortised cost: ECL is presented as an allowance i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Restricted Group - II does not reduce impairment allowance from the gross carrying amount.

 

For assessing increase in credit risk and impairment loss, the Restricted Group - II combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

 

Financial liabilities

 

Initial recognition and measurement

 

Financial liabilities are classified, at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as appropriate.

 

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of the directly attributable transaction costs.

 

The Restricted Group - II’s financial liabilities include trade and other payables, loans and borrowings, including bank overdraft and derivative financial instruments.

 

Subsequent measurement

 

The measurement of financial liabilities depends on their classification, as described below:

 

Financial liabilities at fair value through profit or loss

 

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

 

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Restricted Group-II that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

 

Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.

 

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognised in OCI. These gains/ losses are not subsequently transferred to statement of profit and loss. However, the Restricted Group-II may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss.

 

Page 13 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Loans and borrowings

 

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.

 

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

 

Derecognition

 

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 in the respective carrying amounts is recognized in the statement of profit or loss.

 

Reclassification of financial assets

 

The Restricted Group - II determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Restricted Group - II senior management determines change in the business model as a result of external or internal changes which are significant to the Restricted Group - II’s operation. Such changes are evident to external parties. A change in the business model occurs when the Restricted Group - II either or ceases to perform an activity that is significant to its operations. If the Restricted Group - II reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediate next reporting period following the change in the business model. The Restricted Group - II does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.

 

The following table shows various reclassifications and how they are accounted for:

 

Original classification   Revised classification   Accounting treatment
Amortised cost   FVTPL  

Fair value is measured at reclassification date. Difference between previous amortized cost and fair value is recognised in the statement of profit and loss.

FVTPL   Amortised Cost  

Fair value at reclassification date becomes its new gross carrying amount. EIR is calculated based on the new gross carrying amount.

Amortised cost   FVTOCI  

Fair value is measured at reclassification date. Difference between previous amortised cost and fair value is recognised in OCI. No change in EIR due to reclassification.

FVTOCI   Amortised cost  

Fair value at reclassification date becomes its new amortised cost carrying amount. However, cumulative gain or loss in OCI is adjusted against fair value. Consequently, the asset is measured as if it had always been measured at amortised cost.

FVTPL   FVTOCI  

Fair value at reclassification date becomes its new carrying amount. No other adjustment is required.

FVTOCI   FVTPL  

Assets continue to be measured at fair value. Cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss the reclassification date.

 

Page 14 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Offsetting of financial instruments

 

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

 

h) Derivative financial instruments and hedge accounting

 

In the normal course of business, the Restricted Group – II uses derivative instruments for the purpose of mitigating the exposure from foreign currency fluctuation risks associated with forecasted transactions denominated in certain foreign currencies and to minimize earnings and cash flow volatility associated with changes in foreign currency exchange rates, and not for speculative trading purposes. These derivative contracts are purchased within the Restricted Group - II’s policy and are with counterparties that are highly rated financial institutions. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss except for effective portion of cash flow hedges.

 

At the inception of a hedge relationship, the Restricted Group - II formally designates and documents the hedge relationship to which the Restricted Group - II wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Restricted Group - II’s risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

 

The Restricted Group - II evaluates hedge effectiveness of cash flow hedges at the time a contract is entered into as well as on an ongoing basis. The ineffective portion of cash flow hedge is recorded as expense in the statement of profit and loss. The cost of effective portion of cash flow hedges is expensed over the period of the hedge contract.

 

Undesignated contracts

 

Changes in fair value of undesignated derivative contracts are reported directly in the statement of profit and loss along with the corresponding transaction gains and losses on the items being economically hedged. The Restricted Group - II enters into foreign exchange currency contracts to mitigate and manage the risk of changes in foreign exchange rates. These foreign exchange derivative contracts were entered into to hedge the fluctuations in foreign exchange rates for recognized balance sheet items such as the Restricted Group - II’s U.S. dollar denominated borrowings. The Restricted Group - II has not designated the derivative contracts as hedges for accounting purposes. Realized gains (losses) and changes in the fair value of these foreign exchange derivative contracts are recorded in foreign exchange gains (losses), net in the statements of profit and loss. These derivatives are not held for speculative or trading purposes.

 

The Restricted Group-II does not have any net investment in a foreign operation.

 

i) Revenue recognition

 

Revenue from contracts with customers

 

Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Restricted Group - II expects to be entitled in exchange for those goods or services. The Restricted Group - II has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.

 

Page 15 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Application of interpretation for Service Concession Arrangements (SCA)

 

The Management has assessed applicability of Appendix C of Indian Accounting Standards 115: Service Concession Arrangements for the power purchase agreement which the Restricted Group has entered into. In assessing the applicability of SCA, the management has exercised significant judgement in relation to the underlying ownership of the assets, the attached risks and rewards of ownership, residual interest and the fact that secondary lease periods are not at nominal lease rentals etc. in concluding that the arrangements don’t meet the criteria for recognition as service concession arrangements.

 

Sale of power

 

Revenue from sale of power is recognized when persuasive evidence of an arrangement exists, the fee is fixed or is determinable, solar energy kilowatts are supplied and collectability is reasonably assured. Revenue is based on the solar energy kilowatts actually supplied to customers (including the solar energy kilowatts supplied and not billed on reporting date) multiplied by the rate per kilo-watt hour agreed to in the respective PPAs. The solar energy kilowatts supplied by the Restricted Group - II are validated by the customer prior to billing and recognition of revenue.

 

The Restricted Group - II considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of power, the Group considers the effects of variable consideration and consideration payable to the customer (if any).

 

Revenue from the recovery of Safe-guard duties and Goods and Service Tax under the change in law provision are recognized over the PPA period based on terms agreed with customers or unless agreed otherwise once collectability is reasonably assured. The revenue of Safe-guard duties and Goods and Service Tax for the year is recognized by the Restricted Group in proportion to the actual sale of solar energy kilowatts during the period to the total estimated sale of solar energy kilowatts during the tenure of the applicable power purchase agreement.

 

Viability Gap Funding (VGF)

 

The Restricted Group - II records the proceeds received from Viability Gap Funding (VGF) on fulfilment of the underlying conditions as deferred revenue. Such deferred VGF revenue is recognized as sale of power in proportion to the actual sale of solar energy kilowatts during the period to the total estimated sale of solar energy kilowatts during the tenure of the applicable power purchase agreement pursuant to the revenue recognition policy.

 

Interest income

 

For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of the financial liability. When calculating the effective interest rate, the Restricted Group - II estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss.

