1 CORPORATE INFORMATION
SWELECT ENERGY SYSTEMS LIMITED (‘the Company')
was incorporated as a Public Limited Company on
12 September 1994. The Company is a public limited
company domiciled in India with its shares listed on
BSE and NSE. The registered office of the Company is
No.5 SWELECT House, Sir PS Sivasamy Salai, Mylapore,
Chennai- 600004.
The Company is engaged in the business of manufacturing
of solar mounting structures, trading of Solar photovoltaic
modules, solar Photovoltaic inverters and other ancillary
products, solar and wind power generation, contract
manufacturing services and installation and maintenance
services.
2A Basis of preparation and presentation
(a) Statement of compliance
The Standalone Balance Sheet, Standalone Statement
of Profit and Loss and the Standalone Statement
of Changes in Equity have been prepared and
presented in the format prescribed in the Division
II of Schedule III to the Companies Act, 2013. The
Standalone Statement of Cash Flows has been
prepared and presented as per the requirements of
Ind AS 7 ‘Statement of Cash Flows'. The disclosure
requirements with respect to items of the Standalone
Balance Sheet and the Standalone Statement of Profit
and Loss are presented by way of notes forming part
of the Standalone Financial Statements.
The Company has considered a period of twelve
months as the operating cycle for classification of
assets and liabilities as current and non-current.
The directors have, at the time of approving the
standalone financial statements, a reasonable
expectation that the Company has adequate
resources to continue in operational existence
for the foreseeable future. Thus, the Company
has applied the going concern basis of
accounting in preparing the standalone financial
statements.
(b) Functional and presentation currency
These financial statements are presented in Indian
Rupees ('), which is the Company's functional
currency. All the financial information have been
presented in Indian Rupees Lakhs except for share
data and as otherwise stated.
(c) Basis of measurement
These Standalone Ind AS Financial Statements have
been prepared based on accrual and going concern
principles following the historical cost convention
except for the following financial assets and liabilities
which have been measured at fair value:
a. Certain financial assets and liabilities (including
derivative instruments) and contingent
consideration is measured at fair value.
b. Defined benefit plans - plan 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, 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 standalone financial
statements is determined on such a basis, except for
share-based payment transactions that are within
the scope of Ind AS 102, leasing transactions that are
within the scope of Ind AS 116, and measurements
that have some similarities to fair value but are not
fair value, such as value in use in Ind AS 36.
(d) Measurement of fair values
A number of Company's accounting policies and
disclosures require the measurement of fair values,
for both financial and non-financial assets and
liabilities. The Company has an established control
framework with respect to the measurement of fair
values.
The Chief Financial Officer regularly reviews the
significant unobservable inputs and valuation
adjustments. If third party information, such as
broker quotes or pricing services, is used by
the valuer to measure fair values, then the Chief
Financial Officer assesses the evidence obtained
from the third parties to support the conclusion that
these valuations meet the requirements of Ind AS,
including the level in the fair value hierarchy in which
the valuations should be classified.
Fair values are categorised into different levels in a
fair value hierarchy based on the inputs used in the
valuation techniques as follows.
- Level 1: Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices
included in Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
- Level 3: Inputs for the asset or liability that
are not based on observable market data
(unobservable inputs)
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 Company recognises transfers between levels
of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in
measuring fair values is included in the following notes:
Note 4 - Investment Property and
Note 37 - Financial Instruments
Note 31 - Defined Benefit Plan
2B Critical accounting estimates and
judgements
In the application of the Company's accounting policies,
management of the Company is required to make
judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates
and associated assumptions are based on historical
experience and other factors that are considered
to be relevant. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised prospectively.
