2. Material Accounting Policies
2.1 Statement of compliance
The financial statements have been prepared in
accordance with Ind AS notified under Sec. 133 of the
Companies Act, 2013 read with Rule 3 of the Companies
(Indian Accounting Standard) Rules 2015 and other
relevant provisions of the Act.
2.2 Basis of preparation and presentation
These financial statements are prepared in accordance
with Indian Accounting Standards (Ind AS) under the
historical cost convention on the accrual basis except for
certain financial instruments which are measured at fair
values, the provisions of the Companies Act, 2013( Act')
(to the extent notified) and guidelines issued by the
Securities and Exchange Board of India (SEBI).
Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date,
regardless of whether that price is directly observable
or estimated using another valuation technique. In
estimating the fair value of an asset or liability, the
company takes into account the characteristics of the
asset or liability at the measurement date. In addition, for
financial reporting purposes, fair value measurements
are categorized into:
Level 1 (unadjusted quoted prices in active markets for
identical assets or liabilities that the entity can access at
the measurement date);
Level 2 (inputs other than quoted prices included within
Level 1) that are observable for the asset or liability, either
directly or indirectly;
Level 3 (unobservable inputs for the asset or liability).
Fair value in respect of equity financial instruments are
the quoted prices of those instruments in the stock
exchanges at the measurement date.
a) Current and Non-Current Classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.
An asset is treated as current when it is:
• Expected to be realised or intended to be sold
or consumed in 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.
All other assets are classified as non-current.
A liability is 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.
b) Functional and Presentation Currency
Items included in the financial statements of the
Company are measured using the currency of
the primary economic environment in which the
Company operates ("the functional currency"). Indian
rupee is the functional currency of the Company.
The financial statements are presented in Indian
Rupees (B) which is the Company's presentation
currency. All financial information presented in
Indian Rupees has been rounded up to the nearest
Crores except where otherwise indicated.
c) Use of Estimates
The preparation of standalone financial statements
in conformity with Ind AS requires the management
to make estimates and judgements that affect the
reported amounts of assets, liabilities, revenue,
expenses and other comprehensive income (OCI)
that are reported and disclosed in the financial
statements and accompanying notes. These
estimates are based on the management's best
knowledge of current events, historical experience,
actions that the Company may undertake in the
future and on various other assumptions that are
believed to be reasonable under the circumstances.
Actual results could differ from those estimates.
Changes in estimates are reflected in the standalone
financial statements in the year in which the
changes are made.
Significant estimates and assumptions are used for,
but not limited to,
a) Estimation of useful life of Property, Plant and
Equipment, Refer Note 2.3 & Note 3
b) Estimation of useful life of Intangible Assets -
Refer Note 2.4 & Note 4
c) Provisions and Contingent Liabilities -
Refer Note 30.1
d) Recognition of deferred taxes - Refer Note 14
e) Key actuarial assumptions for measurement
of future obligations under employee benefit
plans - Refer Note 30.9
d. Recent Accounting Pronouncements
Companies Act (Indian Accounting Standards)
Amendment Rules, 2024
The Ministry of Corporate Affairs (MCA) has notified
the Companies Act (Indian Accounting Standards)
Amendment Rules, 2024 vide notification dated
August 12, 2024 notified Ind AS 117 "Insurance
Contracts", which are effective for reporting periods
on or after April 1, 2024, and it supersedes Ind AS
104 "Insurance Contracts".
An entity shall apply Ind AS 117 to: (a) insurance
contracts, including reinsurance contracts it issues;
(b) reinsurance contracts it holds; (c) investment
contracts with discretionary participation features
it issues, provided the entity also issues insurance
contracts. The company is not engaged in insurance
contracts. Hence, the amendment does not have
any impact on the financial statements.