 

Income from carbon credit emission

 

Revenue from the sale of carbon credit emissions are recognized at the time of transfer of carbon credits to the customers, at consideration agreed under the sale agreements.

 

Rebates

 

In some Power Purchase Agreements (PPAs), the Restricted Group - II provide rebates on invoice if payment is made before the due date. Rebates are offset against amounts payable by the customers. To estimate the variable consideration for the expected future rebate, the Group applies the most likely method.

 

Page 16 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Contract assets

 

A contract asset is initially recognised for revenue earned for its right to consideration in exchange for goods or services transferred to the customer. If the entities forming part of Restricted Group - II perform by transferring goods or services to a customer before the customer pays consideration or before acceptance by the customer, a contract asset is recognised for the earned consideration that is conditional.

 

Contract liabilities

 

A contract liability is the obligation to transfer goods or services to a customer for which the entities forming part of Restricted Group - II has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the entities forming part of Restricted Group - II transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the entities forming part of Restricted Group - II performs under the contract.

 

Trade receivables

 

A receivable represents the right of entities forming part of Restricted Group - II to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (g) Financial instruments – initial recognition and subsequent measurement.

 

j) Government Grants

 

Government grants are recognised at the fair value where there is a reasonable assurance that the grant will be received and the group will comply all with all attached conditions.

 

Government grant relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the cost that they are intended to compensate and presented within other income.

 

Government grant relating to purchase of property, plant and equipment are included in non- current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

 

k) Foreign currencies

 

The functional currency of APSEPL is the United States Dollar (“US$”) and presentation currency for special purpose combined financial statement of Restricted Group - II is Indian rupees (“INR”). The Restricted Group - II entities which are having operations in India, use INR as the functional currency. The financial statements of APSEPL are translated into INR using the exchange rate as of the balance sheet date for assets and liabilities, historical exchange rates for equity transactions and average exchange rate for the year for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of other equity.

 

Functional currency is the currency of the primary economic environment in which a respective entity under Restricted Group - II operates and is normally the currency in which the respective entity under the Restricted Group - II primarily generates and expends cash.

 

Transactions in foreign currencies are initially recorded by the Restricted Entities at the functional currency spot rates at the date the transaction first qualifies for recognition

 

Conversion

 

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

 

Page 17 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Exchange differences

 

Exchange differences arising on settlement or translation of monetary items are recognized in the statement profit and loss.

 

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or statement of profit and loss are also recognized in other comprehensive income or statement of profit and loss, respectively).

 

l) Retirement and other employee benefits

 

Retirement benefit in the form of provident fund is a defined contribution scheme. The Restricted Group - II has no obligation, other than the contribution payable to the provident fund. The Restricted Group - II recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

 

Retirement benefit in the form of gratuity is a defined benefit scheme. The costs of providing benefits under the scheme are determined on the basis of actuarial valuation at each year-end using the projected unit credit method. The actuarial valuation is carried out for the plan using the projected unit credit method.

 

The Restricted Group - II presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Restricted Group - II has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability. The Restricted Group - II measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

 

The Restricted Group - II recognizes termination benefit as a liability and an expense when the Restricted Group - II has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

If the termination benefits fall due more than 12 months after the balance sheet date, they are measured at present value of future cash flows using the discount rate determined by reference to market yields at the balance sheet date on government bonds.

 

The interest is calculated by applying the discount rate to the net defined benefit liability. The Restricted Group - II recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

 

Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

 

Interest expense.

 

m) Income taxes

 

Tax expense represents the sum of current tax and deferred tax of Restricted Group - II.

 

Page 18 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Current income tax

 

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities by each entity in Restricted Group - II. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Restricted Group - II operates and generates taxable income.

 

Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Restricted Group shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.

 

Deferred Tax

 

Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, on carry forward of unused tax credits and unused tax loss, subject to exceptions as below:

 

deferred income tax is not recognised on the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

 

deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered.

 

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

 

Deferred tax assets and liabilities are measured at the tax rates applicable on Restricted Group - II that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

 

The carrying amount of deferred tax assets (including MAT credit available) of Restricted Group - II is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

 

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

 

Deferred tax assets and liabilities of respective entities under Restricted Group - II are offset when they relate to income taxes levied by the same taxation authority and the entities intend to settle their current tax assets and liabilities on a net basis.

 

In the situations where one or more entities in the Restricted Group - II are entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where they operate, no deferred tax (asset or liability) is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the concerned entity’s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate. However, the Restricted Group - II restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.

 

Page 19 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

Current and deferred tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

Minimum Alternate Tax

 

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entities forming part of the Restricted Group - II will pay normal income tax. Accordingly, MAT is recognised as an asset in the balance sheet when it is probable that future economic benefit associated with it will flow to the entities forming part of the Restricted Group - II.

 

n) Segment reporting

 

An operating segment is a component of the Restricted Group - II entities’ that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the other components, and for which discrete financial information is available. All operating segments’ operating results are regularly reviewed by the respective Restricted Group - II entities’ chief operating decision maker(s) to make decisions about resources to be allocated to the segments and assess their performance. The Parent’s chief executive officer is the chief operating decision maker.

 

The activities of Restricted Group - II entities mainly involve sale of electricity. Considering the nature of Restricted Group - II entities’ business and operations, there are no separate reportable operating segments in accordance with the requirements of Indian Accounting Standard 108, ‘Operating Segments’ referred in to Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 and hence, there are no additional disclosures to be provided other than those already provided in the financial statements.

 

o) Provisions

 

General

 

Provisions are recognized when the Restricted Group - II has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Restricted Group - II expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

 

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.

 

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

 

Decommissioning liability

 

Upon the expiration of the lease agreement for solar power plants located on leasehold land, the Restricted Group - II is required to remove the solar power plant and restore the land. The Restricted Group - II records a provision for such decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognised in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

 

Page 20 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

p) Impairment of non-financial assets

 

The Restricted Group - II, at each reporting date, assesses whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Restricted Group - II estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

 

Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount and the asset is written down to its recoverable amount.

 

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

 

The Restricted Group - II bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. To estimate cash flow projections beyond periods covered by the most recent budgets/forecasts, the Restricted Group - II extrapolates cash flow projections in the budget using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. In any case, this growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the entity operates, or for the market in which the asset is used.

 

Impairment losses of continuing operations are recognised in the statement of profit and loss.