Judgements
Note 5 - Service Concession Arrangements
Assumptions and estimation uncertainties
Information about assumptions and estimation
uncertainties that have a significant risk of resulting in a
material adjustment in the year ending 31 March 2026 is
included in the following notes:
Note 3 - Useful life of Property, plant and equipment
Note37-Fair valuation of Financial Assets/Liabilities
Notes 6, 7 & 10 - Impairment of financial assets and other
assets
Note 9 - Allowance for Non- moving, Slow moving
inventories
Note 19 - Provision for Warranty and the underlying
projections / assumptions / judgements etc.
Note 31 - Measurement of Defined Benefit Obligations:
Key actuarial assumptions
2C Summary of material accounting policies
(a) Current versus non-current classification
The Company presents assets and liabilities in
the Balance Sheet based on current/ non-current
classification which is determined based on the
operating cycle.
An asset is treated as current when it is:
• Expected to be realised or intended to sold or
consumed in the normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months
after the reporting period, or
• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability
for at least twelve months after the reporting
period
The Company classifies all other assets as non¬
current.
A liability is treated as current when:
• It is expected to be settled in normal operating
cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months
after the reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
The Company classifies all other liabilities as non¬
current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
The operating cycle is the time between the
acquisition of assets for processing and their
realisation in cash and cash equivalents. The
Company has identified twelve months as its
operating cycle.
(b) Revenue Recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Company and the revenue can be reliably
measured, regardless of when the payment is being
made. Revenue is measured at the fair value of the
consideration received or receivable, taking into
account contractually defined terms of payment and
excluding taxes and duties collected on behalf of
the Government. The Company has concluded that
it is the principal in all of its revenue arrangements
since it is the primary obligor in all the revenue
arrangements as it has pricing latitude and is also
exposed to inventory and credit risks.
The following specific recognition criteria must also
be met before revenue is recognised:
Sale of goods
Revenue from sale of goods, its accessories and
other traded/manufactured goods are recognised
when control of ownership is passed to the buyer,
which generally coincides with dispatch of goods.
Revenues under composite contracts comprising
supply, installation and commissioning are recognised
on receipt of the CEIG Approval for the contract.
Sales Tax/Value Added Tax (VAT), Goods and Service
Tax is not received by the Company on its own
account. Rather, it is tax collected on value added to the
commodity by the seller on behalf of the Government.
Accordingly, it is excluded from revenue.
Sale of power
Revenue from sale of power from renewable energy
sources is recognised in accordance with the price
agreed under the provisions of the Power Purchase
Agreement entered into with customeRs. Such
revenue is recognised on the basis of actual units
generated and transmitted.
Revenue from power distribution business is
accounted on the basis of billings to the customers
and includes unbilled revenues accrued up to the
end of accounting year. Customers are billed as per
the tariff rates in the Power Purchase Agreement.
EPC Contracts:
The Company has applied the guidance in Ind AS
115 “Revenue from Contracts with Customers” by
applying the revenue recognition criteria for each
distinct performance obligation. The arrangements
with customers generally meet the criteria for
considering software testing services as distinct
performance obligations. The transaction price as
allocated to each distinct performance obligation
is defined in the contract with the customer. In case
of fixed bid contracts, the performance obligations
are satisfied as and when the services are rendered
since the customer generally obtains control of the
work as it progresses and the entity's performance
creates an asset with no alternative use to the entity
and the entity has an enforceable right to payment
for performance completed to date.
A summary of the revenue recognition criteria are
given below:
“Revenue from fixed-bid contract, where the
performance obligations are satisfied over time and
where there is no uncertainty as to measurement
or collectability of consideration, is recognized
as per the percentage-of-completion method.
When there is uncertainty as to measurement
or ultimate collectability, revenue recognition
is postponed until such uncertainty is resolved.
Efforts or costs expended have been used to
measure progress towards completion as there is a
direct relationship between input and productivity.
Revenues in excess of invoicing are classified as
contract assets (which the Company refers to as
Unbilled Revenue) while invoicing in excess of
revenues are classified as contract liabilities (which
the Company refers to as Unearned Revenue).
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.”
