3. Material Accounting Policies

3.1 Revenue recognition

Revenue is recognised upon transfer of control of promised
products or services to customers in an amount that reflects
the consideration which the Company expects to receive in
exchange for those products or services.

• Revenue from time and material and job contracts is
recognised on an output basis measured by units
delivered, efforts expended, number of transactions
processed, etc.

• Revenue related to fixed price maintenance and
support services contracts where the Company is
standing ready to provide services is recognised
based on time elapsed mode and revenue is straight-
lined over the period of performance.

• Revenue from the sale of WTGs is recognised over
the time when the significant risks and rewards of the
ownership have been transferred to the buyers and
there is no continuing effective control over the goods
or managerial involvement with the goods. Revenue
from the sale of WTGs is recognised on supply in
terms of the respective contracts. Revenue from the
sale of power is recognised on the basis of actual units
generated and transmitted to the purchaser.

• Revenue from services rendered is recognised in profit
or loss in proportion to the stage of completion of the
transaction at the reporting date and when the costs
incurred for the transactions and the costs to complete
the transaction can be measured reliably, as under:

• Revenue from EPC is recognized point in time based on
the stage of completion by reference to surveys of work
performed. Revenue from operations and maintenance
and common infrastructure facilities contracts is
recognised over time proportionally over the period of
the contract, on a straight-line basis. Revenue from wind
farm development is recognized point in time when
the wind farm site is developed and transferred to the
customers in terms of the respective contracts.

• Revenue is measured at the fair value of the
consideration received or receivable and is recognised
when it is probable that the economic benefits
associated with the transaction will flow to the
Company and the amount of income can be measured
reliably. Revenue is net of returns and is reduced for
rebates, trade discounts, refunds and other similar
allowances. Revenue is net of goods and service tax.

• Revenue is measured based on the transaction
price, which is the consideration, adjusted for volume
discounts, service level credits, performance bonuses,
price concessions and incentives, if any, as specified in
the contract with the customer.

• Revenue also excludes taxes collected from customers.
Revenue from subsidiaries is recognised based on
transaction price which is at arm’s length. Contract
assets are recognised when there is an excess of
revenue earned over billings on contracts.

• Contract assets are classified as unbilled receivables
(only the act of invoicing is pending) when there is an
unconditional right to receive cash, and only passage
of time is required, as per contractual terms.

• Unearned and deferred revenue (“contract liability”) is
recognised when there are billings in excess of revenues.

• The billing schedules agreed upon with customers
include periodic performance-based payments and/
or milestone-based progress payments. Invoices are
payable within the contractually agreed credit period.

• In accordance with Ind AS 37, the Company recognises
an onerous contract provision when the unavoidable
costs of meeting the obligations under a contract
exceed the economic benefits to be received.

• Contracts are subject to modification to account for
changes in contract specifications and requirements.
The Company reviews modifications to the contract
in conjunction with the original contract, basis which
the transaction price could be allocated to a new
performance obligation, or the transaction price of
an existing obligation could undergo a change. In the
event transaction price is revised for existing obligation,
a cumulative adjustment is accounted for.

Use of significant judgments in revenue recognition

• The Company’s contracts with customers could
include promises to transfer multiple products and
services to a customer. The Company assesses the
products/services promised in a contract and identify
distinct performance obligations in the contract.
Identification of distinct performance obligations
involves judgement to determine the deliverables and
the ability of the customer to benefit independently
from such deliverables.

• The Company uses judgement to determine an
appropriate standalone selling price for a performance
obligation. The Company allocates the transaction
price to each performance obligation on the basis of
the relative standalone selling price of each distinct
product or service promised in the contract. Where
the standalone selling price is not observable, the
Company uses the expected cost plus margin
approach to allocate the transaction price to each
distinct performance obligation.

• The Company exercises judgement in determining
whether the performance obligation is satisfied at a
point in time or over a period of time. The Company
considers indicators such as how customer consumes
benefits as services are rendered or who controls
the asset as it is being created or the existence of an
enforceable right to payment for performance to date
and alternate use of such product or service, transfer
of significant risks and rewards to the customer,
acceptance of delivery by the customer, etc.

• Revenue for fixed-price contracts is recognised using
the percentage-of-completion method. The Company
uses judgement to estimate the future cost-to-
completion of the contracts which is used to determine
the degree of completion of the performance obligation.

• Contract fulfilment costs are generally expensed as
incurred except for certain software license costs
which meet the criteria for capitalisation. Such costs
are amortised over the contractual period or useful
life of the license whichever is less. The assessment
of this criterion requires the application of judgement,
in particular when considering if costs generate
or enhance resources to be used to satisfy future
performance obligations and whether costs are
expected to be recovered.

Dividend income is recorded when the right to receive
payment is established. Interest income is recognised using
the effective interest method.

3.2 Government Grants

Government grants are recognised when there is reasonable
assurance that they will be received and the Company will
comply with the conditions associated with the grants.

