B. Material Accounting Policies
1.1 Basis ofPreparation:
These standalone financial statements are prepared on going concern basis following
accrual system of accounting and in compliance with the Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent
amendments thereto, the Companies Act, 2013 (to the extent notified and applicable) and the
provisions of the Electricity Act, 2003 to the extent applicable.
These financial statements were authorized for issue by the Board of Directors on May 29,
2025.
Use ofestimates and management judgments:
The preparation of the financial statements requires management to make judgments,
estimates and assumptions that may impact the application of accounting policies and the
reported value of Assets, Liabilities, Income, Expenses and related disclosures concerning
the items involved as well as contingent assets and liabilities at the balance sheet date. The
estimates and management’s judgements are based on previous experience and other factor
considered reasonable and prudent in the circumstances. Actual results could vary from
these estimates. The estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognized in the period in which the estimates
are revised and in any future periods affected.
In order to enhance understanding of the financial statements, information about significant
areas of estimation, uncertainty and critical judgments in applying accounting policies that
may have the material effect on the amount recognized in the financial statements are as
under
a) Useful life of Property, Plant & Equipment and intangible assets:
The estimated useful life of property, plant & equipment and intangible assets is based on a
number of factors including the effects of obsolescence, demand, competition and other
economic factors (such as the stability of the industry and known technological advances)
and the level of maintenance expenditure required to obtain the expected future cash flow
from the asset.
Useful life of the asset used for generation of electricity is determined by the Central
Electricity Regulatory Commission (CERC) tariff regulations as mentioned in Part-B of
schedule-ll of the Companies act 2013 except for computer & peripherals, mobile phones,
Furniture & Fixture, Office/ Electrical Equipment and solar and wind power plants which are
as per management assessment.
) Recoverable amount of property, plant and equipment and intangible assets:
The recoverable amount of property, plant and equipment and intangible assets is based on
estimates and assumptions regarding, in particular, the expected market outlook and future
cash flows associated with the power plants, Any changes in these assumptions may have a
material impact on the measurement of the recoverable amount and could result in
impairment.
c) Post-employment benefits plan:
Employee benefits obligations are measured on the basis of actuarial assumptions which
include mortality and withdrawal rates as well as assumptions concerning future
developments in discount rates, the rate of salary increases and the inflation rate. The
Company considers that the assumptions used to measure its obligations are appropriate
and documented. However, any changes in these assumptions may have an impact on the
resulting calculations.
d) Revenues:
The company recognizes revenue from sale of power based on tariff approved by the CERC.
However, in cases where tariff rates are yet to be approved, provisional rates are adopted
considering the applicable CERC tariff regulations/ PPA signed with beneficiaries.
e) Regulatory deferral account balances:
Recognition of regulatory deferral account balances involves significant judgments
including about future tariff regulations since these are based on estimation of the amounts
expected to be recover able/payable through tariff in future.
f) Investment in Subsidiaries and Joint Ventures:
Investment has been carried at cost and as per assessment by the Company, there is no
indication of impairment on such investments. Any changes in assumption may have a
material impact on the measurement of the recoverable amount.
g) Provisions and contingencies:
The assessments undertaken in recognising provisions and contingencies have been made in
accordance with Ind AS 37, ’Provisions, Contingent Liabilities and Contingent Assets’. The
evaluation of the likelihood of the contingent events has been made on the basis of best
judgment by management regarding probable outflow of economic resources. Such
estimation can change on occurrence of unforeseeable developments.
1.1 MAT Credit Entitlements:
MAT credit entitlement is recognized as an asset in accordance with Ind AS 12, based on
reasonable certainty that the Company will generate sufficient future taxable profits to
utilize the credit within the specified period under the Income-tax Act, 1961. The assessment
involves significant judgment regarding future profitability and tax laws. The asset is
reviewed at each reporting date and is adjusted, if required, to reflect the amount that is
reasonably expected to be recovered.
1.2 Basisof Measurement:
These financial statements have been prepared on accrual basis and under the historical
cost convention except following which have been measured at fair value:
- financial assets and liabilities except certain Investments and borrowings carried at
amortised cost,
- assets held for sale - measured at fair value less cost of disposal,
- defined benefit plans - plan assets measured at fair value,
- Right of Use Assets - measured at fair value.
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. Normally at
initial recognition, the transaction price is the best evidence of fair value. However, when the
Company determines that transaction price does not represent the fair value, it uses inter-
alia valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the use of relevant observable inputs
and minimising the use of unobservable inputs.
