4. SIGNIFICANT ACCOUNTING POLICIES:

A summary of the significant accounting policies applied
in the preparation of the financial statements are as
given below. These accounting policies have been
applied consistently to all the periods presented in the
financial statements, unless otherwise stated.

1. Inventories

Raw materials and stores, work in progress, traded
and finished goods are stated at the lower of cost
and net realizable value. Cost of raw materials and
traded goods comprises cost of purchases. Cost
of work-in-progress and finished goods comprises
direct materials, direct labour and an appropriate
proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis
of normal operating capacity. Costs of inventories
also include all other costs incurred in bringing
the inventories to their present location and
condition. Costs are assigned to individual items
of inventory arrived on weighted average basis.
Costs of purchased inventory are determined after
deducting rebates and discounts. Net realisable
value is the estimated selling price in the ordinary
course of business less the estimated costs of
completion and the estimated costs necessary to
make the sale.

Stores spares, packing material and all
consumables items held for use in the production
of inventories are charged to profit & loss account
as and when purchased.

Provision is recognized for damaged, defective or
obsolete stocks where necessary

2. Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet
comprise cash at banks and on hand, Cheques
on hand and short-term deposits with an original
maturity of three months or less, which are subject
to an insignificant risk of change in value.

3. Cash Flows

Cash flows are reported using the indirect method,
where by net profit before tax is adjusted for the

effects of transactions of a 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 from operating,
investing and financing activities are segregated.

4. Income Tax

Income Tax comprises current and deferred tax.

a) Current Tax

Current Tax is measured on the basis of
estimated taxable income for the current
accounting period in accordance with the
applicable tax rates and the provisions of the
Income-tax Act, 1961. Current income tax
is recognized in The statement of profit and
loss except to the extent that it relates to an
item recognized directly in equity or in other
comprehensive income.

b) Deferred Tax

Deferred tax is provided, on all temporary
differences at the reporting date between
the tax bases of assets and liabilities and
their carrying amounts for financial reporting
purposes. Deferred tax assets and liabilities
are measured at the tax rates that are
expected to be applied to the temporary
differences when they reverse, based on the
laws that have been enacted or substantively
enacted at the reporting date. Tax relating to
items recognised directly in equity or OCI is
recognised in equity or OCI and not in the
statement of profit and loss.

Deferred tax assets and liabilities are offset
if there is a legally enforceable right to offset
current tax liabilities and assets, and they
relate to income taxes levied by the same
tax authority, but they intend to settle current
tax liabilities and assets on a net basis or
their tax assets and liabilities will be realized
simultaneously.

A deferred tax asset is recognized to the
extent that it is probable that future taxable
profits will be available against which
the temporary difference can be utilised.
Deferred tax assets are reviewed at each
reporting date and are reduced to the extent
that it is no longer probable.

MAT Credit is recognized as an asset only
when and to the extent there is convincing
evidence that the Company will pay normal
Income Tax during the specified period. In
the year in which the Minimum Alternative
Tax (MAT) credit becomes eligible to be
recognized as an asset in accordance with
the recommendations contained in guidance
note issued by the ICAI, the said asset is

created by way of credit to statement of
profit and loss and shown as MAT credit
entitlement. The Company reviews the same
at each Balance Sheet date and writes down
the carrying amount of MAT entitlement to
the extent there is no longer convincing
evidence to the effect that Company will
pay normal Income Tax during the specified
period.