 

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Restricted Group - II estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognized in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

 

q) Contingent assets/liabilities

 

Contingent assets are not recognised. However, when realisation of income is virtually certain, then the related asset is no longer a contingent asset, and is recognised as an asset.

 

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Restricted Group - II or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Restricted Group - II does not recognize a contingent liability but discloses its existence in the financial statements.

 

Page 21 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

r) Fair value measurement

 

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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

 

In the principal market for the asset or liability, or

 

In the absence of a principal market, in the most advantageous market for the asset or liability

 

The principal or the most advantageous market must be accessible by the Restricted Group - II.

 

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

 

The Restricted Group - II uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

 

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

 

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

 

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Restricted Group - II determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

The Restricted Group-II determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operations.

 

External valuers are involved for valuation of significant assets and liabilities, if any. At each reporting date, the Restricted Group- II analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Restricted Group-II’s accounting policies.

 

For the purpose of fair value disclosures, the Restricted Group - II has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

 

This note summarises accounting policy for fair value. Other fair value related disclosures are given in the notes 34 and 35.

 

s) Cash and cash equivalents

 

Cash and cash equivalents in the Balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

 

For the purpose of the combined statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

 

Page 22 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(INR amount in millions, unless otherwise stated)      

 

t) Events occurring after the balance sheet date

 

Impact of events occurring after the balance sheet date that provide additional information materially effecting the determination of the amounts relating to conditions existing at the balance sheet date are adjusted to respective assets and liabilities.

 

The Restricted Group - II does not adjust the amounts recognised in its combined financial statements to reflect non-adjusting events after the reporting period.

 

The Restricted Group - II makes disclosures in the combined financial statements in cases of significant events.

 

u) Material prior period errors

 

Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

 

v) Measurement of EBITDA

 

The Restricted Group - II has elected to present earnings before interest, tax, depreciation and amortisation (EBITDA) as a separate line item on the face of the statement of profit and loss. The Restricted Group - II measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Restricted Group - II does not include interest income, depreciation, finance cost and tax expense.

 

w) Changes in accounting policy and disclosures – New and amended standards

 

i) Other Amendments

 

A number of other amendments to existing standards also became effective on April 01, 2021 and have been adopted by the Restricted Group - II. The adoption of these new accounting pronouncements did not have a significant impact on the accounting policies, method of computation or presentation applied by the Restricted Group - II.

 

ii) Standards issued but not yet effective

 

The Restricted Group is currently evaluating the impact of the new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Restricted Group’s financial statements and does not expect to have significant impact on the Restricted Group’s financial statements. The Restricted Group has not early adopted any amendment, standard or interpretation that has been issued but is not yet effective. Refer the note “Standards notified but not yet effective” in Notes to Financial Statements.

 

Page 23 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

5. Property, plant and equipment

 

   Freehold
land
   Plant and
machinery
   Vehicles   Computers   Office
equipment
   Building   Total   Capital work
in progress
 
Gross block                                
At April 01, 2020   667    34,919    11    1    3    1,997    37,598    514 
Additions   149    729    1    1    4    45    929    355 
Disposals/Adjustments   -    (208)   -    -    -    (23)   (231)   (806)
At March 31, 2021   816    35,440    12    2    7    2,019    38,296    63 
Additions   19    57    1    3    3    14    97    246 
Disposals/Adjustments   (43)   (44)   -    -    -    -    (87)   (164)
At March 31, 2022   792    35,453    13    5    10    2,033    38,306    145 
                                         
Depreciation/Amortisation                                        
At April 01, 2020   -    2,540    2    -    -    106    2,648    - 
Charge for the year   -    1,914    2    -    1    82    1,999    - 
Impairment expense#   -    644    -    -    -    -    644    - 
Disposals/Adjustments   -    (1)   -    -    -    -    (1)   - 
At March 31, 2021   -    5,097    4    -    1    188    5,290    - 
Charge for the year   -    984    3    1    1    57    1,046    - 
Disposals/Adjustments   -    (6)   -    -    -    -    (6)   - 
At March 31, 2022   -    6,075    7    1    2    245    6,330    - 
                                         
Net Block                                        
At March 31, 2021   816    30,343    8    2    6    1,831    33,006    63 
At March 31, 2022   792    29,378    6    4    8    1,788    31,976    145 

 

#Pursuant to share purchase agreement entered between the shareholders.

 

(i)Property, plant and equipment are pledged as collateral against borrowing, the details related to which is described in Note 12 on borrowings.

 

(ii)Refer note 40 and 41 for restatement and reclassification respectively

 

Capital work in progress (CWIP) ageing schedule

 

   Amount in CWIP for a period of     
As at March 31, 2022  Less than
1 year
   1-2 years   2-3 years   More than
3 years
   Total 
Project in progress   145           -           -           -    145 
Total   145    -    -    -    145 

 

   Amount in CWIP for a period of     
As at March 31, 2021  Less than
1 year
   1-2 years   2-3 years   More than
3 years
   Total 
Project in progress   63          -          -          -    63 
Total   63    -    -    -    63 

 

As at March 31, 2022 and March 31, 2021, there is no CWIP whose completion is overdue or has exceeded its cost compared to original plan.

 

On transition of Ind AS, the company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1 April 2015 measured as per indian GAAAP and use that carrying value as the deemed cost of property, plant and equipement.

 

The space has been intentionally left blank

 

Page 24 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

Particulars  As at
March 31,
2022
   As at
March 31,
2021
 
         
6. Non-current financial assets          
(Carried at amortised cost, unless stated otherwise)          
           
6.1 Investments          
           
Investments (at cost)          
83,513 compulsorily convertible debentures 0.0% (March 31, 2020: 83,513) in Azure Power Thirty Seven Private Limited   221    221 
Investment in equity share of fellow subsidiary #   -    - 
Total   221    221 

 

#During the year ended March 31, 2020, one of the entities of the Restricted Group - II, namely Azure Power Solar Energy Private Limited, acquired 1 equity share of its fellow subsidiary Azure Power India Private Limited (“AZI”) from its holding company Azure Power Global Limited (“APGL”) for consideration of INR 0.006 million. The carrying value of the investment as at March 31, 2022 was INR 0.006 million.

 

#During the year ended March 31, 2021, one of the entities of the Restricted Group - II, namely Azure Power Makemake Private Limited, acquired 1 equity share of its fellow subsidiary Azure Power Forty One Private Limited (“AZI”) for consideration of INR 0.003 million. The carrying value of the investment as at March 31, 2022 was INR 0.003 million.