Additionally, the notification introduced
amendments to Ind AS 101 (First-time Adoption of
Indian Accounting Standards), Ind AS 103 (Business
Combination), Ind AS 105 (Non-Current Assets Held
for Sales and Discontinued Operations), Ind AS 107
(Financial Instruments: Disclosures), Ind AS 109
(Financial Instruments), Ind AS 115 (Revenue from
Contracts with Customers), Ind AS 116 (Leases). The
amendments were primarily focused on ensuring
consistency with Ind AS 117. The amendments also
provided for enhanced disclosure requirements
under Ind AS 107 (Financial Instruments: Disclosures)
and Ind AS 116 (Leases) to provide greater
transparency regarding financial instruments linked
to Insurance Contracts and lease transactions. The
amendments do not have any material impact on
the company's financial statements.
Companies Act (Indian Accounting Standards)
Second Amendment Rules, 2024
The Ministry of Corporate Affairs (MCA) has notified
the Companies Act (Indian Accounting Standards)
Second Amendment Rules, 2024, with effect from
September 9, 2024.
Ind AS 116 - Leases (Amendments applicable with
effect from April 1, 2024)
The amendments in the standard address the
measurement of lease liability in a sale and leaseback
transaction. The seller-lessee shall determine the
lease payments or the 'revised lease payments' in a
way that they do not recognize any amount of gain
or loss that relates to the right of use retained by the
seller-lessee.
The company is not engaged in any sale and
leaseback transactions during the year. Hence,
the amendment does not have any impact on the
financial statements.
Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. During the year
ended March 31, 2025, MCA has not notified any
new standards or amendments to the existing
standards applicable to the Company.
2.3 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net
of recoverable taxes, trade discount and rebates less
accumulated depreciation and impairment losses, if any.
Increase/Decrease in rupee liability in respect of foreign
currency liability related to acquisition of Property, Plant
and Equipment is added to the cost of the asset.
Such cost includes purchase price, borrowing cost and
any cost directly attributable to bringing the assets to its
working condition for its intended use.
Spare parts, stand-by equipment and servicing
equipment are recognised when they meet the definition
of property, plant and equipment. Otherwise, such items
are classified as inventory.
Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the entity and the
cost can be measured reliably.
Expenses incurred relating to project, net of income
earned during the project development stage prior to its
intended use, are considered as pre-operative expenses
and disclosed under Capital Work-in-Progress.
Property, plant and equipment represent a significant
proportion of the asset base of the Company. Depreciation
on Property, Plant and Equipment is provided using
Straight Line Method (SLM) over the estimated useful life.
The useful lives and residual values of company's assets
are determined by management at the time the asset is
acquired and reviewed periodically, including at each
financial year end with the effect of any changes in
estimate accounted for on a prospective basis. The lives
are based on historical experience with similar assets as
well as anticipation of future events, which may impact
their life, such as changes in technology.
The management estimates of the useful lives of the
Property, Plant and Equipment are as follows:
The useful lives as given above best represent the period
over which the management expects to use these assets,
based on technical assessment. The estimated useful
lives for these assets are therefore different from the
useful lives prescribed under Part C of Schedule II of the
Companies Act 2013.
An item of property, plant and equipment is
de-recognised upon disposal or when no future economic
benefits are expected to arise from the continued use of
the asset. Gains or losses arising from derecognition of
an item of property, plant and equipment , measured as
the difference between the net disposal proceeds and
the carrying amount of the asset, are recognized in profit
or loss when the asset is de-recognised.
For transition to Ind AS, the company has elected to
continue with the carrying value of all of its property,
plant and equipment recognized as of April 1, 2015
(transition date) measured as per the previous GAAP
and use that carrying value as its deemed cost as of the
transition date.
2.4 Intangible assets
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated
amortization and accumulated impairment losses.
Intangible assets with indefinite useful lives that are
acquired separately are carried at cost less accumulated
impairment losses.
The useful life of company's assets are determined
bymanagement at the time the asset is acquired and
reviewed periodically, including at each financial year end
with the effect of any changes in estimate accounted for
on a prospective basis. The lives are based on historical
experience with similar assets as well as anticipation
of future events, which may impact their life, such as
changes in technology.