5. Property, Plant and Equipment

a) Recognition and Measurement

i) Property, plant and equipment held for
use in the production or/and supply of
goods or services, or for administrative
purposes, are stated in the balance
sheet at cost, less any accumulated
depreciation and accumulated
impairment losses (if any).

ii) Cost of an item of property, plant and
equipment acquired comprises its
purchase price, including import duties
and non-refundable purchase taxes,
after deducting any trade discounts
and rebates, any directly attributable
costs of bringing the assets to its
working condition and location for its
intended use and present value of
any estimated cost of dismantling and
removing the item and restoring the
site on which it is located.

iii) In case of self-constructed assets, cost
includes the costs of all materials used
in construction, direct labour, allocation
of directly attributable overheads,
directly attributable borrowing costs
incurred in bringing the item to working
condition for its intended use, and
estimated cost of dismantling and
removing the item and restoring the
site on which it is located. The costs of
testing whether the asset is functioning
properly, after deducting the net
proceeds from selling items produced
while bringing the asset to that location
and condition are also added to the
cost of self-constructed assets.

iv) For transition to IND AS, the company
has revalued land at fair value as
deemed cost and considered other
assets at Ind AS Cost.

v) Gains or losses arising from de¬
recognition of property, plant and
equipment are measured as the
difference between the net disposal
proceeds and the carrying amount
of the asset is recognized in the
statement of profit and loss.

vi) Subsequent costs are included in the
asset's carrying amount, only when
it is probable that future economic
benefits associated with the cost
incurred will flow to the Company and
the cost of the item can be measured
reliably. The carrying amount of
any component accounted for as a
separate asset is derecognized when
replaced. Major Inspection/ Repairs/
Overhauling expenses are recognized
in the carrying amount of the item
of property, plant and equipment a
replacement if the recognition criteria
are satisfied. Any Unamortized part of
the previously recognized expenses of
similar nature is derecognized.

vii) The residual values, useful lives and
methods of depreciation of property,
plant and equipment are reviewed at
each financial year end and adjusted
prospectively, if appropriate.

viii) The Company identifies and
determines cost of asset significant to
the total cost of the asset having useful
life that is materially different from that
of the remaining life.

ix) Research and development costs that
are in nature of tangible/ intangible
assets and are expected to generate
probable future economic benefits
are capitalized and classified under
tangible/intangible assets and
depreciated on the same basis as other
fixed assets. Revenue expenditure on
research and development is charged
to the statement of profit and loss in
the year in which it is incurred.

b) Depreciation and Amortization

i) Depreciation commences when the

assets are ready for their intended use
which is generally on commissioning.
Depreciation on property, plant and
equipment is provided under Straight
Line Method over the useful lives of
assets prescribed by Schedule II of the
Companies Act, 2013. Depreciation
in change in the value of fixed assets
due to exchange rate fluctuation has
been provided prospectively over the
residual life of the respective assets.
Land is not depreciated.

The estimated useful lives of property
plant and equipment of the company
are as follows:

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

Goodwill and intangible assets that have an
indefinite useful life are not subject to amortization
and are tested annually for impairment, or more
frequently if events or changes in circumstances
indicate that they might be impaired.

8. Capital Work in Progress

Capital work-in-progress is stated at cost which
includes expenses incurred during construction
period, interest on amount borrowed for acquisition
of qualifying assets and other expenses incurred
in connection with project implementation in so far
as such expenses relate to the period prior to the
commencement of commercial production.

9. Investment in Joint-Venture

Investment in Joint-venture is measured at cost
less impairment loss, if any.

The joint arrangement is structured through
a separate vehicle and the legal form of the
separate vehicle, the terms of the contractual
arrangement and, when relevant, any other facts
and circumstances gives the Company rights
to the net assets of the arrangement (i.e. the
arrangement is a joint venture). The activities of
the joint venture are primarily aimed to provide the
third parties with an output and the parties to the
joint venture will not have rights to substantially
all the economic benefits of the assets of the
arrangement.

10. Investment in subsidiaries and associates

Investments in subsidiaries and associates are
recognized at cost as per IND AS 27. Except
where investments accounted for at cost shall be
accounted for in accordance with IND AS 105,
Non-current Assets held for Sale and Discontinued
Operations, when they are classified as held for
sale.