These financial statements are presented in Indian Rupees (?), which is the Company’s
functional and presentation currency and all amounts are rounded to the nearest lakh,
except as stated otherwise.
1-3 Property, plant and equipment (PPE)
a) The Company has opted to utilize the option under Ind AS101 which permits to continue to use
the Indian GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind
AS- Therefore, the carrying amount of property, plant and equipment according to the Indian
GAAP as at April 1, 2015 i.e. Company's date of transition to Ind AS, were maintained in
transition to Ind AS.
b) An item of PPE is recognized as an asset if 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.
cj PPE are initially measured at cost of acquisition/construction including decommissioning or
restoration cost wherever required. The cost includes expenditure that is directly
attributable to the acquisition/construction of the asset. Where final settlement of bills with
contractors is pending/under dispute, capitalization is done on estimated/provisional basis
subject to necessary adjustment in the year of final settlement.
tl) After initial recognition, Property, Plant & Equipment is carried at cost less accumulated
depreciation/ amortisation and accumulated impairment losses, if any.
ej Deposits, Payments/ liabilities made provisionally towards compensation, rehabilitation and
other expenses relatable to land in possession are treated as cost of land.
f) Asset created on land not belonging to the company where the company is having control
over the use and access of such asset are included under Property, Plant and Equipment.
g) Items of spare parts, stand-by equipment and servicing equipment which meet the definition
of property, plant and equipment are capitalized. The cost of replacing part of an item of
property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the
Company and its cost can be measured reliably. The carrying amount of the replaced part is
derecognised when no future economic benefits are expected from its use or upon disposal.
The costs of the day-to-day servicing of property, plant and equipment are recognised in
statement of profit and loss as and when incurred. Other spares are treated as "stores &
spares” forming part of the inventory and charged to statement of profit & loss when used /
consumed.
h) Subsequent expenditure is recognized as an increase in the carrying amount of the asset
when it is probable that future economic benefits deriving from the cost incurred will
flowto the company and the cost of the item can be measured reliably.
i) Expenditure incurred on renovation and modernization of PPE on completion of the originally
estimated useful life of the power station resulting in increased life and/or efficiency of an
existing asset, is added to the cost of the related asset.
j) Property, plant and equipment is derecognized when no future economic benefits are
expected from its use or upon its disposal. Gains and losses on disposal of an item of property,
plant and equipment is recognized in the statement of profit and loss.
1.4 Capital Work-in-progress
a) Expenditure incurred on assets under construction (including a project) is carried at cost
under Capital Work-in-progress (CWIP). Such cost comprises of purchase price of asset
including other costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the intended manner.
b) Cost directly attributable to projects under construction include costs of employee benefits,
expenditure in relation to survey and investigation activities of the projects, depreciation on
assets used in construction of projects, interest during construction and other costs if
attributable to construction of projects. Such costs are accumulated under “Expenditure
Attributable to Construction (EAC)” and subsequently allocated on systematic basis over
major immovable assets, other than land and infrastructure facilities on commissioning of
projects. Net pre-commissioning income/expenditure is adjusted directly in the cost of
related assets.
c) Capital Expenditure incurred for creation of facilities, over which the Company does not have
control but the creation of which is essential for construction of the project is carried under
“Capital Work-in-progress” and subsequently allocated on systematic basis over major
immovable assets, other than land and infrastructure facilities on commissioning of projects.
Expenditure of such nature incurred after completion of the project, is charged to Statement
of Profit and Loss.
d) Expenditure on Survey and Investigation of the Project is carried as capital work in progress
and capitalized as cost of Project on completion of construction of the Project or the same is
expensed in the year in which it is decided to abandon such project.
e) Expenditure against "Deposit Works” is accounted for on the basis of statement of account
received from the concerned agency and acceptance by the company. However, provision is
made wherever considered necessary.
f) Claims for price variation/ exchange rate variation in case of contracts are accounted for on
acceptance.
1.6 Non -Current Assets Heldfor Sale
The Company classifies non-current assets and disposal groups as held for sale if their
carrying amounts will be recovered principally through a sale rather than through
continuing use and a sale is considered highly probable.
Assets and disposal group identified/ approved for sale, which should be expected to qualify
for recognition as a completed sale within one year from the date of classification as held for
sale, and actions required to complete the plan of sale should indicate that it is unlikely that
significant changes to the plan will be made or that the plan will be withdrawn. Non-Current
Assets held for sale and disposal groups are measured at the lower of their carrying amount
and the fair value less cost to sell.
Non-current assets classified as held for sale are not depreciated or amortized.