Government grants in the form of non-monetary assets
given at a concessional rate are accounted for at their fair
value. The related grant is presented as deferred income and
subsequently transferred to profit or loss as other income
on a systematic and rational basis. Grants that compensate
the company for expenses incurred are recognised in profit
or loss, either as other income or deducted in reporting the
related expense, as appropriate, on a systematic basis over
the periods in which the Company recognises as expenses
the related costs for which the grants are intended to
compensate. Government grants that are receivable as
compensation for expenses or losses already incurred or
for the purpose of giving immediate financial support to
the Company with no future related costs are recognised in
profit or loss in the period in which they become receivable.

3.3 Leases

Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases. The leasing transaction of the Company
comprises only operating leases.

3.3.1 The Company as lessee

The Company lease assets include classes primarily
consisting of leases for land and building, The
Company assesses whether a contract contains a
lease, at the inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to

control the use of an identified asset for a period of
time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i) the
contract involves the use of an identified asset (ii) the
Company has substantially all of the economic benefits
from the use of the assets through the period of the
lease and (iii) the Company has the right to direct the
use of the assets.

At the date of commencement of the lease, the
Company recognizes a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements
in which it is a lessee, except for leases with a term
of twelve months or less (short-term leases) and
low-value leases, the Company recognizes the lease
payments as on operating expenses on straight-line
bases over the term of the lease.

The right-of-use assets are initially recognized as a cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
cost less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.

Right-of-use assets are depreciation from the
commencement date on a straight-line basis over
the shorter of the lease term and useful life of the
underlying assets. Right-of-use assets are evaluated
for recoverability whenever events or changes in
circumstance indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of
the fair value less cost to sell and the value-in-use )
is determined on an individual assets basis unless
the assets do not generate cash flow that is largely
independent of those from other assets. In such cases,
the recoverable amount is determined from the Cash
Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized
cost at the present value of the future lease payments.
The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates in the country of
domicile of these lease liabilities are remeasured with
a corresponding adjustment to the related right of use
asset if the Company change its assessment if whether
it will exercise an extension or a termination option.

Lease liability and ROU assets have been separately
presented in the Balance sheet and lease payments
have been classified as financial cash flows.

3.4 Foreign currency transactions and translation

In preparing the financial statements of the Company,
transactions in currencies other than the Company’s
functional currency (foreign currencies) are recognised
at the rates of exchange prevailing at the dates of the
transactions. At the end of each reporting period, foreign
currency monetary items are translated using the closing
rates. Non-monetary items measured at historical cost in
a foreign currency are translated using the exchange rate
at the date of the transaction and are not translated. Non¬
monetary items measured at fair value that are denominated
in foreign currency are translated using the exchange rates
at the date when the fair value was measured.

Exchange differences on monetary items are recognised in
profit or loss in the period in which they arise except for:

• exchange differences on foreign currency borrowings
relating to assets under construction for future 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; and

• exchange differences on transactions entered into in
order to hedge certain foreign currency risks (refer to
Note 3.14 below for hedging accounting policies).

3.5 Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period 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.

Interest income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible
for capitalisation.

All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.

3.6 Employee benefits

3.6.1 Retirement benefit costs

Recognition and measurement of defined
contribution plans:

Payments to defined contribution retirement benefit
plans viz. government-administered provident funds
and pension schemes are recognised as an expense
when employees have rendered service entitling them
to the contributions.

Recognition and measurement of defined benefit
plans:

For a defined benefit plan, the cost of providing benefits
is determined using the projected unit credit method,
with actuarial valuations being carried out at the end of
each reporting period. Re-measurement, comprising
actuarial gains and losses, the effect of the changes to
the asset ceiling (if applicable) and the return on plan
assets (excluding net interest), is reflected immediately
in the balance sheet with a charge or credit recognised
in other comprehensive income in the period in which
they occur. Re-measurement recognised in other
comprehensive income is reflected immediately in
retained earnings and is not reclassified to profit or loss.
Past service cost is recognised in profit or loss in the
period of a plan amendment. Net interest is calculated
by applying the discount rate to the net defined benefit
plan at the start of the reporting period, taking account
of any change in the net defined benefit plan during the
year as a result of contributions and benefit payments.
Defined benefit costs are categorised as follows:

• service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);

• net interest expense or income; and

• re-measurement

The Company presents the first two components of
defined benefit costs in profit or loss in the line item
‘Employee benefits expense’. Curtailment gains and
losses are accounted for as past service costs.

The retirement benefit obligation recognised in the
standalone balance sheet represents the actual deficit
or surplus in the Company’s defined benefit plans. Any
surplus resulting from this calculation is limited to the
present value of any economic benefits available in the
form of refunds from the plans or reductions in future
contributions to the plans.

3.6.2Short-term and other long-term employee benefits

A liability is recognised for benefits accruing to
employees in respect of wages and salaries, annual
leave and sick leave, bonus etc. in the period the related
service is rendered at the undiscounted amount of
the benefits expected to be paid in exchange for
that service.

Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount of
the benefits expected to be paid in exchange for the
related service.

The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the
asset to be recovered.