11. Leases

a) The Company as lessor

Leases for which the Company is a lessor
are classified as finance or operating leases.
Whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee, the contract is
classified as finance lease. All other leases
are classified as operating leases.

Rental income from operating leases is
recognized on a straight-line basis over
the term of the relevant lease. Initial direct
costs incurred in negotiating and arranging
an operating lease are added to the carrying
amount of the leased asset and recognized
on a straight-line basis over the lease term.

b) The Company as lessee

The Company assesses whether a contract
is or contains a lease, at inception of the
contract. The Company recognizes a
right-of-use asset and a corresponding
lease liability with respect to all lease
arrangements in which it is the lessee,
except for short-term leases (defined as
leases with a lease term of 12 months or
less) and leases of low value assets. For
these leases, the Company recognizes the
lease payments as an operating expense
on a straight-line basis over the lease term,
unless another systematic basis is more
representative of the time pattern in which
economic benefits from the leased assets
are consumed. Contingent and variable
rentals are recognized as expense in the
periods in which they are incurred.

c) Lease Liability

The lease payments that are not paid at
the commencement date are discounted
using the interest rate implicit in the lease.
If that rate cannot be readily determined,
which is generally the case for leases in
the Company, the lessee's incremental
borrowing rate is used, being the rate that
the individual lessee would have to pay to
borrow the funds necessary to obtain an
asset of similar value to the right-of-use
asset in a similar economic environment with
similar terms, security and conditions.

Lease payments included in the
measurement of the lease liability comprise:

• Fixed lease payments (including in¬
substance fixed payments) payable
during the lease term and under
reasonably certain extension options,
less any lease incentives;

• Variable lease payments that depend
on an index or rate, initially measured
using the index or rate at the
commencement date;

• The amount expected to be payable
by the lessee under residual value
guarantees;

• The exercise price of purchase options,
if the lessee is reasonably certain to
exercise the options; and

• Payments of penalties for terminating
the lease, if the lease term reflects the
exercise of an option to terminate the
lease.

The lease liability is presented as a separate
line in the Balance Sheet.

The lease liability is subsequently measured
by increasing the carrying amount to reflect
interest on the lease liability (using the
effective interest method) and by reducing
the carrying amount to reflect the lease
payments made.

The Company re-measures the lease liability
(and makes a corresponding adjustment to
the related right-of-use asset) whenever:

• The lease term has changed or there
is a change in the assessment of
exercise of a purchase option, in which
case the lease liability is re-measured
by discounting the revised lease
payments using a revised discount
rate.

• A lease contract is modified and the
lease modification is not accounted
for as a separate lease, in which
case the lease liability is re-measured
by discounting the revised lease
payments using a revised discount
rate.

d) Right of Use (ROU) Assets

The ROU assets comprise the initial
measurement of the corresponding lease
liability, lease payments made at or before
the commencement day and any initial direct
costs. They are subsequently measured at
cost less accumulated depreciation and
impairment losses.

Whenever the company incurs an obligation
for costs to dismantle and remove a leased
asset, restore the site on which it is located or
restore the underlying asset to the condition
required by the terms and conditions of
the lease, a provision is recognized and
measured under Ind AS 37- Provisions,
Contingent Liabilities and Contingent
Assets. The costs are included in the related
right-of-use asset.

ROU assets are depreciated over the
shorter period of the lease term and useful
life of the underlying asset. If the company
is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated
over the underlying asset's useful life. The
depreciation starts at the commencement
date of the lease.

The ROU assets are not presented as a
separate line in the Balance Sheet but
presented below similar owned assets as a
separate line in the PPE note under “Notes
forming part of the Financial Statement”.

The Company applies Ind AS 36- Impairment
of Assets to determine whether a right-
of-use asset is impaired and accounts for
any identified impairment loss as per its
accounting policy on ‘property, plant and
equipment'.