The Company presents revenues excluding indirect
taxes in its Statement of Profit and Loss.
Provision for estimated losses, if any, on uncompleted
contracts are recorded in the period in which such
losses become probable based on the current
contract estimates.
Renewable Energy Certificate (REC) Income:
Income arising from REC is recognised on sale of
such RECs at the Power Exchange and are accounted
for as and when such sale happens.
Income from service
Revenue from maintenance contracts is recognised
in the Statement of Profit and Loss on a periodic
basis over the period of the contract according to
the terms and conditions of the agreements. Income
from installation contracts is recognised when
the certificate of installation is received from the
customer.
Interest income
I nterest 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 at
the effective interest rate 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.
Dividend
Revenue is recognised when the Company's right
as a shareholder/unit holder to receive payment is
established by the reporting date.
Rental Income
Rental income arising from operating leases is
accounted for on a straight-line basis over the lease
terms and is included in Revenue from Operations in
the Statement of Profit or Loss due to its operating
nature
(c) Service Concession Agreement
The Company constructs Infrastructure used to
provide a public service, operates and maintains that
Infrastructure (operation services) for a specified
period of time.
These arrangements may include Infrastructure
used in a Public-to-Private service concession
arrangement for its entire useful life.
Under Appendix C to Ind AS 115 - Service Concession
Arrangements, these arrangements are accounted
for based on the nature of the consideration. The
Intangible asset model is used to the extent that the
Company receives a right (i.e. a franchisee) to charge
users of the public service. The financial asset model
is used when the Company has an unconditional
contractual right to receive cash or another financial
asset from or at the direction of the grantor for the
construction services. When the unconditional right
to receive cash covers only part of the service, the
two models are combined to account separately
for each component. If the Company performs
more than one service (i.e., construction or upgrade
services and operation services) under a single
contract or arrangement, consideration received or
receivable is allocated with reference to the relative
fair values of the services delivered, when the
amounts are separately identifiable.
The Company manages concession arrangements
which include constructing Solar power distribution
assets for distribution of electricity. The Company
maintains and services the Infrastructure during
the concession period. These concession
arrangements set out rights and obligations
related to the Infrastructure and the services to be
provided.
The right to consideration gives rise to an Intangible
asset and accordingly, the Intangible asset model is
applied. Income from the concession arrangements
earned under the Intangible asset model consists of
the value of contract revenue, which is deemed to
be fair value of consideration transferred to acquire
the asset; and payments actually received from
the users. The Intangible asset is amortised over
its expected useful life in a way that reflects the
pattern in which the asset's economic benefits are
consumed by the Company, starting from the date
when the right to operate starts to be used. Based
on these principles, the Intangible asset is amortised
in line with the actual usage of the specific public
facility or the agreement period, whichever is less.
Any asset carried under concession arrangements
is derecognised on disposal or when no future
economic benefits are expected from its future
use or disposal or when the contractual rights to the
financial asset expires.
Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and costs to make the sale.
(e) Taxes
Current income tax
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates
and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the
reporting date.
Current income tax related to items recognised
outside Statement of Profit and Loss are recognised
either in other comprehensive income or in equity.
Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject to
interpretation and establishes provisions where
appropriate”
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible
temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred
tax assets are recognised to the extent that it is
probable that taxable profit will be available against
which the deductible temporary differences and
the carry forward of unused tax credits and unused
tax losses can be utilised. The carrying amount of
deferred tax assets is reviewed at each reporting
date and written off to the extent that it is no longer
probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re¬
assessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside
the Statement of Profit and Loss is recognised
outside Statement of Profit and Loss (either in Other
Comprehensive Income or in Equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in Equity.
Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.