Deferred tax liabilities and assets are measured at
the tax rates that are expected to apply in the period
in which the liability is settled or the asset realised,
based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the
reporting period.

The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.

3.7.3 Presentation of current and deferred tax:

Current and deferred tax are recognised in profit
or loss, except when they relate to items that are
recognised in other comprehensive income or directly
in equity, in which case, the current and deferred tax
are also recognised in other comprehensive income
or directly in equity respectively. Where current tax
or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the
accounting for the business combination.

The Company offsets current tax assets and current tax
liabilities, where it has a legally enforceable right to set
off the recognized amounts and where it intends either
to settle on a net basis or to realize the asset and settle
the liability simultaneously. In the case of deferred tax
assets and deferred tax liabilities, the same are offset if
the Company has a legally enforceable right to set off
corresponding current tax assets against current tax
liabilities and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same tax
authority on the Company.

3.8 Property, plant and equipment

An item of property, plant and equipment that qualifies as
an asset is measured on initial recognition at cost. Following
initial recognition, Property, Plant and Equipment (PPE) are
carried at cost, as reduced by accumulated depreciation
and impairment losses, if any.

The Company identifies and determines the cost of each
part of an item of property, plant and equipment separately
if the part has a cost which is significant to the total cost of
that item of property, plant and equipment and has a useful
life that is materially different from that of the remaining item.

Cost comprises of the purchase price / cost of construction,
including non-refundable taxes or levies and any expenses
attributable to bringing the PPE to its working condition
for its intended use. Project pre-operative expenses and
expenditures incurred during the construction period are
capitalized to various eligible PPE. Borrowing costs directly
attributable to the acquisition or construction of qualifying
PPE are capitalised.

Spare parts, stand-by equipment and servicing equipment
that meet the definition of property, plant and equipment
are capitalized at cost and depreciated over their useful life.
Costs in nature of repairs and maintenance are recognized
in the Statement of Profit and Loss as and when incurred.

The cost of assets not ready for intended use, as on the
Balance Sheet date, is shown as capital work in progress.
Advances given towards the acquisition of fixed assets
outstanding at each Balance Sheet date are disclosed as
Other Non-current assets.

Depreciation is recognised so as to write off the cost of PPE
(other than freehold land and properties under construction)
less their residual values over their useful lives, using the
straight-line method. The useful lives prescribed in Schedule
II to the Companies Act, 2013 are considered the minimum
lives. If the management’s estimate of the useful life of
property, plant and equipment at the time of acquisition of
the asset or of the remaining useful life on a subsequent
review is shorter than that envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based
on the management’s estimate of the useful life/remaining
useful life. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.

PPE is depreciated over its estimated useful lives,
determined as under:

• Freehold land is not depreciated.

• On other items of PPE, based on useful life as per Part C
of Schedule II to the Companies Act, 2013.

The management believes that these estimated useful lives
are realistic and reflect a fair approximation of the period
over which the assets are likely to be used.

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

3.9 Intangible assets

Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated
useful lives. The estimated useful life and amortisation
method are reviewed at the end of each reporting period,
with the effect of any changes in estimate being accounted
for on a prospective basis. Intangible assets with indefinite
useful lives that are acquired separately are carried at cost
less accumulated impairment losses.

Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised
at their fair value at the acquisition date (which is regarded
as their cost). Subsequent to initial recognition, intangible
assets acquired in a business combination are reported at
cost less accumulated amortisation and impairment losses,
on the same basis as intangible assets as above.

An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from the derecognition of
an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the
asset, and are recognised in profit or loss when the asset
is derecognised.

Estimated useful lives of intangible assets

The estimated useful lives of the intangible assets are
as follows:

• Technical know-how 10 years

• Operating software 3 years

• Other Software 6 years

3.10 Impairment of tangible and intangible assets other
than goodwill

At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible assets
(other than goodwill) to determine whether there is any
indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate
the recoverable amount of an individual asset, the Company
estimates the recoverable amount of the cash-generating
unit to which the asset belongs. When a reasonable and
consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units,
or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.

The recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates of future
cash flows have not been adjusted. If it is not possible to
measure fair value less cost of disposal because there is
no basis for making a reliable estimate of the price at which
an orderly transaction to sell the asset would take place
between market participants at the measurement dates
under market conditions, the asset’s value in use is used as
the recoverable amount.

If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.

When an impairment loss subsequently reverses, the
carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount,
to the extent that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss has been recognised for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit
or loss.

3.11 Inventories

Inventories are valued at lower of cost and net realisable
value. Cost is determined using weighted average
cost basis.

Cost of inventories comprises all costs of purchase, duties
and taxes (other than those subsequently recoverable from
tax authorities) and all other costs incurred in bringing the
inventory to their present location and condition.

The cost of finished goods and work-in-progress includes
the cost of materials, conversion costs, an appropriate share
of fixed and variable production overheads and other costs
incurred in bringing the inventories to their present location
and condition. Closing stock of imported materials includes
customs duty payable thereon, wherever applicable. The
net realisable value represents the estimated selling price
in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make
the sale.