3. Material Accounting Policies

3.1 Statement of compliance

These financial statements of the company have
been prepared in accordance with Indian Accounting
Standards ("Ind AS”) prescribed under Section 133 of
Companies Act, 2013 read with the Companies (Indian
Accounting Standards) Rules as amended from time
to time. The accounting policies as set out below have
been applied consistently to all years presented in
these financial statements except where a newly issued
accounting standard is initially adopted or a revision to
an existing accounting standard requires a change in
the accounting policy hitherto in use.

Amounts in the financial statements are presented in
Indian Rupees in Lakhs as permitted by Schedule III to
the Companies Act, 2013. Per share data is presented in
Indian Rupees.

3.2 Basis of preparation and presentation

These financial statements have been prepared on
the historical cost basis except for certain financial
instruments that are measured at fair values at the end
of each reporting period, as explained in the accounting
policies below. Historical cost is generally based on the
fair value of the consideration given in exchange for
goods and services.

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date,
regardless of whether that price is directly observable
or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the
company takes into account the characteristics of
the asset or liability if market participants would take
those characteristics into account when pricing the
asset or liability at the measurement date. Fair value
for measurement and/or disclosure purposes in these
Financial Statements is determined on such a basis.

In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2, or 3
based on the degree to which the inputs to the fair value
measurements are observable and the significance of
the inputs to the fair value measurement in its entirety,
which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities
that the entity can access at the measurement
date;

• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the
asset or liability

When measuring the fair value of an asset or a liability,
the company uses observable market data as far as
possible. If the inputs used to measure the fair value
of an asset or a liability fall into different levels of the
fair value hierarchy, then the fair value measurement
is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is
significant to the entire measurement.

The material accounting policies are set out below:

3.3 Inventories

Raw materials and stores and spares are stated at
the lower of cost and net realisable value. Costs of
inventories are determined on a weighted average basis
and includes all direct costs incurred in bringing such
inventories to their present location and condition. Net
realisable value represents the estimated selling price
for inventories less all estimated costs of completion
and costs necessary to make the sale.

Due allowance is made to the carrying amount of
inventory based on Management's assessment/

technical evaluation and past experience of the company
taking into account its age, usability, obsolescence,
expected realisable value etc.

3.4 Cash Flow Statement

Cash flows are reported using the indirect method,
whereby profit before tax is adjusted for the effects
of transactions of non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
are segregated into operating, investing and financing
activities.

Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand and short-term
deposits with original maturity of three months or less,
which are subject to an insignificant risk of changes in
value. In the Statement of Cash Flows, cash and cash
equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts,
if any, as they are considered as integral part of the
Company's cash management.

3.5 Taxation

Income tax expense represents the sum of the current
tax and deferred tax.

3.5.1 Current tax

The tax currently payable is based on taxable profit
for the year. Taxable profit differs from 'profit before
tax' as reported in the statement of profit and loss
because of items of income or expense that are taxable
or deductible in other years and items that are never
taxable or deductible. The Company's current tax is
calculated using tax rates and laws that have been
enacted or substantively enacted by the end of the
reporting period.

3.5.2 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 recognised for all
taxable temporary differences. Deferred tax assets
are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable
profits will be available against which those deductible
temporary differences can be utilised.

Deferred tax liabilities are recognised for taxable
temporary differences associated with investment
in subsidiaries, except where the company is able to
control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse
in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with
such interests are recognised only to the extent that it
is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary
differences and they are expected to reverse in the
foreseeable future.

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
deferred tax assets to be utilized.

Deferred tax liabilities and assets are measured at the
tax rates that are expected to apply in the period in
which the liability would be 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.

3.5.3 Current and deferred tax for the year

Current and deferred tax expense is recognised in the
Statement of Profit and Loss. When they relate to items
that are recognised in other comprehensive income or
directly in equity, the current and deferred tax are also
recognised in other comprehensive income or directly
in equity respectively.