1.6 Investment Property
a) Land or a building or part of building or both held by company to earn rentals or for capital
appreciation or both is classified as Investment property other than for
i. Use in the production or supply of goods or services or for administrative purpose; or
ii. Sale in the ordinary course of business.
b) Investment property is recognised as an asset when, and only when:
i. It is probable that the future economic benefits that are associated with the investment
property will flow to the entity and
ii. The cost of the investment property can be measured reliably.
c) Investment properties are initially measured at cost, including transaction costs.
Subsequent to initial recognition, investment properties are carried at cost less accumulated
depreciation and accumulated impairment loss, if any.
d) Investment properties are derecognised either when they have been disposed off 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 the statement of profit and loss in the period of derecognition.
e) Transfers to or from investment property is made when and only when there is a change
in use.
1.7 Intangible Assets and intangible assets under development
a) Intangible assets are identifiable non-monetary asset without physical substance.
Intangible assets are recognised if:
i. It is probable that the expected future economic benefit that are attributable to the asset
will flow to the entity and
ii. the cost of the asset can be measured reliably
b) Intangible assets acquired separately are measured on initial recognition at cost. After initial
recognition, intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses.
c) Subsequent expenditure on already capitalized Intangible assets is capitalised when it
increases the future economic benefits embodied in an existing asset and is amortised
prospectively.
d) Software (not being an integral part of the related hardware) acquired for internal use, is
stated at cost of acquisition less accumulated amortisation and impairment losses, if any.
e) An item of Intangible asset is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. 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.
f) Expenditure on development activities is capitalised only if the expenditure can be measured
reliably, the product or process is technically and commercially feasible, future economic
benefits are probable and the company intends to S has sufficient resources to complete
development and to use or sell the asset.
g) Expenditure incurred which are eligible for capitalisation under intangible assets are carried
as intangible assets under development till they are ready fortheir intended use.
1.8 Regulatory deferral accounts
a) Expenses/ income recognized in the Statement of Profit & Loss to the extent recoverable from
or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are
recognized as 'Regulatory deferral account balances’ as per Ind AS-114.
b) Regulatory deferral account balances are adjusted from the year in which the same become
recoverable from or payable to the beneficiaries.
c) Regulatory deferral account balances are evaluated at each balance sheet date to ensure
that the underlying activities meet the recognition criteria and it is probable that future
economic benefits associated with such balances will flow to the entity. If these criteria are
not met, the regulatory deferral account balances are derecognised.
1.9 Impairment ofnon-financial assets
a) The carrying amounts of the Company’s non-financial assets primarily include property,
plant and equipment, which are reviewed at each reporting date to determine whether there
is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated. An asset’s recoverable amount is the higher of an asset’s or cash¬
generating unit’s (CGU’s) fair value less costs of disposal and its value in use. Recoverable
amount is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets 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. The resulting impairment loss is
recognised in the Statement of Profit and Loss.
b) In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining fair value less costs of
disposal, recent market transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
c) Impairment losses recognized in earlier period are assessed at each reporting date for any
indication that loss has decreased or no longer exists. An impairment loss is reversed if there
has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognized.
1.10 Inventories
a) Inventories mainly comprise stores and spare parts to be used for maintenance of Property,
Plant and Equipment.
b) Inventories and Certified Emission Reduction (CERs-Carbon Credit) are valued at the lower of
cost and net realizable value.
c) Cost includes cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on weighted average basis.
d) Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
e) Net realizable value of obsolete, unserviceable and surplus stores & spares is ascertained at
the end of financial year and provided for, wherever required. Scrap is accounted for as and
when sold.
1.11 Foreign CurrencyTransactions:
a) Functional and presentation currency:
These financial statements have been presented in Indian Rupees (?), which is the Company’s
functional and presentation currency.
b) Transactionsand balances
i. Transactions in foreign currency are initially recorded at exchange rate prevailing on
the date of transaction. At each Balance Sheet date, monetary items denominated in
foreign currency are translated at the exchange rates prevailing on that date. Non¬
monetary items denominated in foreign currency are reported at the exchange rate
prevailing at the date of transaction.
ii. Exchange differences arising on translation or settlement of monetary items are
recognised in the statement of profit and loss in the year in which it arises with the
exception that exchange differences on long term monetary items related to acquisition
of fixed assets entered upto March 31,2016 are adjusted to carrying cost of fixed assets.
iii. In case of advance consideration received or paid in a foreign currency, the date of
transaction for the purpose of determining the exchange rate to use on initial
recognition of the related asset, expense or income (or part of it), is when the Company
initially recognises the non-monetary asset or non-monetary liability arising from the
payment or receipt of advance consideration.