As a practical expedient, Ind AS 116
permits a lessee not to separate non¬
lease components when bifurcation of the
payments is not available between the two
components, and instead account for any
lease and associated non-lease components
as a single arrangement. The Company has
used this practical expedient.

Extension and termination options are
included in many of the leases. In determining
the lease term the management considers
all facts and circumstances that create an
economic incentive to exercise an extension
option, or not exercise a termination option.

12. Revenue Recognition

Revenue is amount receivable from supply of solar
modules and solar power, stated net of discounts.

Ind AS 115 “Revenue from Contracts with
Customers”, introduced one single new model for
recognition of revenue which includes a 5-step
approach and detailed guidelines. Among other,
such guidelines are on allocation of revenue to
performance obligations within multi-element
arrangements, measurement and recognition of
variable consideration and the timing of revenue
recognition.

The Company considers the terms of the
contract in determining the transaction price. The
transaction price is based upon the amount the
entity expects to be entitled to in exchange for
transferring of promised goods and services to
the customer after deducting incentive programs,
included but not limited to discounts, volume
rebates etc.

a) Revenue from sale of goods

Revenue from the sale of solar modules
is measured based on the consideration
specified in a contract with a customer and
excludes amounts collected on behalf of
third parties. Company recognises revenue
at a point in time, when control is transferred
to the customer, and the consideration
agreed is expected to be received. Control
is generally deemed to be transferred upon
delivery of the products in accordance with
the agreed delivery plan.

Revenues for services are recognised when

the service rendered has been completed.

a) Revenue from services

Revenue from services mainly consists of

the following;

• Income from Lease Rent

Revenue from services, which mainly
consists of lease rentals from letting
of space, is recognised over time on
satisfying performance obligations as
per the terms of agreement, that is,
by reference to the period in which
services are being rendered. Revenue
from services, if any, involving single
performance obligation is recognised
at a point in time

• Sale of energy

Revenue from operations comprises of
sale of power. Revenue is recognized
at an amount that reflects the
consideration for which the Company
expects to be entitled in exchange for
transfer of power (goods / service) to
the customer. Revenue from sale of
power is accounted for in accordance
with tariff provided in Power Purchase
Agreement (PPA) read with the
regulations of respective regulatory
authorities and no significant
uncertainty as to the measurability or
collectability exist. There is no impact
on the adoption of the standard in the
financial statement as the Company's
revenue primarily comprised of
revenue from sale of power and the
recognition criteria of this revenue
stream is largely unchanged by Ind AS
115.

Contract Assets

Contract assets are recognised when
there is excess of revenue earned
over billings on contracts. Unbilled
receivables where further subsequent
performance obligation is pending are
classified as contract assets when the
company does not have unconditional
right to receive cash as per contractual
terms. Revenue recognition for fixed
price development contracts is based
on percentage of completion method.
Invoicing to the clients is based on
milestones as defined in the contract.
This would result in the timing of
revenue recognition being different
from the timing of billing the customers.
Unbilled revenue for fixed price
development contracts is classified as

non-financial asset as the contractual
right to consideration is dependent on
completion of contractual milestones.

Impairment of Contract asset

The Company assesses a contract
asset for impairment in accordance
with Ind AS 109.An impairment of a
contract asset is measured, presented
and disclosed on the same basis as a
financial asset that is within the scope
of Ind AS 109.

Contract Liability

Contract Liability is recognised when
there are billings in excess of revenues
and it also includes consideration
received from customers for whom the
company has pending obligation to
transfer goods or services.