3.6 Property, Plant and Equipment (PPE)

Property, plant and equipment are carried at cost less
accumulated depreciation and impairment losses, if any.
The cost of property, plant and equipment comprises
the purchase price net of any trade discounts and
rebates, any import duties and other taxes (other than
those subsequently recoverable) and includes interest
on borrowings attributable to acquisition of qualifying
property, plant and equipment up to the date the asset is
ready for its intended use and other incidental expenses

incurred up to that date. Subsequent expenditure
relating to property, plant and equipments is capitalised
only if such expenditure results in an increase in the
future benefits from such asset beyond its previously
assessed standard of performance.

Property, plant and equipment acquired and put to use
for project purpose are capitalised and depreciation
thereon is included in the project cost till the project is
ready for its intended use.

Any part or components of property, plant and
equipment which are separately identifiable and
expected to have a useful life which is different from
that of the main assets are capitalised separately,
based on the technical assessment of the management.

Projects under which assets are not ready for their
intended use and other capital work-in-progress
are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.

Property, plant and equipment retired from active use
and held for sale are stated at the lower of their net
book value and net realisable value and are disclosed
separately.

Capital work in progress represents projects under
which the property, plant and equipments are not yet
ready for their intended use and are carried at cost
determined as aforesaid.

3.7 Depreciation

Depreciation on property, plant and equipment is
provided pro-rata for the periods of use on the straight
line method at the rates specified in Schedule II to the
Companies Act, 2013 except in respect of certain assets
mentioned below which are provided for at the rates
based on the estimated useful lives of the assets, as
determined by the Management.

Plant and Equipment in the nature of Electrical
equipment including transmission facilities are
depreciated over a period of 22 to 27 years considering
the nature of the facilities and technical evaluation.

I ndividual assets costing less than Rs. 5,000 each are
depreciated in the year of purchase considering the
type and usage pattern of these assets.

Leasehold improvements are depreciated over the
primary lease period.

Depreciation is accelerated on property, plant and
equipment, based on their condition, usability, etc. as
per the technical estimates of the Management, where
necessary.

Buildings and Plant and Machinery developed on land/
plot obtained on a lease arrangement are depreciated
over the term of the arrangement or the useful life of the
asset, whichever is lower.

3.8 Intangible assets

I ntangible assets are carried at cost less accumulated
amortisation and impairment losses, if any.

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
the 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 prospective basis.

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

3.9 Leases

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.

Company as a lessee

The Company accounts for each lease component
within the contract as a lease separately from
non-lease components of the contract and allocates the
consideration in the contract to each lease component
on the basis of the relative standalone price of the lease
component and the aggregate standalone price of the
non-lease components.

The Company recognises right-of-use asset
representing its right to use the underlying asset for the
lease term at the lease commencement date. The cost
of the right-of-use asset measured at inception shall
comprise of the amount of the initial measurement
of the lease liability adjusted for any lease payments

made at or before the commencement date less any
lease incentives received, plus any initial direct costs
incurred and an estimate of costs to be incurred by
the lessee in dismantling and removing the underlying
asset or restoring the underlying asset or site on which
it is located. The right-of-use assets is subsequently
measured at cost less any accumulated depreciation,
accumulated impairment losses, if any and adjusted for
any remeasurement of the lease liability. The right-of-
use assets is depreciated using the straight line method
from the commencement date over the shorter of lease
term or useful life of right-of-use asset. The estimated
useful lives of right-of-use assets are determined on the
same basis as those of property, plant and equipment.
Right-of-use assets are tested for impairment whenever
there is any indication that their carrying amounts
may not be recoverable. Impairmen t loss, if any, is
recognised in the statement of profit and loss.