 

6.2 Trade receivables        
         
Trade receivables (refer note 28 and 45)   151    - 
Total   151    - 
           
Break-up for trade receivables          
From others          
Undisputed trade receivables, considered good   151    - 
Undisputed trade receivables, credit impaired   2      
Total   153    - 
           
Impairment allowance for trade receivables (refer note 36)          
Undisputed trade receivables, credit impaired   (2)   - 
Total   151    - 
Total   151    - 

 

Trade receivables Ageing Schedule

 

       Non-current   Outstanding for following periods from due date of payment     
As at 31 March 2022  Unbilled
receivables*
   but not due**   Less than
6 Months
  

6 months –
1 year

   1-2 years   2-3 years   More than
3 years
   Total 
Undisputed Trade Receivables – considered good   111    40          -            -    -    -    -    151 
Undisputed Trade receivable – credit impaired   -    2    -    -    -    -    -    2 
    111    42    -    -    -    -    -    153 

 

*Unbilled receivables represents receivables where the goods and/or services have been provided to the customer for which the Restricted Group - II has unconditional right to consideration. However, the Restricted Group - II is yet to raise invoices to the customer.

 

**Non-current but not due represent receivables which aren’t due as per credit terms agreed with the customer.

 

Page 25 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

Particulars      As at
March 31,
2022
   As at
March 31,
2021
 
             
6.3 Loans           
            
(Unsecured, considered good)           
Carried at amortised cost           
Performance bank guarantee receivable      7    6 
Loans to fellow subsidiary companies (refer note 26) ##      -    15 
Loans to holding company (refer note 26) ##      1,055    472 
Total  (A)   1,062    493 

 

##During the year ended March 31, 2021, some of the Restricted Group - II entities have renewed the loan given to Holding Company and fellow subsidiaries for long term and has classified the same accordingly. The loans outstanding at the end of the current year are repayable over the period of 3 years and carries interest rate of 10% p.a.

 

6.4 Other financial assets           
            
Carried at amortised cost           
Term deposits *      102    - 
Security deposits      4    4 
Interest accrued on loans and advances to holding company (refer note 26)      79    5 
Interest accrued on loans and advances to fellow subsidiary companies (refer note 26)      -    4 
              
Derivative instruments at fair value through OCI             
Derivative assets ### (refer note 12.1 and 32)      1,044    769 
Total  (B)   1,229    782 
              
Total non-current financial assets  (A+B)   2,291    1,275 

 

### This relates to US$ Senior Notes.

 

Azure Power Thirty Six Private Limited    
*Axis Bank    
     
Balance of INR 102 million Nil as at March 31, 2022 (March 31, 2021: INR Nil)   Represents an amount of margin against Letter of credit.

 

Page 26 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

Particulars  As at
March 31,
2022
   As at
March 31,
2021
 
         
7. Income tax assets (net)        
         
Advance income-tax (net of provision for tax INR Nil (March 31, 2021: INR Nil))   26    11 
Total   26    11 
           
8. Other non-current assets          
           
(Unsecured, considered good)          
Capital advances to others   1    7 
Prepaid assets   69    72 
    70    79 
           
9. Current financial assets          
(Carried at amortised cost, unless stated otherwise)          
           
9.1 Trade receivables          
           
Trade receivables (refer note 28 and 45)   1,443    1,001 
Total   1,443    1,001 
           
Break-up for trade receivables          
Undisputed trade receivables, considered good   1,436    9,145 
Disputed trade receivables, considered good   7    - 
Undisputed trade receivables, credit impaired   18    2 
Disputed trade receivables, credit impaired   69    17 
Total   1,530    9,164 
           
Impairment allowance for trade receivables (refer note 36)          
Undisputed trade receivables, credit impaired   (18)   (2)
Disputed trade receivables, credit impaired   (69)   (17)
Total   1,443    9,145 
           
Total trade receivables   1,443    9,145 

 

Page 27 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

Trade receivables Ageing Schedule

 

       Current   Outstanding for following periods from due date of payment     
As at 31 March 2022  Unbilled
receivables*
   but not
due**
   Less than
6 Months
   6 months –
1 year
   1-2 years   2-3 years   More than
3 years
   Total 
Undisputed Trade Receivables – considered good   763    237    263    170    3    -         -    1,436 
Undisputed Trade receivable – credit impaired   4    1    6    6    -    -    1    18 
Disputed Trade receivables – considered good   -    -    1    6    -    -    -    7 
Disputed Trade receivables – credit impaired   -    -    1    19    36    11    2    69 
    767    238    271    201    39    11    3    1,530 

 

       Current   Outstanding for following periods from due date of payment     
As at 31 March 2021  Unbilled
receivables*
   but not
due**
   Less than
6 Months
   6 months –
1 year
   1-2 years   2-3 years   More than 3 years   Total 
Undisputed Trade Receivables – considered good   430    4,194    189    4,326    6    -    -    9,145 
Undisputed Trade receivable – credit impaired   -    -    1    1    -    -    -    2 
Disputed Trade receivables – credit impaired   -    -    -    -    13    4    -    17 
    430    4,194    190    4,327    19    4    -    9,164 

 

Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days.

 

*Unbilled receivables represents receivables where the goods and/or services have been provided to the customer for which the Restricted Group - II has unconditional right to consideration. However, the Restricted Group - II is yet to raise invoices to the customer.

 

**Current but not due represent receivables which aren’t due as per credit terms agreed with the customer.

 

Particulars  As at
March 31,
2022
   As at
March 31,
2021
 
         
9.2 Cash and cash equivalents        
         
Balances with banks:        
- On current accounts   234    36 
- Deposits with original maturity of less than 3 months   427    415 
Total   661    451 

 

Page 28 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

There are no repatriation restriction with cash and cash equivalents as at the end of reporting period and prior period.

 

9.3 Other bank balances        
         
- Deposits with original maturity for more than 3 months but remaining maturity of less than 12 months   1,719    1,333 
Total   1,719    1,333 
           
9.4 Loans          
           
(Unsecured, considered good)          
Loans to holding company (refer note 26)   -    11 
Loans to fellow subsidiary companies (refer note 26)   30    30 
Total   30    41 
           
9.5 Other financial assets          
           
Carried at amortised cost          
Interest accrued on term deposits   11    8 
Interest accrued on loans and advances to fellow subsidiary companies (refer note 26)   22    9 
Fixed deposits with original maturity more than 12 months**   26    - 
Government Grant Receivable (VAT Refund)   60    - 
Receivable from fellow subsidiary companies (refer note 26)   1    8 
Receivable from holding company (refer note 26)   104    12 
Carried at fair value through profit or loss          
Firm Commitment   1    - 
Total   225    37 

 

**This amount related to bank guarantee.

 

10. Other current assets          
           
Balance with statutory / government authorities   2    - 
Prepaid assets   14    18 
Prepaid performance bank guarantee   2    - 
Advance to vendors   6    4 
Other advances*   32    33 
Total   56    55 

 

*Other Advances includes advance given to Holding company (refer note 26).

