a) Fair value measurement

The Company measures financial instruments such as
investments in equity shares, mutual funds etc. at fair value at
each reporting date.

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 to the Company.

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 considers
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 Company uses valuation techniques that are appropriate
in the circumstances and for which sufficient information
is available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the Standalone Financial Statements are
categorised 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 Standalone
Financial Statements on a recurring basis, the Company
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.

For the purpose of fair value disclosures, the Company 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 relevant notes.

• Quantitative disclosures of fair value measurement
hierarchy (refer Note 44)

• Financial instruments (including those carried at
amortised cost) (refer Note 44)

b) Property, plant and equipment

Freehold land is carried at historical cost. All other items of
property, plant and equipment are stated at historical cost
net of accumulated depreciation and impairment losses,
if any.

The cost comprises of the purchase price and directly
attributable costs of bringing the asset to its working
condition for the intended use. It also includes the initial
estimate of the costs of dismantling, removing the item and
restoring the site on which it is located, where the Company
has such contractual obligation. Any trade discounts and
rebates are deducted in arriving at the purchase price. Each
part of item of property, plant and equipment with a cost
that is significant in relation to the total cost of the item is
depreciated separately. 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 Company
and the cost of the item can be measured reliably.

Capital work-in-progress comprises of the cost of property,
plant and equipment that are not yet ready for their intended
use as at the Balance Sheet date.

In case of windmills, useful life of 20 years (instead of 22
years as prescribed in Part C of Schedule II to the Act) has
been estimated by the Management of the Company for
the purpose of charging depreciation based on technical
assessment by independent external expert.

However, on account of classification of windmill
operations as discontinued operations, depreciation of
windmill has been suspended from May 2023 onwards.

In case of vehicles useful life of 5 years (instead of 8 years
as prescribed in Part C of Schedule II to the Act) has been
estimated by the Management of the Company for the
purpose of charging depreciation.

Leasehold improvements are amortised under straight
line method over the lower of lease term and the useful
life of such assets subject to maximum of 60 months.

All items of property, plant and equipment individually
costing H 5,000 or less are fully depreciated in the year
of installation.

ii. Disposals / derecognition

An item of property, plant and equipment 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.

iii. The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed annually and adjusted prospectively,
if appropriate.

c) Intangible assets

Intangible assets are recognised when it is probable that the
future economic benefits that are attributable to the assets
will flow to the Company and the cost of the asset can be
measured reliably.

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost comprising of the consideration
paid for acquisition less accumulated amortisation and
accumulated impairment losses, if any. Internally generated
intangible assets, excluding capitalised development costs,
are not capitalised and the expenditure is recognised in
the statement of profit and loss in the period in which the
expenditure is incurred.

The useful lives of intangible assets are assessed as either
finite or indefinite.

I ntangible assets with finite useful lives i.e., software are
amortised on a straight-line basis over the period of expected
future benefits i.e., over their estimated useful lives of five
years. Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment at least annually and whenever there is an
indication that the asset may be impaired.

The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least
at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future
economic benefits embodied in the asset is accounted for by
changing the amortisation period or method, as appropriate,

and are treated as changes in accounting estimates. The
amortisation expense on intangible assets with finite lives is
recognised in the Statement of Profit and Loss.

Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and
are recognised in the Statement of Profit and Loss when the
asset is derecognised.

d) Revenue recognition

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

(i) Dividend income on investments is recognised when the
right to receive dividend is established.

(ii) Interest on fixed deposits with banks, debentures, bonds
etc. is recognised on a time proportion basis taking into
account the amount outstanding and rate applicable. In
case of significant uncertainty of receiving interest, the
same is not recognised though accrued and is recognised
only when received.

(iii) Profit / Loss of the sale / redemption of investments is
dealt with at the time of actual sale / redemption.

(iv) Income from power generation is recognised on
supply of power to the grid in accordance with the
terms and conditions of the contract with the Open
Access Consumer.

The unutilised units by the Open Access Consumer
are initially recognised at a rate which is estimated
on the basis of latest available rates as per MSEDCL
circulars/orders. The same are subsequently billed
upon determination of the billable rate / units after
verification by MSEDCL in accordance with the Rules and
Regulations. The difference between the initial accrual
and final billing is adjusted with the revenue of the year in
which the billing is done.

(v) Income from the sale of Renewable Energy Certificates
(RECs) is recognised on an accrual basis at the time when
the contract to sale is entered.

(vi) Other Incomes are accounted as and when the right to
receive such income arises and it is probable that the
economic benefits will flow to the Company and the
amount of income can be measured reliably.

e) Expenditure on Corporate Social Responsibility (CSR
Activities)

The expenditure on CSR activities is recognised in the
Statement of Profit and Loss upon utilisation by the trust/NGO
to which the funding is made by the Company. The expenditure
on CSR activities conducted by the Company is recognised in
the Statement of Profit and Loss, on payment basis.

f) Income taxes

i. Current Income Tax

Current income tax assets and expenses / liabilities are
measured respectively at the amount expected to be
recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted at the
reporting date.

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

ii. Deferred tax

Deferred tax is recognised in respect of temporary
differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting
purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable
temporary differences, except in respect of taxable
temporary differences associated with investments
in subsidiaries, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.

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 utilised except
when the deferred tax asset relating to the deductible
temporary difference arises from 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.

In respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable
future and taxable profit will be available against which
the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced 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 utilised. 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 assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively
enacted at the reporting date. 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 deferred tax liabilities are offset
if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred
taxes relate to the same taxable Company and the same
taxation authority.

Minimum Alternate Tax (MAT) Credit:

MAT credit is recognised as deferred tax asset only
when and to the extent there is convincing evidence
that the Group will pay normal income tax during the
specified period.

g) Investments

i. Investment in subsidiary

Investment in subsidiaries is recognised at cost and not
adjusted to fair value at the end of each reporting period.
Cost represents amount paid for acquisition of the
said investments.

The Company assesses at the end of each reporting
period, if there are any indications that the said
investments may be impaired. If so, the Company
estimates the recoverable value / amount of the
investment and provides for impairment, if any i.e., the
deficit in the recoverable value over cost.

ii. Investment property

Investment in land and / or buildings that are not intended
to be occupied substantially for use by or in the operations
of the Company are classified as investment property.

I nvestment property is initially measured at cost,
including related transaction costs. The cost of
investment property includes its purchase price and
directly attributable expenditure, if any. Subsequent
expenditure is capitalised to the asset’s carrying amount
only when it is probable that future economic benefits
associated with expenditure will flow to the Company
and the cost of the item can be measured reliably. All
other repairs and maintenance costs are expensed
when incurred.

Subsequent to the initial recognition, investment
property is stated at cost less accumulated depreciation
and accumulated impairment loss, if any. Depreciation
on investment property has been provided in a manner
that amortise the cost of the assets over their estimated
useful lives on straight line method as per the useful life
prescribed under Schedule II of the Act.

Investment property in the form of land is not depreciated.

Investment property is derecognised either when it is
disposed off or permanently withdrawn from use and no
future economic benefit is expected from its disposal.
The difference between the net disposal proceeds and
the carrying amount of the asset is recognised in the
Statement Profit and Loss in the period of derecognition.

Though the Company measures investment property
using cost-based measurement, the fair value of
investment property is disclosed as required by
IND AS 40 ‘Investment Properties’. Fair values are
determined based on a periodic evaluation performed
by an accredited external independent valuer applying
valuation model recommended by recognised valuation
standards committee.

h) Leases

Company as a Lessee:

The Company’s lease asset classes primarily consist of
leases for land and buildings. The Company, at the inception
of a contract, assesses whether the contract is a lease or
otherwise. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a
time in exchange for a consideration.

The Company recognises a right-of-use asset and a lease
liability at the lease commencement date.

The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located,
less any lease incentives received. The right-of-use asset is
subsequently depreciated using the straight-line method from
the commencement date to the end of the lease term. Such
depreciation is recognised in the Statement of Profit and Loss
except to the extent that it can be allocated to any Property,
Plant and Equipment.

The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the Company’s incremental borrowing
rate. After the commencement date, the lease liability is
adjusted by increasing the carrying amount to reflect interest
on the lease liability; reducing the carrying amount to reflect
the lease payments made; and remeasuring the carrying
amount to reflect any reassessment or lease modifications.
The lease liability is also remeasured when there is a change in
future lease payments arising from a change in an index or rate,
if there is a change in the Company’s estimate of the amount
expected to be payable under a residual value guarantee, or
if the Company changes its assessment of whether it will
exercise a purchase, extension or termination option. When
the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use
asset, or is recorded in profit or loss if the carrying amount of
the right-of-use asset has been reduced to zero. The interest
on the lease liability is recognised in the statement of Profit
and Loss except to the extent that it can be allocated to any
Property, Plant and Equipment.

The Company has elected not to recognise right-of-use assets
and lease liabilities for short-term leases that have a lease term
of 12 months or less and leases of low-value assets (assets of

less than C 5,000 in value). The Company recognises the lease
payments associated with these leases as an expense over the
lease term.

Company as a Lessor:

Leases in which the Company does not transfer substantially
all the risks and rewards of ownership of an asset are classified
as operating leases. Rental income from operating lease is
recognised on a straight-line basis over the term of the relevant
lease unless the payments to the lessor are structured to
increase in line with expected general inflation to compensate
for the lessor’s expected inflationary cost increases or another
systematic basis is available. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the
lease term on the same basis as rental income. Contingent
rents are recognised as revenue in the period in which they
are earned. Leases are classified as finance leases when
substantially all of the risks and rewards of ownership transfer
from the Company to the lessee. Amounts due from lessees
under finance leases are recorded as receivables at the
Company’s net investment in the leases. Finance lease income
is allocated to accounting periods to reflect a constant periodic
rate of return on the net investment outstanding in respect of
the lease.

i) Inventories

Renewable Energy Certificates (RECs) are recognised upon
application for certification to the respective authorities till
such units are sold and valued at lower of cost and net realisable
value. Cost comprises of costs incurred for certification of
RECs. Net realisable value of RECs is the estimated selling price
in the ordinary course of business.

j) Impairment of non-financial assets

The Company assesses at each reporting date 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 Company estimates 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 to
sell and its value in use. It is determined for an individual asset,
unless the asset does not generate cash inflows that are largely
independent of those from other assets of the Company. When
the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down
to its recoverable amount.

Impairment losses, including impairment on inventories, are
recognised in the Statement of Profit and Loss in those expense
categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at
each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist
or may have decreased. If such indication exists, the Company
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 recognised in the
Statement of Profit and Loss.