The Company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease payments
are discounted using the interest rate implicit in the
lease, if that rate can be readily determined. If that
rate cannot be readily determined, the Company
uses incremental borrowing rate. For leases with
reasonably similar characteristics, the Company, on a
lease by lease basis, may adopt either the incremental
borrowing rate specific to the lease or the incremental
borrowing rate for the portfolio as a whole. The lease
payments shall include fixed payments, variable lease
payments, residual value guarantees, and exercise price
of a purchase option where the Company is reasonably
certain to exercise that option and payments of
penalties for terminating the lease, if the lease term
reflects the lessee exercising an option to terminate the
lease. The lease liability is subsequently remeasured
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 or to reflect revised in-substance fixed
lease payments.

The Company recognises the amount of the
remeasurement of lease liability due to modification
as an adjustment to the right-of-use asset and the
statement of profit and loss depending upon the nature
of modification. Where the carrying amount of the

right-of-use asset is reduced to zero and there is a
further reduction in the measurement of the lease
liability, the Company recognises any remaining
amount of the remeasurement in the statement of
profit and loss.

The Company has elected not to apply the requirements
of Ind AS 116 Leases to short term leases of all assets
that have a lease term of 12 months or less and leases
for which the underlying asset is of low value. The lease
payments associated with these leases are recognised
as an expense on a straight line basis over the lease
term.

The Company chose to present Right-of-use assets
along with the property plant and equipment, as if they
were owned.

Company as a lessor

At the inception of the lease the Company classifies
each of its leases as either an operating lease or a
finance lease. The Company recognises lease payments
received under operating leases as income on a straight
line basis over the lease term. In case of a finance lease,
finance income is recognised over the lease term based
on a pattern reflecting a constant periodic rate of return
on the lessor's net investment in the lease. When the
Company is an intermediate lessor it accounts for its
interests in the head lease and the sublease separately.
It assesses the lease classification of a sub-lease
with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying
asset. If a head lease is a short term lease to which the
Company applies the exemption described above, then
it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease
components, the Company applies Ind AS 115 Revenue
from contracts with customers to allocate the
consideration in the contract.

Company as a lessee

Operating leases

For transition, the Company has elected not to apply the
requirements of Ind AS 116 to leases which are expiring
within 12 months from the date of transition by class of
asset and leases for which the underlying asset is of low
value on a lease-by-lease basis. The Company has also
used the practical expedient provided by the standard
when applying Ind AS 116 to leases previously classified

as operating leases under Ind AS 17 and therefore, has
not reassessed whether a contract, is or contains a
lease, at the date of initial application, relied on its
assessment of whether leases are onerous, applying Ind
AS 37 immediately before the date of initial application
as an alternative to performing an impairment review,
excluded initial direct costs from measuring the right-
of-use asset at the date of initial application and used
hindsight when determining the lease term if the
contract contains options to extend or terminate the
lease. The Company has used a single discount rate to
a portfolio of leases with similar characteristics.

3.10 Revenue recognition

Revenue from Operations- Sale of Power

The company derives revenue primarily from Sale of
power.

Revenue from the sale of power is recognised on the
basis of the number of units of power exported, in
accordance with joint meter readings undertaken
on a monthly basis by representatives of the State
Electricity Board and the company, at rates agreed upon
with customers and when there is no uncertainty in
realising the same. Transmission, System Operating and
Wheeling/Other Charges payable to State Electricity
Boards on sale of power is reduced from Revenue.

Revenue from the end of the last invoicing to the
reporting date is recognized as unbilled revenue and are
classified as contract assets.

The company accounts for volume discounts and pricing
incentives to customers as a reduction of revenue based
on the ratable allocation of the discounts/ incentives
to each of the underlying performance obligation that
corresponds to the progress by the customer towards
earning the discount/ incentive.

Other Operating Revenues

a. Renewable Energy Certificate (REC) Income

I ncome arising from REC is initially recognised in
respect of the number of units of power exported
at the minimum expected realisable value,
determined based on the rates specified under
the relevant regulations duly considering the
entitlements as per the policy, industry specific
developments, Management assessment etc and
when there is no uncertainty in realising the same.

The difference between the amount recognised
initially and the amount realised on sale of such
REC's at the Power Exchange are accounted for as
and when such sale happens.