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

Modification in contract

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

b) Interest Income

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

13. Retirement and other employee benefits

a) Short Term Employee Benefits

Short term employee benefit obligations are
measured on an undiscounted basis and

are expensed as the related services are
provided. Liabilities for wages and salaries,
including non-monetary benefits that are
expected to be settled wholly within twelve
months after the end of the period in which
the employees render the related service are
recognized in respect of employees' services
up to the end of the reporting period.

b) Other Long Term Employee Benefits

The liabilities for earned leaves that are not
expected to be settled wholly within twelve
months are measured as the present value
(determined by actuarial valuation using the
projected unit credit method) of the expected
future payments to be made in respect of
services provided by employees up to the
end of the reporting period and recognized
in books of accounts. The present value of
the defined benefit plan liability is calculated
using a discount rate which is determined by
reference to market yields at the end of the
reporting period on government bonds. Re¬
measurements as the result of experience
adjustment and changes in actuarial
assumptions are recognized in statement of
profit and loss.

c) Post-Employment Benefits

The Company operates the following post¬
employment schemes:

i) Defined Benefit Plan

The liability or asset recognized in the
Balance Sheet in respect of defined
benefit plans is the present value of the
defined benefit obligation the end of
the reporting period less the fair value
of plan assets. The Company's net
obligation in respect of defined benefit
plans is calculated by estimating
the amount of future benefit that
employees have earned in the current
and prior periods.

The defined benefit obligation is
calculated annually by Actuaries
using the projected unit credit method.
The liability recognized for defined
benefit plans is the present value of
the defined benefit obligation at the
reporting date less the fair value of plan
assets, together with adjustments for
unrecognized actuarial gains or losses
and past service costs. Net interest
is calculated by applying the discount
rate at the beginning of the period
to the net defined benefit liability or
asset. Past service cost is recognized
in the statement of profit and loss in
the period of a plan amendment. The
present value of the defined benefit

plan liability is calculated using a
discount rate which is determined by
reference to market yields at the end
of the reporting period on government
bonds.

Re-measurement, comprising

actuarial gains and losses, the effect
of the changes to the asset ceiling
(if applicable) and the return on plan
assets (excluding net interest), is
reflected immediately in the Balance
Sheet with a charge or credit recognized
in Other Comprehensive Income (OCI)
in the period in which they occur.
Re-measurement recognized in OCI
is reflected immediately in retained
earnings and will not be reclassified to
statement of profit and loss.

ii) Defined Contribution Plan

Retirement benefit in the form
of provident fund is a defined
contribution scheme. The Company
has no obligation other than the
contribution payable to the Provident
fund. Contribution payable under
the provident fund is recognized as
expenditure in the statement of profit
and loss and/or carried to Construction
work-in-progress when an employee
renders the related service.

14. Government Grants

Government grants are recognized at their fair
values when there is reasonable assurance that
the grants will be received and the Company will
comply with all the attached conditions.

a) Government grants are recognized in the
statement of profit or loss on a systematic
basis over the periods in which the Company
recognizes the related costs for which the
grants are intended to compensate.

b) Grants related to acquisition/ construction of
property, plant and equipment are recognized
as deferred revenue in the Balance Sheet
and transferred to the statement of profit or
loss on a systematic and rational basis over
the useful lives of the related asset.

15. Foreign Currency Transactions

a) The functional currency and presentation
currency of the company is Indian Rupee
(INR).

b) Transactions in currencies other than the
company's functional currency are recorded
on initial recognition using the exchange
rate at the transaction date. At each balance
sheet date, foreign currency monetary items
are reported using the closing rate.

c) Non- monetary items that are measured in
terms of historical cost in foreign currency
are not retranslated. Exchange difference
that arise on settlement of monetary items
or on reporting of monetary items at each
Balance sheet date at the closing spot rate
are recognized in profit or loss in the period
in which they arise except for:

i) exchange difference on foreign
currency borrowings related 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 cost on
those foreign currency borrowings;
and

ii) Exchange differences on transactions
entered into in order to hedge certain
foreign currency risks.

iii) exchange differences on monetary
items receivable from or payable to a
foreign operation for

Which settlement is neither planned
nor likely to occur (therefore forming
part of the net investment in the foreign
operation), which are recognized
initially in other comprehensive
income and reclassified from equity
to the Statement of Profit and Loss on
repayment of the monetary items.