(f) Employee Benefits
Defined Contribution Plan
Provident Fund
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. The Company recognises
contribution payable to the provident fund scheme
as an expenditure, when an employee renders the
related service. If the contribution payable to the
scheme for service received before the Balance
Sheet date exceeds the contribution already paid,
the deficit payable to the scheme is recognised as
a liability after deducting the contribution already
paid. If the contribution already paid exceeds the
contribution due for services received before the
Balance Sheet date, then excess is recognised as an
asset to the extent of the pre-payment.
Employee State Insurance
Contributions to Employees State Insurance Scheme
are recognised as expense in the year in which the
services are rendered.
Defined Benefit Plan
Gratuity
The Company makes annual contribution to a
Gratuity Fund administered by trustees and managed
by LIC. The Company accounts its liability for future
gratuity benefits based on actuarial valuation, as
at the Balance Sheet date, determined every year
using the Projected Unit Credit method. Actuarial
gains/losses are immediately recognised in Retained
Earnings through Other Comprehensive Income in
the period in which they occur. Re-measurements
are not re-classified to profit or loss in subsequent
periods. The defined benefit obligation recognised
in the Balance Sheet represents the present value
of the Defined Benefit Obligation less the Fair Value
of Plan Assets out of which the obligations are
expected to be settled.
Long Term Compensated Absences
The Company treats accumulated leave expected
to be carried forward beyond twelve months, as
long-term employee benefit for measurement
purposes. Such long-term compensated absences
are provided for based on the actuarial valuation
using the projected unit credit method at the year-
end. Actuarial gains/losses are immediately taken
to the Statement of Profit and Loss and are not
deferred. The Company presents the leave as a
current liability in the Balance Sheet, to the extent
it does not have an unconditional right to defer its
settlement for 12 months after the reporting date.
Short Term Employee Benefits
Short Term Employee Benefits includes short term
compensated absences which is recognised based
on the eligible leave at credit on the Balance Sheet
date and the estimated cost is based on the terms of
the employment contract.
Code on Social Security, 2020
On November 21, 2025, the Government of India
notified provisions of the Code on Wages, 2019, the
Industrial Relations Code, 2020, the Code on Social
Security, 2020 and the Occupatlonal Safety, Health
and Working Conditions Code, 2020, (‘Labour Codes')
which consolidate twenty-nine existing labour
laws into a unified framework governing employee
benefits during employment and postemployment.
The Ministry of Labour & Employment has also
issued draft Central Rules and FAQs to facilitate the
impact assessment. The Labour Codes, amongst
other things introduces changes, including a uniform
definition of wages and enhanced benefits relating
to leave. Based on the best available information
and guidance from the Institute of Chartered
Accountants of India, The Company has assessed
the financial implications of these changes which
has resulted in increase in gratuity liability arising
out of past service cost and that of Compensated
absences. Considering the impact arising out of an
enactment of the new legislation is an event of non
recurring nature, the Group has presented this one¬
time nature of the incremental of Labour Codes
under “Exceptional Item” in the Statement of Profit
and Loss for the year ended 31 March 2026. The
Company continues to monitor the developments
pertaining to Labour Codes and will evaluate impact
if any on the measurement of liabllity pertaining to
employee benefits.
Share-based payment transactions of the
Company
Equity-settled share-based payments to employees
and others providing similar services are measured
at the fair value of the equity instruments at the
grant date. The fair value excludes the effect of non¬
market-based vesting conditions. Details regarding
the determination of the faire value of equity-settled
share-based transactions are set out in note 26(a).
The fair value determined at the grant date of the
equity-settled share-based payments is expensed
on a straight-line basis over the vesting period,
based on the Company's estimate of the number of
equity instruments that will eventually vest. At each
reporting date, the Company revises its estimate
of the number of equity instruments expected to
vest as a result of the effect of non-market-based
vesting conditions. The impact of the revision of
the original estimates,if any,is recognised in profit or
loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment
to reserves.
Equity-settled share-based payment transactions
with parties other than employees are measured
at the fair value of the goods or services received,
except where the fair value cannot be estimated
reliably, in which case they are measure at the fair
value of the equity instruments granted, measured
at the date the entity obtains the goods or the
counterparty renders the service.