The management estimates of the useful lives of the
intangible assets are as follows:
The useful lives as given above best represent the period
over which the management expects to use these assets,
based on technical assessment. The estimated useful
lives for these assets are therefore different from the
useful lives prescribed under Part C of Schedule II of the
Companies Act 2013.
An intangible asset is de-recognised upon disposal or
when no future economic benefits are expected to arise.
Gains or losses arising from derecognition of an
intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the
asset, are recognized in profit or loss when the asset is
de-recognised.
For transition to Ind AS, the company has elected to
continue with the carrying value of all of its intangible
assets recognized as of April 1, 2015 (transition date)
measured as per the previous GAAP and use that carrying
value as its deemed cost as of the transition date.
2.5 Investment Property
Investment properties are properties held to earn rentals
and / or for capital appreciation (including property under
construction for such purposes). Investment properties
are measured initially at cost, including transaction
costs. Subsequent to initial recognition, investment
properties are measured in accordance with Ind AS 16's
requirements for cost model.
Investment properties are depreciated using the straight¬
line method over their estimated useful lives. The useful
life has been determined based on technical evaluation
performed by the management's expert.
An investment property is derecognized upon disposal
or when the investment property is permanently
withdrawn from use and no future economic benefits are
expected from the disposal. Any gain or loss arising on
derecognition of the investment property is recognised
in profit or loss in the period of disposal.
2.6 Impairment of assets
Property, Plant and Equipment or Intangible asset is
evaluated for recoverability whenever events or changes
in circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair
value less cost to sell and the value-in-use) is determined
on an individual asset basis unless the asset does not
generate cash flows that are largely independent of
those from other assets. In such cases, the recoverable
amount is determined for the CGU to which the asset
belongs. If such assets are considered to be impaired,
the impairment has to be recognized in the Statement of
Profit and Loss.
An impairment loss is reversed in the Statement of Profit
and Loss if there has been a change in the estimates
used to determine the recoverable amount. The carrying
amount of the asset is increased to its revised recoverable
amount, provided that this amount does not exceed the
carrying amount that would have been determined (net
of any accumulated amortization) had no impairment
loss been recognized for the asset in prior years.
2.7 Financial Instruments
Financial Asset
Initial recognition
The Company recognizes financial assets when it
becomes a party to the contractual provisions of the
instrument. All financial assets are recognized at fair value
on initial recognition, except for trade receivables which
are initially measured at transaction price.
Transaction costs that are directly attributable to the
acquisition of financial assets (except for financial assets
carried at fair value through profit or loss) are added to
the fair value of the financial assets on initial recognition.
Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Regular way purchase and sale of financial assets are
accounted for at trade date.
Subsequent measurement
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at
amortized cost if it is held within a business model
whose objective is to hold the asset in order to collect
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 on the principal amount outstanding.
(ii) Financial assets carried at fair value through other
comprehensive income (FVTOCI)
Assets that are held for collection of contractual
cash flows and for selling the financial assets, where
the assets' cash flows represent solely payments
of principal and interest, are measured at FVTOCI.
All fair value changes are recognised in the Other
Comprehensive Income except for the recognition
of impairment gains or losses, interest income
and foreign exchange gains and losses which are
recognised in profit and loss.
(iii) Financial assets carried at fair value through profit
or loss (FVTPL)
Financial assets are measured at FVTPL if it does
not meet the criteria for classification as measured
at amortised cost or at FVTOCI. Movement in Fair
value changes are recognised in the statement of
profit and loss.
A financial asset that meets the amortized cost
criteria or debt instruments that meet the FVTOCI
criteria may be designated as at FVTPL upon initial
recognition if such designation eliminates or
significantly reduces a measurement or recognition
inconsistency that would arise from measuring
assets or liabilities or recognizing the gains and
losses on them on different bases.
