Note 2: Summary of Material Accounting Policiesa) Statement of Compliance

The financial statements of the company have been
prepared in accordance with Indian Accounting Standards
(“Ind-AS”) notified under the Companies (Indian
Accounting Standards) Rules, 2015 as amended by the
Companies (Indian Accounting Standards) Rules, 2016
and other relevant provisions of the Act.

b) Basis of Measurement

The financial statements have been prepared on a historical
cost basis except for certain financial assets and financial
liabilities (including financial instruments) which have
been measured at fair value at the end of each reporting
period as explained in the accounting policies stated
below. The Financial Statements have been prepared on
accrual and going concern basis.

c) Current versus non-current classification

The Company has classified all its assets and liabilities
under current and non-current as required by Ind AS 1-
Presentation of Financial Statements.

The asset is treated as current when it is:

• Expected to be realized or intended to be sold or
consumed in normal operating cycle;

• Held primarily for purpose of trading;

• Expected to be realized within twelve months after the
reporting period; or

• Cash or cash equivalent 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;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the
reporting period; or

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

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle is the time between the acquisition
of assets for processing and their realizations in cash
and cash equivalents. The Company has ascertained its
operating cycle as twelve months for the purpose of current
and non-current classification of assets and liabilities.

The Company’s functional currency is the Indian Rupee.
These financial statements are presented in Indian Rupees
and all values are rounded to the nearest lakhs, except
when otherwise stated.

d) Use of Estimates, Judgments and Assumptions

The preparation of the financial statements in conformity
with Ind-AS requires management to make estimates,
judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the
date of the financial statements and reported amounts
of revenues and expenses during the period. Application
of accounting policies that require critical accounting
estimates involving complex and subjective judgments and
the use of assumptions in these financial statements have
been disclosed in Note 3(i) below. Accounting estimates
could change from period to period. Actual results could
differ from those estimates. Appropriate changes in
estimates are made as management becomes aware of
changes in circumstances surrounding the estimates.
Changes in estimates are reflected in the financial
statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the
financial statements.

e) Revenue Recognition

Revenue is recognized to the extent that it is probable that
the economic benefits will flow to the Company and the
revenue can be reliably measured, regardless of when the
payment is being received. Revenue towards satisfaction
of performance obligation is measure at the amount of
transaction prices (net of variable consideration) allocates
to the performance obligation. Transaction price of goods
sold and services rendered is net of variable consideration
on account of various discount and scheme offered by the
company as per Ind AS, specially INDA AS 115. Revenue
is measured at value of the consideration received or
receivable, taking into account contractually defined terms
of payment including excise duty collected which flows to
the Company on its own account but excluding taxes or
duties collected on behalf of the government.

Revenue from contracts with customers Ind AS 115
establishes a single comprehensive model for entities to

use in accounting for revenue arising from contracts with
customers. Under Ind AS 115, an entity recognises revenue
when (or as) a performance obligation is satisfied i.e. when
control of the goods and service underlying the particular
performance obligation is transferred to the customer.

The Company follows specific recognition criteria as
described below before the revenue is recognized.

• Sale of goods

• Revenue from sale of goods is recognized when
the significant risks and rewards of ownership have
been transferred to the buyer, usually on delivery of
goods, recovery of the consideration is probable, the
associated cost can be estimated reliably, there is no
continuing effective control or managerial involvement
with the goods, and the amount of revenue can be
measured reliably.

• Revenue is measured at the transaction value of the
consideration received or receivable. The amount
recognized as revenue is exclusive of Goods and
Service Tax (GST), Value Added Taxes (VAT), and is net
of discounts.

• Sale of solar power

• Sale is recognized when the power is delivered by
the Company at the delivery point in conformity with
the parameters and technical limits and fulfilment
of other conditions specified in the Power Purchase
Agreement. Sale of power is accounted for as per tariff
specified in the Power Purchase Agreement.

• The sale of power is accounted for net of all local taxes
and duties as may be leviable on sale of electricity for
all electricity made available and sold to customers.

• Other Operating Revenue

• Other Operating revenue comprises of following Items

1. Job work income

2. Duty drawback and other export incentives

• Revenue from manufacturing charges is recognized on
completion of contractual obligation of manufacturing
and delivery of product manufactured.

• Revenue from export incentives are recognized upon
adherence to the compliances as may be prescribed
with regard to export and / or realization of export
proceeds as per foreign trade policy and its related
guidelines.