 

The space has been intentionally left blank

 

Page 29 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

11.1 Equity share capital*

 

Particulars

 

 

Shares (Aggregate of Restricted Group - II entities):  Number of
shares
   Amount 
At April 01, 2020   71,26,399    73 
Changes during the period   -    - 
At March 31, 2021   71,26,399    73 
Changes during the period   -    - 
At March 31, 2022   71,26,399    73 

 

*Equity share capital represents the aggregate amount of the share capital of Restricted Group - II entities as at the respective year ends and does not necessarily represent legal share capital for the purpose of the Restricted Group - II.

 

A. Terms/ rights attached to shares

 

The respective Restricted group - II’s entities have only one class of equity shares, Indian entities having a par value of INR 10/- per share and Mauritius entity having a par value of USD 100/- per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation, the holders of equity shares will be entitled to receive remaining assets of the entity, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

 

B. There are no bonus shares issued, for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date. Further, there are no shares reserved for issue under options and contracts/commitments for sale of shares/disinvestment.

 

11.2 Other equity**

 

For the year ended March 31, 2022:

 

   Reserves and surplus   Items of other comprehensive income     
Particulars  Deficit in the
combined
statement of
profit and loss
   Securities
premium
reserve
   Exchange
differences on
translating the financial
statements of
foreign
operations
  

Defined benefit plans

(refer note 38)

  

Effective portion of Cash flow hedges

(refer note 32)

   Total equity 
At April 01, 2021 (as previously reported)   (3,295)   9,872    (1,202)   (1)   681    6,055 
Adjustment relating to prior period errors*   (150)   -    -    -    -    (150)
Restated balance as at April 1, 2021   (3,445)   9,872    (1,202)   (1)   681    5,905 
Loss for the year   (371)   -    -    -    -    (371)
Other comprehensive income/(loss)   -    -    (806)   -    213    (593)
At March 31, 2022   (3,816)   9,872    (2,008)   (1)   894    4,941 

 

Page 30 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

For the year ended March 31, 2021

 

   Reserves and surplus   Items of other comprehensive income     
Particulars  Deficit in the
combined
statement of
profit and loss
   Securities
premium
reserve
   Exchange
differences on translating the
financial
statements of
 foreign
operations
   Defined
benefit plans
(refer note 38)
   Effective
portion of Cash flow
hedges
(refer note 32)
   Total equity 
At April 01, 2020 (as previously reported)   (1,678)   9,872    (1,842)   -    909    7,261 
Adjustment relating to prior period errors*   80    -    -    -    -    80 
Restated balance as at April 1, 2020   (1,598)   9,872    (1,842)   -    909    7,341 
Loss for the year*   (1,847)   -    -    -    -    (1,847)
Other comprehensive income/(loss)   -    -    640    (1)   (228)   411 
Restated balance as at March 31, 2021   (3,445)   9,872    (1,202)   (1)   681    5,905 

 

**Other equity represents the aggregate amount of other equity of Restricted Group - II entities as at the respective year ends.

 

*Refer note 40 and 41 for restatement and reclassification respectively

 

Note:

 

Deficit in the statement of profit and loss are the losses of the Restricted Group - II incurred till date net of appropriations.

 

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such as issuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

 

Exchange differences arising on translation of the foreign operations are recognised in other comprehensive income as described in accounting policy and accumulated in a separate reserve within equity.

 

Particulars  As at
March 31,
2022
   As at
March 31,
2021
 
12. Non-current financial liabilities        
         
12.1 Non-current borrowings        
         
At amortised cost        
Term loans (secured)        
(a) Bonds (Secured)        
- 5.65% Senior Notes*   26,291    25,413 
           
(b) Loans from related parties (Unsecured)          
- from holding company (refer note 26)#   395    400 
- from fellow subsidiary (refer note 26)#   111    126 
- from others##   848    - 
           
(c) Deferred payment liabilities (refer note 26 and 40)   3,226    3,821 
Total   30,871    29,760 

 

#The loans are repayable over the period of 5 years.

 

##Pertains to unsecured term loans taken by certain entities from Radiance Renewables Private Limited amounting to INR 848 million as at March 31, 2022 (INR Nil as at March 31, 2021) pursuant to share purchase agreement relating to disposal of rooftop entities. These loans carries interest rate of 10% p.a.

 

Page 31 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

a)Azure Power Solar Energy Private Limited

 

*5.65% Senior Notes During the year ended March 31, 2020, Azure Power Solar Energy Private Limited issued 5.65% US$ denominated Senior Notes (“5.65% Senior Notes” or “Green Bonds”) and raised INR 24,400 million net of discount of INR 7 million at 0.03% and issuance expense of INR 397 million. The discount on issuance of the Green Bonds and the issuance expenses have been recorded as finance cost, using the effective interest rate method and the unamortized balance of such amounts is netted with the carrying value of the Green Bonds. The Green Bonds are listed on the Singapore Exchange Securities Trading Limited (SGX-ST).
Interest Rate- 5.65% In accordance with the terms of the issue, the proceeds were used for repayment of project level loans. The interest on the 5.65% Senior Notes are payable on a semi-annual basis and the principal amount is payable in December 2024. As of March 31, 2022, the unamortised balance of issuance expenses was INR 239 million (March 31, 2021: INR 307 million) and the net carrying value of Green Bonds as on March 31, 2022 was INR 26,291 million (March 31, 2021: INR 25,413 million). The Parent Company continues to guarantee the principal and interest repayments to the investors and the guarantee shall become ineffective on meeting certain financial covenants. The Green Bonds are secured fixed charge by the Company  over the capital stock of Azure Power Solar Energy Private Limited (refer note 6.4 – Derivative assets). Investment of APSEL in non-convertible debentures of RG group entities are further secured by a first priority security interest (to be shared on pari-passu basis) over all immovable properties of the RG entities by an equitable mortgage.