Effective Interest Rate Method
The effective interest rate method is a method of
calculating the amortised cost of financial asset and
of allocating interest income over the expected life.
The Company while applying EIR method, generally
amortises any fees, transaction costs and other
premiums or discount that are integral part of the
effective interest rate of a financial instrument.
Income is recognised in the Statement of Profit
and Loss on an effective interest rate basis for
financial assets other than those classified as at
FVTPL. EIR is determined at the initial recognition
of the financial asset. EIR is subsequently updated
at every reset, in accordance with the terms of the
respective contract.
Once the terms of financial assets are renegotiated,
other than market driven interest rate movement,
any gain/loss measured using the previous EIR as
calculated before the modification, is recognised in
the Statement of Profit and Loss in period during
which such renegotiations occur.
Investments in Equity Instruments
All equity investments other than in subsidiaries,
joint ventures and associates are measured at fair
value. Equity instruments which are held for trading
are classified as at FVTPL. For all other equity
instruments, the Company at initial recognition
makes an irrevocable election to classify it as either
FVTOCI or FVTPL. The Company chooses to make
an irrevocable election and designates it as FVTOCI.
An equity investment classified as FVTOCI is
initially measured at fair value plus transaction
costs. Subsequently, it is measured at fair value
and, all fair value changes are recognised in Other
Comprehensive Income (OCI) and accumulated
in "Reserve for Equity instruments through OCI".
There is no recycling of the amounts from OCI
to Statement of Profit and Loss, even on sale
of investment.
Investment in subsidiaries, associates and
joint venture:
Investment in subsidiaries, associates and joint
venture are measured at cost less provision
for impairment. On disposal of investments in
subsidiaries, associates and joint venture, the
difference between net disposal proceeds and the
carrying amounts are recognised in the Statement
of Profit and Loss.
Impairment of financial assets
Trade receivables, contract assets, lease receivables,
investments in debt instruments that are carried at
amortised cost, investments in debt instruments
that are carried at FVTOCI are tested for impairment
based on the expected credit losses for the
respective financial asset.
Expected credit losses are the weighted average
of credit losses with the respective risks of default
occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to
the Company in accordance with the contract and all
the cash flows that the company expects to receive
(i.e. all cash shortfalls), discounted at the original
effective interest rate (or credit-adjusted effective
interest rate for purchased or originated credit-
impaired financial assets). The Company estimates
cash flows by considering all contractual terms of
the financial instrument (for example, prepayment,
extension, call and similar options) throughout the
expected life of that financial instrument.
The Company measures the loss allowance for a
financial instrument at an amount equal to the
lifetime expected credit losses if the credit risk on
that financial instrument has increased significantly
since initial recognition. If the credit risk on a
financial instrument has not increased significantly
since initial recognition, the Company measures
the loss allowance for that financial instrument
at an amount equal to 12-month expected credit
losses. 12-month expected credit losses are portion
of the life-time expected credit losses and represent
the lifetime cash shortfalls that will result if default
occurs within the 12 months after the reporting date
and thus, are not cash shortfalls that are predicted
over the next 12 months.
If the Company measured loss allowance for a
financial instrument at lifetime expected credit loss
model in the previous period but determines at the
end of a reporting period that the credit risk has not
increased significantly since initial recognition due
to improvement in credit quality as compared to
the previous period, the Company again measures
the loss allowance based on 12-month expected
credit losses.
When making the assessment of whether there has
been a significant increase in credit risk since initial
recognition, the Company uses the change in the
risk of a default occurring over the expected life of
the financial instrument instead of the change in the
amount of expected credit losses.
To make that assessment, the Company compares
the risk of a default occurring on the financial
instrument as at the reporting date with the risk
of a default occurring on the financial instrument
as at the date of initial recognition and considers
reasonable and supportable information, that
is available without undue cost or effort, that is
indicative of significant increases in credit risk since
initial recognition.