(g) Foreign Currency Transactions and
Translations
The Company's financial statements are presented
in ' which is also the Company's functional currency.
Income and expenses in foreign currencies are
recorded at exchange rates prevailing on the date
of the transaction. Foreign currency denominated
monetary assets and liabilities are translated at the
exchange rate prevailing on the balance sheet date
and exchange gains and losses arising on settlement
and restatement are recognised in the Statement of
Profit and Loss. Non-monetary assets and liabilities
that are measured in terms of historical cost in
foreign currencies are not retranslated. Exchange
differences on monetary items are recognised in
the Statement of Profit and Loss in the period 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.
Forward exchange contracts entered into to hedge
foreign currency risk of an existing Asset/Liability.
I n the event of the Company entering into hedging
transactions, the premium or discount arising at
the inception of forward exchange contracts is
amortised as expense or income over the life of the
contract. Exchange differences on such contracts
are recognised in the Statement of Profit and Loss
in the year in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income
or as expense for the year.
(h) Earnings per share ( EPS)
Basic earnings per share is computed by dividing
the profit / loss after tax (including the post tax
effect of extraordinary items, if any) by the weighted
average number of equity shares outstanding during
the year. Diluted earnings per share is computed
by dividing the profit / loss after tax (including the
post tax effect of extraordinary items, if any) as
adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential
equity shares, by the weighted average number of
equity shares considered for deriving basic earnings
per share and the weighted average number of
equity shares which could have been issued on the
conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive
only if their conversion to equity shares would
decrease the net profit per share from continuing
ordinary operations. Potential dilutive equity shares
are deemed to be converted as at the beginning
of the period, unless they have been issued at a
later date. The dilutive potential equity shares are
adjusted for the proceeds receivable had the shares
been actually issued at fair value (i.e. average market
value of the outstanding shares). Dilutive potential
equity shares are determined independently for
each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted
for share splits / reverse share splits and bonus
shares, as appropriate.
(i) Property, Plant and Equipment and Other
Intangible assets
Property, Plant and Equipment and Other Intangible
assets are stated at original cost net of tax/duty
credit availed, less accumulated depreciation/
amortisation and impairment losses, if any. The cost
comprises the purchase price and any attributable
cost of bringing the asset to its working condition for
its intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Other Intangible assets acquired separately are
measured on initial recognition at cost. Following
initial recognition, Other Intangible assets are
carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
Subsequent expenditure related to an item of
Property, Plant and Equipment is added to its book
value only if it increases the future benefits from
the existing asset beyond its previously assessed
standard of performance. All other expenses on
existing Property, Plant and Equipment , including
day-to-day repair and maintenance expenditure and
cost of replacing parts, are charged to Statement
of Profit and Loss for the year during which such
expenses are incurred.
When the use of a property changes from owner-
occupied to investment property, the property is
reclassified as investment property at its carrying
amount on the date of classification.
Gains and losses arising from derecognition of
Property, Plant and Equipment and Other Intangible
assets are measured as the difference between the
net disposal proceeds and the carrying amount of
the Property, Plant & Equipment is recognised in the
Statement of the Profit and Loss, when the Property,
Plant and Equipment is derecognised.
The Company identifies and determines cost of
each component/part of the Property, Plant and
Equipment separately, if the component/part has
a cost which is significant to the total cost of the
Property, Plant and Equipment and has useful life
that is materially different from that of the remaining
Property, Plant and Equipment.
Capital Work-in-Progress: Projects under which
Property, Plant and Equipment are not ready for
their intended use and capital work-in-progress
are carried at cost, comprising direct cost and
attributable interest. Once it has becomes available
for use, their cost is re-classified to appropriate
caption and subjected to depreciation.