• Revenue from sale of scrap is recognized on delivery of
scrap items.

• The Company recognises revenue from Operations
and Maintenance services using the time-elapsed
measure of progress i.e. input method on a straight
line basis.

• Other Income

• Other income comprises of interest income, rent
income, dividend from investment and profits on
redemption of investments.

• Interest income from financial assets is recognized
when it is probable that the economic benefit will flow
to the Company and the amount of income can be
measured reliably. Interest income is accrued on time
basis by reference to the principal outstanding and at
the effective rate applicable, which is the rate exactly
discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net
carrying amount on initial recognition.

• Dividend income from investment is recognized when
the shareholder’s right to receive payment has been
established (provided that it is probable that the
economic benefit will flow to the Company and the
amount of income can be measured reliably).

• Profit on redemption of investment is recognized by
upon exercise of power by the company to redeem the
investment held in any particular security / instrument
(non-current as well as current investment).

• Contract assets

Contract assets are recognised when there is excess
of revenue earned over billings on contracts. Contract
assets are classified as unbilled receivables (only act
of invoicing is pending) when there is unconditional
right to receive cash, and only passage of time is
required, as per contractual terms.

• Contract liabilities

Contract Liabilities are recognised when there is
billing in excess of revenue and advance received from
customers.

f) Foreign Currency-Transactions and Balances

Items included in the Financial Statements of the Company
are measured using the currency of the primary economic
environment in which the Company operates (‘functional
currency’). The Company’s functional currency is Indian
Rupee and accordingly, the financial statements are
presented in Indian Rupee.

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

Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot
rates of exchange at the reporting period. Gains and losses
arising on account of differences in foreign exchange
rates on settlement/ translation of monetary assets and
liabilities are recognized in the Statement of Profit and
Loss except exchange differences on foreign currency
borrowings relating to assets under construction for future
productive use, which are included in the cost of those
assets when they are regarded as an adjustment to interest
costs on those foreign currency borrowings.

Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the
exchange rates as 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 was determined. The gain or loss
arising on translation of non-monetary items measured at
fair value is treated in line with the recognition of the gain or
loss on the change in fair value of that item (i.e. translation
differences on items whose fair value gain or loss is
recognized in OCI or profit or loss are also recognised in
OCI or profit or loss, respectively).

g) Employee Benefits

• Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within 12 months after the end of the period in
which the employees render the related service are
recognised in respect of employee’s services up to the
end of the reporting period and are measured at the
undiscounted amounts of the benefits expected to be
paid when the liabilities are settled. The liabilities are
presented as current employee benefit obligations in
the balance sheet.

• Other Long-term employee benefit obligations

The liabilities for compensated absences (annual
leave) which are not expected to be settled wholly
within 12 months after the end of the period in which
the employee render the related service are presented
as non-current employee benefits obligations. They
are therefore measured as the present value of
expected future payments to be made in respect
of services provided by employees up to the end of
the reporting period using the Projected Unit Credit
method. The benefits are discounted using the market
yields at the end of the reporting period on government
bonds that have terms approximating to the terms
of the related obligations. Re-measurements as a
result of experience adjustments and changes in
actuarial assumptions (i.e. actuarial losses/ gains) are
recognised in the Statement of Profit and Loss.

The obligations are presented as current in the balance
sheet, if the Company does not have an unconditional
right to defer settlement for at least twelve months
after the reporting period, Regardless of when the
actual settlement is expected to occur.

• Post-employment obligations

The Company operates the following post¬
employment schemes:

I. Defined benefit plans such as gratuity

II. Defined contribution plans such as provident
fund.

h) Tax Expenses

The tax expense for the period comprises current and
deferred tax. Taxes are recognised in the statement of profit
and loss, except to the extent that it relates to the items
recognised in the comprehensive income or in Equity. In
which case, the tax is also recognised in the comprehensive
income or in Equity.

• Current tax:

Current tax payable is calculated based on taxable profit
for the year. Current tax is recognized based on the amount
expected to be paid to or recovered from the tax authorities
based on applicable tax laws that have been enacted
or substantively enacted by the balance sheet date.
Management periodically evaluates positions taken in the
tax return with respect to situations in which applicable tax
regulations are subject to interpretation and establishes
provisions where appropriate.