Further, for the purpose of measuring lifetime
expected credit loss allowance for trade receivables,
the Company has used a practical expedient as
permitted under Ind AS 109. This expected credit
loss allowance is computed based on a provision
matrix which takes into account historical credit
loss experience and adjusted for forward-looking
information.
De-recognition of financial assets
The Company derecognizes a financial asset when
the contractual rights to the cash flows from the
asset expire, or when it transfers substantially all the
risks and rewards of ownership of the financial asset
to another party. If the Company neither transfers
nor retains substantially all the risks and rewards of
ownership and continues to control the transferred
asset, the Company recognizes its retained
interest in the asset and an associated liability for
amounts it may have to pay. If the Company retains
substantially all the risks and rewards of ownership
of a transferred financial asset, the Company
continues to recognize the financial asset and
also recognizes a collateralised borrowing for the
proceeds received.
On derecognition of a financial asset in its entirety,
the difference between the asset's carrying amount
(Measured at the date of derecognition) and the sum
of the consideration received shall be recognised in
the statement of profit and loss account.
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 and FVTPL,
the exchange differences are recognized
in profit or loss except for those which are
designated as hedging instruments in a
hedging relationship.
• Changes in the carrying amount of investments
in equity instruments at FVTOCI relating
to changes in foreign currency rates are
recognized in other comprehensive income.
• For the purposes of recognizing foreign
exchange gains and losses, FVTOCI debt
instruments are treated as financial assets
measured at amortized cost. Thus, the
exchange differences on the amortized cost are
recognized in profit or loss and other changes
in the fair value of FVTOCI financial assets are
recognized in other comprehensive income.
2.8 Equity Instruments & Financial Liabilities
Equity Instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the entity
are recognized at the proceeds received.
Repurchase of the company's own equity instruments is
recognized and deducted directly in equity.
Financial liabilities
Initial Recognition
The Company recognizes financial liabilities when it
becomes a party to the contractual provisions of the
instrument. All financial liabilities are recognized at fair
value on initial recognition, except for trade payables.
Transaction costs that are directly attributable to the
acquisition or issue of financial liabilities, which are not
at fair value through profit or loss, are added to the fair
value on initial recognition.
Subsequent measurement
The subsequent measurement of financial liabilities
depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated as such
at the initial date of recognition, and only if the criteria
in Ind AS 109 are satisfied. Changes in fair value of such
liability are recognized in the statement of profit or loss.
Financial liabilities at amortized cost
The Company's financial liabilities at amortized cost
are initially recognized at net of transaction costs and
includes trade payables, borrowings including bank
overdrafts and other payables.
After initial recognition, financial liabilities are
subsequently measured at amortized cost using the
effective interest rate (EIR) method except for deferred
consideration recognized in a business combination
which is subsequently measured at fair value through
profit and loss.
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 recognized in 'Other
income/Expense'.
The fair value of 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. For financial liabilities that are measured as at
FVTPL, the foreign exchange component forms part
of the fair value gains or losses and is recognized in
profit or loss.
Derecognition of financial liabilities
The Company derecognizes financial liabilities only
when, the Company's obligations are discharged,
cancelled or have expired. An exchange between a
lender of debt instruments with substantially different
terms is accounted for as an extinguishment of the
original financial liability and the recognition of a new
financial liability.
Similarly, a substantial modification of the terms of an
existing financial liability is accounted as derecognition
of the original financial liability and the recognition of
a new financial liability. The difference between the
carrying amount of the financial liability derecognized
and the consideration paid and payable is recognized in
profit or loss.
2.9 Valuation of Inventories
Inventories are valued at lower of cost or net
realizable value after providing for obsolescence
wherever necessary.
Cost is determined on weighted average basis. Net
realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion
and estimated costs necessary to make the sale.
Raw materials and stores, work in progress, traded and
finished goods are stated at the lower of cost and net
realisable 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. Cost 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 on
the basis of first-in first-out 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.