(j) Depreciation and amortisation
Depreciation is provided using the straight line
method as per the useful lives of the Property, Plant
and Equipment estimated by the Management as
follows:
(k) Useful lives/depreciation rates
Considering the applicability of Schedule II,
the Management has estimated the useful lives
and residual values of all its fixed assets. The
Management believes that the depreciation rates
currently used fairly reflect its estimate of the
useful life and residual values of Property, Plant
and Equipment, though these rates in certain cases
are different from the lives prescribed under
Schedule II.
The Management has estimated, supported by
independent assessment by professionals, where
applicable, the useful lives of the above classes of
Property, Plant and Equipment.
The useful life of certain Solar Plant and Machinery and
Intangible assets recognised under Service Concession
Agreement is 20-25 years, respectively. These lives are
higher than those indicated in Schedule II.
Other Intangible assets are amortised using the
straight-line method over a period of three years or
five years as applicable.
(l) Impairment of Property, Plant and
Equipment and Other Intangible assets
The carrying amounts of Property, Plant and
Equipment is reviewed at each Balance Sheet
date if there is any indication of impairment based
on internal / external factoRs. An impairment
loss is recognised wherever the carrying amount
of an Property, Plant and Equipment exceeds its
recoverable amount. The recoverable amount is the
greater of the Property, Plant and Equipment's net
selling price 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 risks specific to the Property,
Plant and Equipment. After impairment, depreciation
is provided on the revised carrying amount of the
Property, Plant and Equipment over its remaining
useful life.
(m) Investment Property
I nvestment Property represents Property (Land or
Building or part of a Building or both) held (by the
owner or by the lessee under a finance lease) to earn
rentals or for capital appreciation or both.
Investment Property is measured initially at cost,
including transaction costs. Subsequent to initial
recognition, Investment Property is stated at cost
less accumulated depreciation and accumulated
impairment loss, if any.
The cost includes the cost of replacing parts if the
recognition criteria are met. When significant parts of
the Investment Property is required to be replaced at
intervals, the Company depreciates them separately
based on their specific useful lives. All other repair
and maintenance costs are recognized in Statement
of Profit and Loss as incurred.
Depreciation on Building classified as Investment
Property has been provided on the straight-line
method based on the useful life as prescribed in
Schedule II to the Companies Act, 2013. These are
based on the Company's estimate of their useful lives
taking into consideration technical factoRs.
Though the Company measures Investment
Property using cost basis measurement, the fair
value of Investment Property is disclosed in Note 4.
Fair values are determined on an annual evaluation
applying a valuation model.
I nvestment Property is derecognised when either
they have been disposed off or when the Investment
Property is permanently withdrawn from use and no
future economic benefit from its disposal.
When the use of a property changes from investment
property to owner-occupied, the property is
reclassified as property, plant and equipment at its
carrying amount on the date of classification.
The difference between the net disposal proceeds
and the carrying amount of the Investment Property
is recognised in the Statement of Profit and Loss in
the period of derecognition.
(n) Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of an 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. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds.
(o) Leases
Where the Company is a lessee:
Assets and Liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities
include the net present
(i) Fixed payments (including in-substance
fixed payments), less any lease incentives
receivable.
(ii) Variable lease payments that are based on
an index or a rate, initially measured using the
index or rates as at the
(iii) Amounts expected to be payable by the
Company under residual value guarantees.
(iv) Lease payments to be made under an extension
option if the Company is reasonably certain to
exercise the option, and
(v) The exercise price of a purchase option if the
Company is reasonably certain to exercise that
option
Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability for each period.
Variable lease payments that depend on sales are
recognised in profit or loss in the period in which the
condition that triggers those payments occurs.
Right-of-use assets are measured at cost comprising the
following:
(i) The amount of the initial measurement of lease
liability
(ii) Any lease payments made at or before the
commencement date less any lease incentives
received
(iii) Any initial direct costs
(iv) Restoration costs
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