 

12.2 Other non-current financial liabilities        
         
Carried at amortised cost        
Interest accrued but not due on borrowings from fellow subsidiary companies (refer note 26)   21    39 
Interest accrued and not due on borrowings from holding company (refer note 26)   135    94 
Payable to fellow subsidiary companies (refer note 26)   7    37 
Interest payable on deferred payment liabilities (refer note 26)   572    363 
Total   735    533 
           
13. Provisions          
           
13.1 Non-current          
           
Provision for gratuity (refer note 38)   4    3 
Provision for decommissioning liabilities #   245    257 
Total   249    260 

 

#Provision has been recognised for decommissioning costs associated with solar power plants being constructed on leasehold lands. The respective entities under Restricted Group - II are under an obligation to decommission the plant at the expiry of the lease term before handing over the leasehold lands to the lessors.

 

Movement in provision for decommissioning liabilities

 

Opening balance   257    257 
Impact of change in estimate during the year   (31)   (10)
Reversals during the year   -    (7)
Accretion during the year   19    17 
Closing Balance   245    257 
           
13.2 Current          
           
Provision for compensated absences   2    3 
Total   2    3 

 

Page 32 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

   As at   As at 
Particulars  March 31,
2022
   March 31,
2021
 
         
14. Other non-current liabilities        
         
Deferred revenue   220    - 
Deferred viability gap funding income   378    315 
Deferred revenue on account of SGD   95    - 
Deferred Government grant   133    90 
Total   826    405 
           
15. Current financial liabilities        
(Carried at amortised cost)        
         
15.1 Trade payables        
         
- Total outstanding dues of micro enterprises and small enterprises (refer note 29)   2    2 
(A)   2    2 
- Total outstanding dues of creditors other than micro enterprises and small enterprises#          
- from related parties   241    117 
- from others   123    176 
(B)   364    293 
           
Total (A + B)   366    295 

 

#(a) Trade payables are non-interest bearing and are normally settled upto 90 days terms.

 

(b)For terms and conditions relating to related party payables, see note 26.

 

(c)Refer note 40 and 41 for restatement and reclassification respectively

 

Trade payables Ageing Schedule

 

           Outstanding for following periods from due
date of payment
     
As at 31 March 2022  Unbilled dues*   Not due trade payable**   Less than
1 year
   1-2 years   2-3 years   More than
3 years
   Total 
Total outstanding dues of micro enterprises and small enterprises   -    -    2    -    -    -    2 
                                    
Total outstanding dues of creditors other than micro enterprises and small enterprises   77    5    278    1    1    2    364 
    77    5    280    1    1    2    366 

 

Page 33 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

           Outstanding for following periods from due
date of payment
     
As at 31 March 2021  Unbilled dues*   Not due trade payable**   Less than
1 year
   1-2 years   2-3 years   More than
3 years
   Total 
Total outstanding dues of micro enterprises and small enterprises   -      -    2    -    -    -    2 
                                    
Total outstanding dues of creditors other than micro enterprises and small enterprises   209    1    38    40    5    -    293 
    209    1    38    40    5    -    295 

 

*Unbilled dues represents payables where the goods and/or services have been received, however, Company is yet to receive invoices from the vendors.

 

**Not due trade payable represent balances which are not due as per credit terms agreed with the vendor.

 

15.2 Other financial liabilities        
         
Other financial liabilities at amortised cost        
Interest accrued but not due on borrowings   404    392 
Interest accrued and not due on borrowings from fellow subsidiary company (refer note 26)   35    - 
Contractually reimbursable expense to holding company (refer note 26)   32    196 
Other payables   -    1 
Payable to employees   4    - 
Payable for purchase of capital goods to others   130    48 
Financial liabilities at fair value through OCI          
Derivative liabilities   1    - 
Total   606    637 
           
16. Current tax liabilities (net)          
           
Provision for income tax (net of Advance tax of INR 10 million (March 31, 2021: INR 6 million))   10    3 
Total   10    3 

 

   As at    As at 
Particulars   March 31, 2022    March 31, 2021 
           
17. Other current liabilities          
           
Statutory dues   32    36 
Advance from customers   1    - 
Deferred Revenue   14    - 
Deferred viability gap funding income   20    29 
Deferred revenue on account of SGD   2    - 
Deferred government grant   8    6 
Total   77    71 

 

   As at    As at 
   March 31, 2022    March 31, 2021 
18.1 Deferred tax liabilities (net)        
         
Deferred tax liability   822    332 
Total   822    332 
           
18.2 Deferred tax assets          
           
Deferred tax asset   298    317 
Total   298    317 

 

The space has been intentionally left blank

 

Page 34 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

18.3 Reconciliation of deferred tax asset/(liabilities) (net)

 

   As at
April 1,
2020*
   Recognised in
Profit &
Loss
   Recognised in
Other
comprehensive
income
   As at
March 31,
2021*
   Recognised in
Profit & Loss
   Recognised in
Other
comprehensive
income
   As at
March 31,
2022
 
Deferred tax liability:                            
Difference between tax depreciation and depreciation charged for financial reporting   3,005    1,068          -    4,073    786          -    4,859 
EIR impact on borrowings   4    6    -    10    2    -    12 
Leases   103    (19)   -    84    (18)   -    66 
Gross deferred tax liability (A)   3,112    1055    -    4167    770    -    4,937 
                                    
Deferred tax assets:                                   
Unabsorbed depreciation and brought forward losses   3,124    973    -    4,097    263    -    4,360 
Deferred revenue   107    (20)   -    87    13    -    100 
Provision for decommissioning liabilities   80    (15)   -    65    (3)   -    62 
Minimum alternate tax   7    4    -    11    7    -    18 
Performance bank guarantee   2    -    -    2    1    -    3 
Provision for employee benefits   1    1    -    2    -    -    2 
Trade receivables measured at amortised cost   -    4    -    4    1    -    5 
Allowance for doubtful trade receivables   2    2    -    4    17    -    21 
Gross deferred tax assets (B)   3,323    949    -    4,272    299    -    4,571 
                                    
Deferred Tax asset / (liability) (Net) (A - B)   211    (106)   -    105    (471)   -    (366)
Deferred tax liability recognised in Other Comprehensive Income   (160)   40    -    (120)   (38)   -    (158)
Deferred tax asset/(liability) (net) after OCI   51    (66)   -    (15)   (509)   -    (524)

 

Azure Power Solar Energy Private Limited is incorporated in Mauritius having applicable income tax rate of 15%. However, the group’s significant operations are based in India and are taxable as per Indian Income Tax Act, 1961. For effective tax reconciliation purposes, the applicable tax rate in India has been considered.