According to Appendix B of In AS 21
“Foreign currency transactions and
advance consideration”,

Purchase or sale transactions must
be translated at the exchange rate
prevailing on the date the

Asset or liability is initially recognized.
In practice, this is usually the date on
which the advance

Payment is paid or received. In
the case of multiple advances, the
exchange rate must be

Determined for each payment and
collection transaction

16. Borrowing Cost

Borrowing cost include interest expense
calculated using the Effective interest method,
finance charges in respect of assets acquired on
finance lease and exchange difference arising on
foreign currency borrowings to the extent they are
regarded as an adjustment to the finance cost.

Borrowing costs (including other ancillary
borrowing cost) directly attributable to the
acquisition or construction of a qualifying asset
are capitalized as a part of the cost of that asset

that necessarily takes a substantial period of time
to complete and prepare the asset for its intended
use or sale. The Company considers period of
twelve months or more as a substantial period of
time.

Transaction costs in respect of long term borrowing
are amortized over the tenure of respective loans
using Effective Interest Rate (EIR) method. All
other borrowing costs are recognized in the
statement of profit and loss in the period in which
they are incurred.

17. Earnings per Share

Earnings per share is calculated by dividing
the net profit or loss before OCI for the year
attributable to equity shareholders by the weighted
average number of equity shares outstanding
during the period. For the purpose of calculating
diluted earnings per share, the net profit or loss
before OCI for the period attributable to equity
shareholders and the weighted average number of
shares outstanding during the period are adjusted
for the effects of all dilutive potential equity shares.

18. Exceptional Item

Exceptional items include income or expense that
are considered to be part of ordinary activities,
however are of such significance and nature
that separate disclosure enables the user of the
financial statements to understand the impact in
a more meaningful manner. Exceptional items are
identified by virtue of either their size or nature
so as to facilitate comparison with prior periods
and to assess underlying trends in the financial
performance of the Company.

19. Financial Guarantee Contract

Financial guarantee contract provided to the
lenders of the Company by its Parent Company is
measured at their fair values and benefit of such
financial guarantee is recognized to equity as a
capital contribution from the parent.

20. Financial Instruments

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. Financial assets and financial liabilities
are recognized when a Company entity 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 and ancillary costs related to
borrowings) 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 recognized immediately
in statement of profit and loss.

a) Financial Assets

i) Classification and Subsequent

Measurement

For purposes of subsequent measurement,

financial assets are classified in four

categories:

> Measured at Amortized Cost

> Measured at Fair Value Through Other
Comprehensive Income (FVTOCI)

> Measured at Fair Value Through Profit
or Loss (FVTPL) and

> Equity Instruments measured at Fair
Value Through Other Comprehensive
Income (FVTOCI)

Financial assets are not reclassified
subsequent to their initial recognition,
except if and in the period the
Company changes its business model
for managing financial assets.

> Measured at Amortized Cost

The Financial assets are subsequently
measured at the amortized cost if both
the following conditions are met:

• The asset is held within a
business model whose objective
is achieved by both collecting
contractual cash flows; and

• The contractual terms of the
financial asset give rise on
specified dates to cash flows that
are solely payments of principal
and interest (SPPI) on the
principal amount outstanding.

After initial measurement, such
financial assets are subsequently
measured at amortized cost using
the effective interest rate (EIR)
method. Income is recognized
on an effective interest basis
for debt instruments other than
those financial assets classified
as FVTPL. Interest income is
recognized in the statement of
profit and loss.

> Measured at Fair Value Through
Other Comprehensive Income
(FVTOCI)

The financial assets are
measured at the FVTOCI if both

the following conditions are met:

• The objective of the business
model is achieved by both
collecting contractual cash flows
and selling the financial assets;
and

• The asset's contractual cash
flows represent SPPI.