The issuance fee incurred for registering the RECs
are reduced from the REC income.

b. Others

(i) Income in the form of Generation Based
Incentives are accounted for in the year of
generation for eligible units when there is no
uncertainty in receiving the same.

(ii) Revenue from windmill operations and
maintenance services is recognized based
on time elapsed mode and revenue is pro
rated over the period for which service is
performed.

The Company presents revenues net of indirect
taxes in its statement of Profit and loss.

Other Income

(i) Dividend from investments is recognised when
the shareholder's right to receive payment is
established and it is probable that the economic
benefits will flow to the company and the amount
can be measured reliably.

(ii) Interest income from a financial asset is
recognised when it is probable that the economic
benefits will flow to the company and the amount
of income can be measured reliably. Interest
income is accrued on a time basis, by reference to
the principal outstanding and the effective rate of
interest applicable, which is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to that
asset's net carrying amount on initial recognition.

(iii) I nsurance claims are accounted for on the basis
of claims admitted/expected to be admitted and
to the extent that the amount recoverable can be
measured reliably and it is reasonable to expect
ultimate collection.

3.11 Employee Benefits

Employee benefits are accrued in the period in which

the associated services are rendered by employees of

the company, as detailed below:

Defined contribution plans

The Company's contribution to State Governed provident
fund scheme, Employee State Insurance scheme and
Employee pension scheme are considered as defined
contribution plans and expenses are recognized in the
Statement of Profit and Loss based on the amount of
contribution required to be made and when services are
rendered by the employees.

Defined benefit plans

The cost of the defined benefit plans and the present
value of the defined benefit obligation are recognized
based on actuarial valuation using the projected
unit credit method. An actuarial valuation involves
making various assumptions that may differ from
actual developments in the future. These include
the determination of the discount rate, future salary
increases and mortality rates. Due to the complexities
involved in the valuation and its long term nature, a
defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at
each reporting date.

The Company accrues for liability towards Gratuity which
is a defined benefit plan. The present value of obligation
under such defined benefit plan is determined based
on actuarial valuation as at the balance sheet date,
using the Projected Unit Credit Method. Actuarial gains
and losses are recognized in the Statement of Other
comprehensive income in the period in which they
occur and are not deferred.

In accordance with Indian law, the company and its
subsidiaries in India operate a scheme of gratuity which
is a defined benefit plan. The gratuity plan provides for a
lump sum payment to vested employees at retirement,
death while in employment or on termination of
employment of an amount equivalent to 15 days' salary
payable for each completed year of service. Vesting
occurs upon completion of five continuous years of
service. The Company formed a trust for making the
contributions. These contributions are classified as
plan assets and the corpus is managed by the Life
Insurance Corporation of India.

The plan assets are adjusted against the gratuity liability.
Any excess of Plan assets over the liability is grouped
under non-current/current assets respectively.

Short Term employee benefits

Short term employee benefits at the Balance Sheet
date, including short term compensated absences, are
recognized as an expense as per the company's scheme
based on expected obligations on an undiscounted
basis.

Long term employee benefits

The Company accounts for its liability towards long term
compensated absences based on the actuarial valuation
done as at the Balance Sheet date by an independent
actuary using the Projected Unit Credit Method.

All gains/losses due to actuarial valuations are
immediately recognized in the Statement of profit and
loss.

3.12 Foreign Currencies

Items included in the company's financial statements
are measured using the currency of the primary
economic environment in which the entity operates
(the "functional currency”). The financial statements
are presented in Indian Rupees, which is the Company's
functional currency and the company's presentation
currency.

In preparing the company's financial statements,
transactions in currencies other than the 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, monetary items
denominated in foreign currencies are retranslated at
the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are not retranslated.

Exchange differences on monetary items are
recognised in the statement of profit and loss in the
year in which they arise except for 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.