 

   For the
year ended
   For the
year ended
 
   March 31,
2022
   March 31,
2021
 
Accounting profit before income tax   279    (1,572)
Applicable statutory income tax rate   25.17%   25.17%
Tax at applicable tax rate   70    (396)
           
Adjustments:          
Permanent difference disallowed under income tax Act   56    40 
Disallowance as per section 94B of Income Tax Act, 1961 not considered for deferred tax purpose   461    480 
Deduction during tax holiday period   (8)   (9)
Difference in property, plant and equipment not considered for deferred tax purposes   10    49 
Tax Effect of ASEPL Mauritius entity   109    111 
Leases   (11)   10 
Impact of different income tax rates   (36)   (32)
Deferred government grant   1    22 
Other   (2)   - 
Total   580    671 
           
Total tax expense   650    275 
           
Component of tax expenses          
Current tax expense   179    169 
Deferred tax charge   471    106 
Total tax expense   650    275 

 

*Refer note 40 for restatement

Page 35 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

   For the year
ended
   For the year
ended
 
Particulars  March 31,
2022
   March 31,
2021
 
         
19. Revenue from operations        
         
Revenue from contracts with customers*        
Sale of power (refer note 27 and 28)   4,423    4,420 
Other operating revenues          
Income from carbon credit emission*   544    52 
Total   4,967    4,472 

 

*Revenue from sale of power and carbon credit are recognised at point in time.

 

20. Non Operating Income        
         
20.1 Interest income on financial assets measured at amortised cost:        
         
- Term deposits   49    42 
- Loan to holding/fellow subsidiary companies (refer note 26)   88    23 
- Others   10    - 
Total   147    65 

 

20.2 Other income        
         
Allowance for doubtful trade receivables written back   8    - 
Government grants related to assets   15    6 
Liabilities no longer required written back   65    10 
Miscellaneous income   11    4 
Total   99    20 

 

21. Employee benefits expense        
         
Salaries, wages and bonus   27    31 
Contribution to provident and other funds (refer note 38)   2    2 
Gratuity expenses (refer note 38)   1    1 
Total   30    34 

 

22. Depreciation and amortisation expense        
         
Depreciation of property, plant and equipment (refer note 5 and 40)   1,046    1,999 
Depreciation of right-of-use assets (refer note 30 and 40)   48    48 
Total   1,094    2,047 

 

23. Finance costs        
         
Interest expenses on financial liabilities measured at amortised cost:        
-5.65% Senior Notes*   2,375    2,375 
-Loan from holding/fellow subsidiary companies** (refer note 26)   418    448 
-Lease liabilities (refer note 30)   77    73 
Interest on delayed payment of statutory dues   1    1 
Other finance costs***   34    20 
Total   2,905    2,917 

 

*Including amortisation of hedging cost of INR 821 million (March 31, 2021: INR 818 million)

 

**Includes interest on deferred payment liabilities

 

***Primarily includes adjustment related to interest on decommissioning liabilities and interest to micro and small enterprises.

 

The space has been intentionally left blank

 

Page 36 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

  

   For the year
ended
   For the year
ended
 
Particulars  March 31,
2022
   March 31,
2021
 
         
24. Other expenses        
         
Guest house expenses   5    5 
Rent (refer note 30)   -    3 
Rates and taxes   78    34 
Solar park maintenance   66    62 
Insurance   56    59 
Repair and maintenance          
-Plant and machinery   91    53 
-Other   30    28 
Travelling and conveyance   5    4 
Communication costs   2    2 
Legal and professional fees   20    26 
Payment to auditor   6    5 
Corporate social responsibilities*   1    - 
Management fees (refer note 26 and 40)   197    102 
Allowance for doubtful trade receivables (refer note 36)   69    19 
Bad debts written off (refer note 36)   9    2 
Recruitment expenses   7    2 
Security charges   41    45 
Asset Written off   167    11 
Bank charges   4    3 
Advance written off   8    - 
Land development   13    13 
Loss on disposal of property, plant and equipment   1    - 
Loss on account of modification of contractual cash flows (refer note 45)   18    - 
Loss on lease modification   -    1 
Miscellaneous expenses   11    8 
Total   905    487 
Payment to auditor:          
As auditor:          
Audit fee   6    5 
In Other Capacity          
Reimbursement of expenses   0    0 
Total   6    5 

 

*The audit fee recognised in current year pertains to amounts incurred in relation to services provided by erstwhile statutory auditors of the Restricted Group II. Since the current auditor’s appointment was made on July 12, 2023, to fill the casual vacancy caused by the resignation of the erstwhile auditor, their audit fees for the audit of year ended March 31, 2022 amounting to INR 5.7 million has not been recognized in year ended March 31, 2022, as this is a non- adjusting subsequent event.

 

*Disclosure relating to Corporate Social Responsibility (CSR) Expenditure

 

Page 37 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

As per provision of Section 135 of the Companies Act, 2013 read with Companies Amendment Act, 2021, the Company has to spent at least 2% of the average profits of the preceding three financial years towards CSR. Accordingly, a CSR committee has been formed for carrying out the CSR activities as per Schedule VII of the Companies Act, 2013.

 

   For the
year ended
   For the
year ended
 
   March 31,
2022
   March 31,
2021
 
Amount required to be spent by the company during the year   -    - 
Amount of expenditure incurred   -    - 
(i) Construction/acquisition of an asset   -      
(ii) On purposes other than (i) above   1    - 
Amount approved by Board   1    - 
Excess/ (shortfall) at the end of the year   -    - 
Total of previous years shortfall   -    - 
Amount spent towards obligations in relation to:          
Ongoing projects   -    - 
Other than Ongoing projects   -    - 
Accrual towards unspent obligations          
Reason for shortfall   -    - 
Nature of CSR activities   Skill development    - 
Details of related party transactions   -    - 

 

25. Earning per share
 
The special purpose combined financial statements do not represent legal structure and are aggregated for a specific purpose. Accordingly, Earning Per Share (EPS) on aggregated number of shares have not been disclosed.