Debt instruments meeting these
criteria are measured initially
at fair value plus transaction
costs. They are subsequently
measured at fair value with any
gains or losses arising on re¬
measurement recognized in
other comprehensive income,
except for impairment gains or
losses and foreign exchange
gains or losses. Interest
calculated using the effective
interest method is recognized in
the statement of profit and loss in
investment income.

> Measured at Fair Value Through
Profit or Loss (FVTPL)

Financial assets are measured at fair
value through profit or Loss unless it is
measured at amortized cost or at fair
value through other comprehensive
income on initial recognition. Gains
or losses arising on re-measurement
are recognized in the statement of
profit and loss. The net gains or loss
recognized in statement of profit and
loss incorporates any dividend or
interest earned on the financial assets
and is included in the “Other income”
line item.

> Equity Instruments measured
at Fair Value Through Other
Comprehensive Income (FVTOCI)

All equity investments in scope of
Ind AS - 109 are measured at fair
value. Equity instruments which
are, held for trading are classified
as at FVTPL. For all other equity
instruments, the company may make
an irrevocable election to present
in other comprehensive income
subsequent changes in the fair value.
The company makes such election
on an instrument-by instrument basis.
The classification is made on initial
recognition and is irrevocable. In
case the company decides to classify
an equity instrument as at FVTOCI,
then all fair value changes on the
instrument, excluding dividends, are
recognized in the OCI. There is no
recycling of the amounts from OCI to
P&L, even on sale of investment.

ii) DE recognition

The Company derecognizes a financial asset
on trade date only 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 entity.

iii) Impairment of Financial Assets

In accordance with In AS 109, the Company
uses ‘Expected Credit Loss' (ECL model, for
evaluating impairment of financial assets
other than those measured at fair value
through profit and loss (FVTPL).

Expected credit losses are measured through
a loss allowance at an amount equal to:

> The 12-months expected credit losses
(expected credit losses that result from those
default events on the financial instrument
that are possible within 12 months after the
reporting date); or

> Full lifetime expected credit losses (expected
credit losses that result from all possible
default events over the life of the financial
instrument)

For trade receivables Company applies
‘simplified approach' which requires
expected lifetime losses to be recognized
from initial recognition of the receivables.
The Company uses historical default rate to
determine impairment loss on the portfolio
of trade receivables. At every reporting date
these historical default rates are reviewed
and changes in the forward looking estimates
are analyzed.

For other assets, the Company uses 12
month ELC to provide for impairment loss
where there is no significant increase in
credit risk. If there is significant increase in
credit risk full lifetime ELC is used.

iv) Foreign exchange gains and losses

The fair value of financial assets denominated
in a foreign currency is determined in that
foreign currency and translated at the spot
rate at the end of each reporting period.
For foreign currency denominated financial
assets measured at amortized cost, the
exchange differences are recognized in the
statement of profit and loss.

b) Financial Liabilities and equity
instruments

Debts and equity instruments issued by a
Company are classified as either financial
liabilities or as equity in accordance with the

substance of the contractual arrangements
and the definitions of a financial liability and
an equity instruments.

Equity Instruments

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

Financial Liabilities

i) Recognition and Initial Measurement

Financial liabilities are classified, at initial
recognition, as at fair value through profit
or loss, loans and borrowings, payables or
as derivatives as appropriate. All financial
liabilities are recognized initially at fair value
and, in the case of loans and borrowings
and payables, net of directly attributable
transaction costs.

ii) Subsequent Measurement

Financial liabilities are measured
subsequently at amortized cost or FVTPL.
A financial liability is classified as FVTPL if
it is classified as held for-trading, or it is a
derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and
losses, including any interest expense, are
recognized in profit or loss. Other financial
liabilities are subsequently measured at
amortized cost using the effective interest
rate method. Interest expense and foreign
exchange gains and losses are recognized
in profit or loss. Any gain or loss on de¬
recognition is also recognized in profit or
loss.

iii) Financial Guarantee Contracts

Financial guarantee contracts issued by the
company are those contracts that require a
payment to be made to reimburse the holder
for a loss it incurs because the specified
debtor fails to make a payment when due
in accordance with the terms of a debt
instrument.