The Company has elected to avail the exemption available under IND AS 101, with regard to
continuation of policy for accounting of exchange differences arising from translation of long
term foreign currency monetary liabilities.
1.12 Financial instruments - initial recognition, subsequent measurement and impairment
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
a) Financial Assets
A financial asset includes inter-alia any asset that is cash, equity instrument of another
entity or contractual obligation to receive cash or another financial assets or to exchange
financial asset or financial liability under condition that are potentially favourable to the
Company. A financial asset is recognized when and only when the Company becomes party to
the contractual provisions of the instrument. Financial assets of the Company comprise cash
and cash equivalents, Bank Balances, Loans to employees/ contractors, security deposit,
claims recoverable etc.
Initial recognition and measurement:
i. All financial assets except trade receivables are recognised initially at fair value plus in the
case of financial assets not recorded at fair value through profit or loss, transaction costs
that are attributable to the acquisition of the financial asset. Transaction costs of financial
assets carried at fair value through profit or loss are expensed in statement of profit or loss.
ii. The company measures the trade receivables at their transaction price if the trade
receivables do not contain a significant financing component. A receivable is classified as a
’trade receivable’ if it is in respect to the amount due from customers on account of goods sold
or services rendered in the ordinary course of business.
Subsequent measurement:
i. Financial Assets are measured at amortized cost or fair value through Other Comprehensive
Income or fair value through Profit or Loss, depending on its business model for managing
those financial assets and the assets contractual cash flow characteristics.
ii. After initial measurement, financial assets classified at amortised cost are subsequently
measured at amortised cost using the effective interest rate (EIR) method. EIR is the rate that
exactly discounts the estimated future cash payments or receipts over the expected life of
the financial instrument. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the statement of profit and loss.
iii. Financial assets at fair value through other comprehensive income are measured at each
reporting date at fair value. Fair value changes are recognized in the other comprehensive
income (OCI). However, the company recognizes interest income, impairment losses and
reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On
derecognition of the financial asset other than equity instruments, cumulative gain or loss
previously recognised in OCI is reclassified to the Statement of Profit and Loss.
iv. Any financial asset that does not meet the criteria for classification as at amortized cost or as
financial assets at fair value through other comprehensive income, is classified as financial
assets at fair value through profit or loss. Financial assets at fair value through profit or loss
are fair valued at each reporting date with all the changes recognized in the Statement of
Profit and Loss.
Impairment offinancial assets:
i. For impairment purposes significant financial assets are tested on an individual basis, other
financial assets are assessed collectively in groups that share similar credit risk
characteristics.
ii. In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss and follows ’simplified approach’ for
recognition of impairment loss allowance on trade receivables or contract assets resulting
from transactions within the scope of Ind-AS 115.
iii. The application of simplified approach does not require the company to track changes in
credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each
reporting date, right from its initial recognition.
iv. For recognition of impairment loss on other financial assets, the company assesses whether
there has been a significant increase in the credit risk since initial recognition. If credit risk
has increased significantly, ECL is provided. For assessing increase in credit risk and
impairment loss, the company assesses the credit risk characteristics on instrument-by¬
instrument basis.
v. Impairment loss allowance (or reversal) recognized during the period is recognized as
expense/income in the statement of profit and loss.
Derecognition:
A financial asset is derecognised when all the cash flows associated with the financial asset
has been realised or such rights have expired.
b) Financial liabilities
Financial liabilities of the Company are contractual obligation to deliver cash or another
financial asset to another entity or to exchange financial assets or financial liabilities with
another entity under conditions that are potentially unfavourable to the Company. The
Company’s financial liabilities include loans & borrowings, trade and other payables etc.
Classification, initial recognition and measurement:
a) Financial liabilities are recognised initially at fair value minus transaction costs that are
directly attributable to the issue of financial liabilities. Any difference between the proceeds
(net of transaction costs) and the fair value at initial recognition is recognised in the
Statement of Profit and Loss or in the "Expenditure Attributable to Construction" if another
standard permits inclusion of such cost in the carrying amount of an asset over the period of
the borrowings using the effective rate of interest.
b) Borrowings are classified as current liabilities unless the company has an unconditional
right to defer settlement of the liability for at least 12 months after the reporting period.
Subsequent measurement:
a) After initial recognition, financial liabilities are subsequently measured at amortised cost
using the EIR method. Gains and losses are recognised in Statement of Profit and Loss or in
the “Expenditure Attributable to Construction" if another standard permits inclusion of such
cost in the carrying amount of an asset, when the liabilities are derecognised as well as
through the EIR amortisation process.
b) Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included as
finance costs in the Statement of Profit and Loss.