Assets and liabilities of entities with functional currency
other than presentation currency are translated to the

presentation currency (INR) using closing exchange
rates prevailing on the last day of the reporting period.
Income and expense items are translated using average
exchange rates for the period. Exchange differences
arising, if any, are recognized in other comprehensive
income and accumulated in equity as "Foreign currency
translation reserve".

3.13 Borrowing Costs

Borrowing costs specifically identified to the
acquisition or construction of qualifying assets are
capitalized as part of such assets. A qualifying asset is
one that necessarily takes a substantial period of time
to get ready for the intended use. All other borrowing
costs are charged to the statement of profit and loss.

Capitalisation of borrowing costs is suspended and
charged to the statement of profit and loss during
extended periods when active development activity on
the qualifying assets is interrupted.

Interest income earned on temporary investment of
specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization. Borrowing costs that are not
directly attributable to a qualifying asset are recognised
in the statement of profit and loss using the Effective
Interest Rate (EIR) method.

3.14 Financial instruments

Financial assets and financial liabilities are recognised
when the company becomes a party to the contractual
provisions of the instruments.

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted from the
fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit
or loss are recognised immediately in the statement of
profit and loss.

3.15 Financial assets

All regular way purchases or sales of financial assets
are recognised and derecognised on a trade date basis.

Regular way purchases or sales are purchases or sales
of financial assets that require delivery of assets within
the time frame established by regulation or convention
in the marketplace.

All recognised financial assets are subsequently
measured in their entirety at either amortised cost
or fair value, depending on the classification of the
financial assets.

3.15.1 Classification of financial assets

Debt instruments that meet the following conditions
are subsequently measured at amortised cost (except
for debt instruments that are designated as at fair
value through statement of profit and loss on initial
recognition):

• the asset is held within a business model whose
objective is to hold assets in order to collect
contractual cash flows; and

• the contractual terms of the instrument give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.

Debt instruments that meet the following conditions
are subsequently measured at fair value through other
comprehensive income (except for debt instruments
that are designated as at fair value through profit or loss
on initial recognition) :

• the asset is held within a business model whose
objective is achieved both by collecting contractual
cash flows and selling financial assets; and

• the contractual terms of the instrument give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.

All other financial assets are subsequently measured at
fair value.

3.15.2 Amortised cost and Effective Interest Rate method

The Effective Interest Rate method is a method of
calculating the amortised cost of a debt instrument and
of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all
fees and amounts paid or received that form an integral
part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life

of the debt instrument, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis
for debt instruments other than those financial assets
classified as at FVTPL. Interest income is recognised in
the statement of profit and loss and is included in the
"Other income” line item.

3.15.3 Investments in equity instruments

On initial recognition, the company can make an
irrevocable election (on an instrument-by-instrument
basis) to present the subsequent changes in fair value in
other comprehensive income pertaining to investments
in equity instruments. Investments in subsidiaries held
in the course of business are measured at fair value
through profit or loss. The related accounting treatment
is discussed in detail in the relevant sections below.
This election is not permitted if the equity investment
is held for trading. These elected investments are
initially measured at fair value plus transaction costs.
Subsequently, they are measured at fair value with gains
and losses arising from changes in fair value recognised
in other comprehensive income and accumulated in
the 'Reserve for equity instruments through other
comprehensive income'. The cumulative gain or loss is
not reclassified to the statement of profit and loss on
disposal of the investments.

A financial asset is held for trading if:

• It has been acquired principally for the purpose of
selling it in the near term; or

• On initial recognition it is part of a portfolio of
identified financial instruments that the company
manages together and has a recent actual pattern
of short-term profit-taking; or

• It is a derivative that is not designated and effective
as a hedging instrument or a financial guarantee.

Changes in the carrying amount of investments in equity
instruments at FVTOCI relating to changes in foreign
currency rates are recognised in other comprehensive
income.

3.15.4 Financial assets at FVTPL

Financial assets are measured at fair value through
profit or loss unless they are measured at amortised cost
or at fair value through other comprehensive income
on initial recognition. The transaction costs directly

attributable to the acquisition of financial assets at fair
value through profit or loss are immediately recognised
in statement of profit and loss.