Financial guarantee contracts are
recognized initially as a liability at fair value,
adjusted for transaction costs that are directly
attributable to the issuance of the guarantee.
Subsequently, the liability is -measured at
the higher of the amount of loss allowance
determined as per impairment requirement
of Ind AS 109 and the amount recognized
less cumulative amortization.

iv) De-recognition

A financial liability is derecognized when the
obligation under the liability is discharged or
cancelled or expires.

v) Foreign exchange gains and losses

For financial liabilities that are denominated
in a foreign currency and are measured at
amortized cost at the end of each reporting
period, the foreign exchange gains and losses
are determined based on the amortized
cost of the instruments and are included in
statement of profit and loss. The fair value
of the financial liabilities denominated in a
foreign currency is determined in that foreign
currency and translated at the spot rate at
the end of the reporting period.

vi) Offsetting financial instruments

Financial assets and liabilities are offset
and the net amount reported in the balance
sheet when there is a legally enforceable
right to offset the recognized amounts and
there is an intention to settle on a net basis
or realize the asset and settle the liability
simultaneously. The legally enforceable right
must not be contingent on future events and
must be enforceable in the normal course
of business and in the event of default,
insolvency or bankruptcy of the counterparty.

c) Derivative financial instruments

The Company uses derivative financial
instruments such as forward, swap, options
etc. to hedge against interest rate and
foreign exchange rate risks, including
foreign exchange fluctuation related to
highly probable forecast sale. The realized
gain / loss in respect of hedged foreign
exchange contracts which has expired /
unwinded during the year are recognized in
the statement of profit and loss and included
in other operating revenue / other expense
as the case may be. However, in respect of
foreign exchange forward contracts period
of which extends beyond the balance sheet
date, the fair value of outstanding derivative
contracts is marked to market and resultant
net loss/gain is accounted in the statement
of profit and loss. Company does not
hold derivative financial instruments for
speculative purposes.

d) Derivatives and Hedge Accounting

Derivatives are initially recognized at fair
value and are subsequently premeasured to
their fair value at the end of each reporting
period. The resulting gains / losses are
recognized in Statement of Profit and
Loss immediately unless the derivative

is designated and effective as a hedging
instrument, in which event the timing of
recognition in profit or loss / inclusion in the
initial cost of non-financial asset depends
on the nature of the hedging relationship
and the nature of the hedged item. The
Company complies with the principles
of hedge accounting where derivative
contracts are designated as hedge
instruments. At the inception of the hedge
relationship, the Company documents the
relationship between the hedge instrument
and the hedged item, along with the risk
management objectives and its strategy for
undertaking hedge transaction, which is a
cash flow hedge.

e) Cash Flow Hedge

The effective portion of changes in the fair
value of derivatives that are designated and
qualify as cash flow hedges is recognized
in the other comprehensive income and
accumulated as ‘Cash Flow Hedging
Reserve'. The gains / losses relating to
the ineffective portion are recognized in
the Statement of Profit and Loss. Amounts
previously recognized and accumulated in
other comprehensive income are reclassified
to profit or loss when the hedged item affects
the Statement of Profit and Loss. However,
when the hedged item results in the
recognition of a non- financial asset, such
gains / losses are transferred from equity
(but not as reclassification adjustment) and
included in the initial measurement cost of
the non- financial asset. Hedge accounting
is discontinued when the hedging
instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies
for hedge accounting. Any gains /losses
recognized in other comprehensive income
and accumulated in equity at that time
remain in equity and is reclassified when
the underlying transaction is ultimately
recognized. When an underlying transaction
is no longer expected to occur, the gains /
losses accumulated in equity are recognized
immediately in the Statement of Profit and
Loss.