 

Page 38 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

26. Related party disclosures:

 

Related parties where control exists:

 

Parent Company: Azure Power Global Limited (w.e.f July 22, 2015)
   
Holding company of Restricted Group - II entities:  
Azure Power Solar Energy Private Limited Azure Power Global Limited
Azure Power Earth Private Limited Azure Power India Private Limited
Azure Power Makemake Private Limited Azure Power India Private Limited
Azure Power Mercury Private Limited Azure Power India Private Limited
Azure Power Uranus Private Limited Azure Power India Private Limited
Azure Power Venus Private Limited Azure Power India Private Limited
Azure Power Saturn Private Limited Azure Power India Private Limited
Azure Power Thirty Three Private Limited Azure Power India Private Limited
Azure Power Thirty Four Private Limited Azure Power India Private Limited
Azure Power Thirty Six Private Limited Azure Power India Private Limited
Azure Power Forty Four Private Limited Azure Power India Private Limited
   
Key managerial personnel: Mr. Preet Mohinder Sandhu (Director till December 3, 2020)
Mr. Sanjeev Bhatia (Director till September 15, 2020)
  Ms. Samitla Subba (Director w.e.f. September 21, 2020 till November 21, 2022 (except for 2 entities))
  Mr. Srinagesh Ramabhotla (Additional director w.e.f. November 13, 2019 till July 13, 2022)
Mr. Kapil Sharma (Appointed director w.e.f. October 25, 2018)
  Mr. Khalid Muhammad Peyrye (Director from April 2, 2018)
  Mrs. Yung Oy Pin Lun Leung (Director w.e.f. November 13, 2019)
  Mr. Nitin Vaid (Appointed additional director w.e.f December 2, 2020 till March 08, 2022)
Mr. Gaurang Sethi (Appointed additional director w.e.f. December 2, 2020)
  Mr. Rajani Kumar Chinnari (Appointed as additional director w.e.f. November 21, 2022
Mr. Kishore Kumar (Director w.e.f March 08, 2022 till February 10, 2023)
  Mr. Saurabh Gupta (Additional Director w.e.f February 22, 2023)

 

Related parties with whom transactions have taken place during the year:

 

Holding company of 10 Indian entities of Restricted Group - II: Azure Power India Private Limited
   
Fellow subsidiary company: Azure Power Thirty Seven Private Limited
Azure Sun Energy Private Limited
  Azure Green Tech Private Limited
Azure Power Jupiter Private Limited
Azure Photovoltaic Private Limited
Azure Sunlight Private Limited
  Azure Power Forty One Private Limited
Azure Power Forty Three Private Limited
Azure Power Infrastructure Private Limited
Azure Power Pluto Private Limited
  Azure Power Rooftop Five Private Limited
Azure Power Rooftop Private Limited
Azure Solar Solutions Private Limited
Azure Power Venus Private Limited
  Azure Power Thirty Eight Private Limited
Azure Power Thirty Three Private Limited

 

Page 39 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

Following transactions were carried out with related parties in the ordinary course of business:

 

1. Transactions during the year

 

   Holding company   Fellow subsidiary company 
Nature of transaction  For the
period ended
March 31,
2022
   For the
period ended
March 31,
2021
   For the
period ended
March 31,
2022
   For the
period ended
March 31,
2021
 
                 
a). Settlement of liabilities on behalf of the entity                
Azure Power India Private Limited   70    17    -    - 
Azure Power Forty Three Private Limited   -    -    7    - 
Azure Power Pluto Private Limited   -    -    3    - 
Azure Power Rooftop Pvt Ltd   -    -    0    - 
Azure Power India Private Limited                    
                     
b). Settlement of liabilities by the entity on behalf of                    
Azure Power Pluto Private Limited   -    -    0    - 
                     
c). Purchase of capital goods and services                    
Azure Power India Private Limited   -    292    -    - 
Azure Power Forty Three Private Limited   -    -    -    33 
Azure Power Venus Private Limited   -    -    -    7 
                     
d). Sale of capital goods and services                    
Azure Power India Private Limited   7    7    -    - 
Azure Green Tech Private Limited   -    -    -    4 
Azure Power Jupiter Private Limited   -    -    -    5 
Azure Power Thirty Three Private Limited   -    -    -    7 
                     
e). Operation and maintenance services received (including GST)                    
Azure Power India Private Limited   4    5    -    - 
                     
f). Management services received (including GST)                    
Azure Power India Private Limited   197    34    -    - 
                     
g). Loan given                    
Azure Power India Private Limited   1,873    483    -    - 
                     
h). Repayment of loan given                    
Azure Power Forty One Private Limited   -    -    -    1 
Azure Power Solar Solution Private Limited   -    -    15    - 
                     
i). Interest income from loans                    
Azure Power India Private Limited   84    19    -    - 
Azure Solar Solutions Private Limited   -    -    1    1 
Azure Sun Energy Private Limited   -    -    3    3 
                     
j) Repayment of borrowings                    
Azure Power India Private Limited   1    5    -    - 
Azure Power Rooftop Private Limited   -    -    15    - 
Azure Power Mercury Private Limited   -    -    16    - 
Azure Power Forty Four Private Limited   -    -    19    - 
                     
k). Interest expense on borrowings                    
Azure Power India Private Limited   394    434    -    - 
Azure Power Infrastructure Private Limited   -    -    4    4 
Azure Power Pluto Private Limited   -    -    6    8 
Azure Power Rooftop Private Limited   -    -    1    2 

 

Page 40 of 70

 

 

Restricted Group - II      
Notes to special purpose combined financial statements      
(All amount in INR millions, unless otherwise stated)      

 

2. Balances outstanding at the end of the year

 

   Holding company   Fellow subsidiary company 
Nature of transaction  As on
March 31,
2022
   As on
March 31,
2021
   As on
March 31,
2022
   As on
March 31,
2021
 
a). Receivable                
Azure Power India Private Limited   104    179    -    - 
Azure Power Rooftop Private Limited   -    -    -    2 
Azure Sun Energy Private Limited   -    -    0    - 
Azure Sunlight Private Limited   -    -    0    - 
Azure Power Pluto Private Limited   -    -    0    - 
Azure Power Rooftop Five Private Limited   -    -    0    - 
Azure Power Thirty Eight Private Limited   -    -    0    - 
Azure Power Pluto Private Limited   -    -    -    - 
Azure Green Tech Private Limited   -    -    -    1 
Azure Power Jupiter Private Limited   -    -    -    5 
                     
b). Payables                    
Azure Power India Private Limited   273    245    -    - 
Azure Power Forty Three Private Limited   -    -    -    33 
Azure Power Rooftop Private Limited   -    -    4    4 
Azure Power Pluto Private Limited   -    -    3    0 
                     
c). Deferred payment liabilities                    
Azure Power India Private Limited*   3,225    3,211    -    - 
                     
d). Borrowings                    
Azure Power India Private Limited   395    400    -    - 
Azure Power Infrastructure Private Limited   -    -    40    40 
Azure Power Pluto Private Limited   -    -