3.15.5 Impairment of financial assets

Loss allowance for expected credit losses is recognised
for financial assets measured at amortised cost (or)
fair value through other comprehensive income (or) fair
value through profit or loss, as the case may be.

Loss allowance equal to the lifetime expected credit
losses is recognised if the credit risk on the financial
instruments has significantly increased since initial
recognition. For financial instruments whose credit risk
has not significantly increased since initial recognition,
loss allowance equal to twelve months expected credit
losses is recognised.

I n accordance with Ind AS 109 - Financial Instruments,
the company follows 'simplified approach' for
recognition of impairment loss allowance on trade
receivables wherein impairment loss allowance based
on lifetime expected credit loss at each reporting date,
is recognized right from its initial recognition.

3.15.6 Derecognition of financial assets

The company derecognises a financial asset when the
contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership
of the asset to another party. If the company neither
transfers nor retains substantially all the risks and
rewards of ownership and continues to control the
transferred asset, the company recognises its retained
interest in the assets and an associated liability for
amounts it may have to pay. If the company retains
substantially all the risks and rewards of ownership of
a transferred financial asset, the company continues
to recognise the financial asset and also recognises a
collateralised borrowing of the proceeds received.

3.16 Financial Liabilities and Equity Instruments

3.16.1 Classifications debt or equity

Financial liabilities and equity instruments issued by the
company are classified according to the substance of
the contractual arrangements and the definitions of a
financial liability and an equity instrument.

3.16.2 Equity instruments

An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by the company are recognized at the proceeds
received, net of direct issue costs.

3.16.3 Financial liabilities

(i) Financial Liabilities

Trade and other payables are initially measured
at fair value, net of transaction costs, and are
subsequently measured at amortised cost, using
the effective interest rate method. Interest¬
bearing bank loans, overdrafts and issued
debt are initially measured at fair value and are
subsequently measured at amortised cost using
the effective interest rate method.

Any difference between the proceeds (net
of transaction costs) and the settlement or
redemption of borrowings is recognised over the
term of the borrowings in accordance with the
company's accounting policy for borrowing costs.

(ii) Financial guarantee contracts

A financial guarantee contract is a contract that
requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a
specified debtor fails to make payments when due
in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by the
company are initially measured at their fair
values and, if not designated as at FVTPL, are
subsequently measured at the higher of:

a. the amount of loss allowance determined in
accordance with impairment requirements
of Ind AS 109; and

b. the amount initially recognised less, when
appropriate, the cumulative amount of
income recognised in accordance with the
principles of Ind AS 115.

(iii) Derecognition of financial liabilities

The company derecognises financial liabilities
when, and only when, the company's obligations are
discharged, cancelled or expired. The difference
between the carrying amount of the financial

liability derecognised and the consideration paid
and payable is recognised in the statement of
profit and loss.

3.16.4 Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset
when the company has a legally enforceable right (not
contingent on future events) to off-set the recognised
amounts either to settle on a net basis, or to realise the
assets and settle the liabilities simultaneously.

3.17 Earnings Per Share

Basic earnings per share are computed by dividing the
net profit after tax by the weighted average number of
equity shares outstanding during the period. Diluted
earnings per share is computed by dividing the net
profit after tax by the weighted average number of
equity shares considered for deriving basic earnings per
share and also the weighted average number of equity
shares that could have been issued upon conversion of
all dilutive potential equity shares.

Further, the Basic and Diluted earnings per share
attributable to the equity shareholders of the Holding
Company are presented separately for continuing and
discontinuing operations for the year.

3.18 Impairment of Assets

At the end of each balance sheet date, the company
assesses whether there is any indication that any
Property, plant and equipment and intangible assets
with finite lives may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated
to determine the extent of the 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 cash generating unit to
which the asset belongs.

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 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 the statement of profit and loss.