• Deferred tax:

Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases
used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all
taxable temporary timing difference. Deferred tax assets
are recognized for deductible temporary differences to the
extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be
utilized.

The carrying amount of deferred tax assets is reviewed
at each reporting date and adjusted to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilized.

Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realized or liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted on
the reporting date. Current and deferred tax for the year
are recognized in profit or loss, except when they relate to
items that are recognized in other comprehensive income
or directly in equity, in which case, the current and deferred
tax are also recognized in other comprehensive income or
directly in equity respectively.

i) Property, Plant and Equipment

Land is carried at historical cost. All other items of property,
plant and equipment are stated at cost, net of recoverable
taxes, trade discount and rebates less accumulated
depreciation and impairment losses, if any. Such cost
includes purchase price, borrowing cost and any cost
directly attributable to bringing the assets to its working
condition for its intended use.

Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,

only when it is probable that future economic benefits
associated with the item will flow to the entity and the cost
can be measured reliably. When significant parts of plant
and equipment are required to be replaced at intervals,
the company depreciates them separately based on their
specific useful lives. All other repairs and maintenance
costs are recognized as expense in the statement of profit
and loss account as and when incurred.

Expenses incurred relating to project, net of income
earned during the project development stage prior to its
intended use, are considered as pre - operative expenses
and disclosed under Capital Work- in- Progress.

Cost of the assets less its residual value (estimated at 5%
of the cost) is depreciated over its useful life. Depreciation
is calculated on written down basis over the useful life of
the assets as prescribed in Schedule II to the Companies
Act, 2013.

Depreciation on additions/ deletions to fixed assets is
calculated pro-rata from/ up to the date of such additions/
deletions.

The carrying values of property, plant and equipment
are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may
not be recoverable. The residual values, useful life and
depreciation method are reviewed at each financial
year-end to ensure that the amount, method and period
of depreciation are consistent with previous estimates
and the expected pattern of consumption of the future
economic benefits embodied in the items of property,
plant and equipment.

An item of property, plant and equipment is derecognized
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss arising on disposal or retirement of an item
of property, plant and equipment is determined as the
difference between sale proceeds and the carrying amount
of the asset and is recognised in profit and loss account.

The management believes that the estimated useful
lives are realistic and reflects fair approximation of the
period over which the assets are likely to be used. At each
financial year end, management reviews the residual
values, useful lives and method of depreciation of property,
plant and equipment and values of the same are adjusted
prospectively where needed.

j) Investment Properties

Investment properties are properties that is held for long¬
term rentals yields or for capital appreciation (including
property under construction for such purposes) or both,
and that is not occupied by the Company, is classified as
investment property.

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less
accumulated impairment loss, if any.

Though the Company measures investment property using
cost based measurement, the fair value of investment
property is disclosed in the notes.

Fair values are determined based on reasonable interval
performed by an accredited external independent valuer.

Investment properties are de-recognized either when
they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is
expected from their disposal. The difference between the
net disposal proceeds and the carrying amount of the
asset is recognised in profit and loss in the period of de¬
recognition.

k) Borrowing Costs

General and specific borrowing costs directly attributable
to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale,
are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or
sale. All other borrowing costs are recognised in Statement
of Profit and Loss in the period in which they are incurred.

l) Impairment of Non-Financial Assets

The Company assesses at each reporting date as to
whether there is any indication that any property, plant and
equipment and intangible assets or group of assets, called
cash generating units (CGU) may be impaired. If any such
indication exists the recoverable amount of an asset or
CGU is estimated to determine the extent of impairment,
if any. When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates
the recoverable amount of the CGU to which the asset
belongs.

An impairment loss is recognized in the Statement of Profit
and Loss to the extent, asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is higher
of an asset’s fair value less cost of disposal and value in
use. Value in use is based on the estimated future cash
flows, discounted to their present value using pre-tax
discount rate that reflects current market assessments
of the time value of money and risk specific to the assets.
The impairment loss recognized in prior accounting period
is reversed if there has been a change in the estimate of
recoverable amount.

m) Inventories

Inventories are valued at lower of cost (on First-In-First-
Out) or net realizable value after providing for obsolescence
and other losses, where considered necessary. Cost of
inventories comprises all costs of purchase and other
costs incurred in bringing the inventories to their present
location and condition. Cost of purchased inventory is
determined after deducting rebates and discounts. Net
realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion
and estimated costs necessary to make the sale.