Derecognition:
A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires.
c) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
balance sheet if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
1.13 Investment in Subsidiaries
a) A subsidiary is an entity controlled by the Company. Control exists when the Company has
power over the entity, is exposed, or has rights to variable returns from its involvement with
the entity and has the ability to affect those returns by using its power over entity. UPower is
demonstrated through existing rights that give the ability to direct relevant activities, those
which significantly affect the entity’s returns.
b) Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire
investment and directly attributable cost. On transition to IND AS, the Company has adopted
optional exemption under IND AS 101 to value investments in subsidiaries at cost less
impairment,if any.
1.14 Investment in joint ventures and associates:
a) A joint venture is a type of joint arrangement whereby the parties that have joint control of
the arrangement have rights to the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.
b) An associate is an entity over which the Company has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the
investee but does not have control or joint control overthose policies.
c) The investment in joint ventures and associates are carried at cost. The cost comprises price
paid to acquire investment and directly attributable cost less impairment, if any.
1.15 Leases
The Company has adopted Ind AS 116-Leases effective 1st April, 2019, using the modified
retrospective method. The Company has applied the standard to its leases with the
cumulative impact recognised on the date of initial application (1st April, 2019).
Lease is a contract that conveys the right to control the use of 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 use of an identified assets, (ii) the
customer has substantially all the economic benefits from the use of the asset through the
period of the lease and (iii) the customer has the right to direct the use of the asset.
i) As a lessee
At the date of commencement of lease, the company recognizes a right-of-use asset (ROD)
and a corresponding lease liability for all lease arrangements in which it is a lessee, except
for lease with a term of twelve months or less (i.e. short term leases) and leases for which the
underlying asset is of low value. For these short-term and leases for which underlying asset
is of low value, the company recognizes the lease payments on the straight-line basis over
the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the
end of the lease term. ROD assets and lease liability includes these options when it is
reasonably certain that they will be exercised.
The right-to-use assets are initially recognized at cost, which comprises the amount of initial
measurement of the lease liability adjusted for any lease payments made at or before the
inception date of lease along with the initial direct costs, restoration obligations and lease
incentives received.
Subsequently, the right-to-use assets is measured at cost less any accumulated
depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of
lease liability. The Company applies Ind AS 36 to determine whether a ROD asset is impaired
and accounts for any identified impairment loss as described in accounting policy 1.9 on
"Impairment of non-financial assets".
The lease liability is initially measured at present value of the lease payments that are not
paid at the commencement date, discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company’s incremental borrowing rate.
Generally, the Company uses its incremental borrowing rate as the discount rate.
The interest cost on lease liability is expensed in the Statement of Profit and Loss, unless
eligible for capitalization as per accounting policy 1.17 on “Borrowing Cost".
Lease liability and ROU assets have been separately presented in the financial statements
and lease payments have been classified as financing cash flows.
ii) As a lessor
Leases for which the Company is a lessor is classified as a finance or operating lease.
Whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee, the contract is classified as a finance lease. All other leases are
classified as operating leases.
For operating leases, rental income is recognised on a straight line basis over the term of the
relevant lease.
1.16 GovernmentGrants
a) Government grants with a condition to purchase, construct or otherwise acquire long-term
assets are initially measured based on grant receivable under the scheme. Such grants are
recognised in the Statement of Profit and Loss on a systematic basis over the useful life of the
asset. Amount of benefits receivable in excess of grant income accrued based on usage of the
assets is accounted as Government grant received in advance. Changes in estimates are
recognised prospectively overthe remaining life of the assets.
b) Government revenue grants relating to costs are deferred and recognised in the Statement of
Profit and Loss over the period necessary to match them with the costs that they are intended
to compensate.
c) Non-monetary government grants are recorded at a nominal amount.
1.17 Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with
the borrowing of funds. Borrowing cost also includes interest expense on lease liabilities
recognized in accordance with Ind AS 116- 'Leases’ and exchange differences to the extent
regarded as an adjustment to the borrowing costs. Borrowing costs directly attributable to
the acquisition, construction/erection or production of a qualifying asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as
part of the cost of the asset. Capitalisation of borrowing costs ceases when substantially all
the activities necessary to prepare the qualifying assets for their intended uses are
complete. All other borrowing costs are expensed in the period in which they occur.
Income earned on temporary investment made out of the borrowings pending utilization for
expenditure on the qualifying assets is deducted from the borrowing costs eligible for
capitalization.
|