2.10 Translation of Foreign Currency Transactions
In preparing the financial statements of the company,
transactions in currencies other than the entity's functional
currency (foreign currencies) are recognized at the rates
of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the
rates prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies
are retranslated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign
currency are not retranslated.
Exchange differences on monetary items are recognized
in profit or loss in the period in which they arise.
2.11 Recognition of Revenue
The Company identifies the contract with customer
once the parties have approved the contract in writing
and committed to perform the respective performance
obligations. Any addition or alteration of contract shall
be binding only if agreed to in writing. The Company
identifies distinct performance obligations in the contract
and recognizes revenue as and when the performance
obligation is satisfied by transferring a promised good or
service to a customer. The process of identifying distinct
performance obligations requires exercising judgment to
determine the deliverables and ability of the customer
to benefit independently from such deliverables. The
Company determines the transaction price which is the
consideration that the Company expects to be entitled
in exchange for good or service. The transaction price
is then allocated to each performance obligation and
revenue is recognised.
Sale of Goods: The Company manufactures and sells
a range of Textile Machinery, Machine tools parts and
Aero-space components. Revenue is recognised when
control is transferred to the customer upon despatch or
delivery of goods, based on the terms of contract.
The Company's obligation to replace faulty products
under standard warranty terms is recognised as a
provision (Refer Note. 18)
Rendering of Services: The Company renders services
that include installation, maintenance, and other ancillary
services. Revenue from services is recognised over a
period of time as and when the services are rendered
in accordance with the specific terms of contract
with customer.
Export Incentives and Carbon credit: Export incentives
are recognized when the right to receive payment/
credit is established and no significant uncertainty as
to measurability or collectability exists. Revenue from
carbon credits / REC entitlements are recognized on
delivery thereof or sale of rights therein, as the case may
be, in terms of the contract with the respective buyer.
Royalty: Royalty revenue is recognized on an accrual
basis in accordance with the substance of the relevant
agreement provided that it is probable that the economic
benefits will flow to the company and the amount of
revenue can be measured reliably. Royalty arrangements
that are based on production, sales and other measures
are recognized by reference to the underlying
arrangement.
Dividend: Dividend income from investments is
recognized when the shareholder's right to receive
payment has been established provided if it is probable
that the economic benefits will flow to the company and
the amount of income can be measured reliably.
Interest Income: Interest income is accrued on a timely
basis, reference to 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.
Rental Income: Rental income is recognized on accrual
basis in accordance with terms and conditions of
respective rental agreements.
Income from Wind Energy: Revenue from power supply
is recognized in terms of power purchase agreement
entered with state distribution companies and is measured
at the value of consideration received or receivable, net
of discounts if any.
2.12 Borrowing costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying asset are capitalized as part of the cost of
respective assets during the period of time that is required
to complete and prepare the asset for its intended
use. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended
use or sale. Other borrowing costs are expensed in the
period in which they are incurred.
2.13 Dividends
Final dividend on shares are recorded as a liability on
the date of approval by the shareholders at the annual
general meeting and interim dividend are recorded as
a liability on the date of declaration by the Company's
Board of Directors.
2.14 Earnings per Share
Basic earnings per share is computed by dividing the
profit or loss after tax by the weighted average number
of equity shares outstanding during the year including
potential equity shares on compulsory convertible
debentures. Diluted earnings per share is computed by
dividing the profit / (loss) after tax as adjusted for dividend,
interest and other charges to expense or income (net of
any attributable taxes) relating to the dilutive potential
equity shares, by the weighted average number of equity
shares considered for deriving basic earnings per share.
2.15 Employee Benefits
Short term employee benefits
A liability is recognized for benefits accruing to employees
in respect of wages and salaries, annual leave and sick
leave in the period the related service is rendered at the
undiscounted amount of the benefits expected to be
paid in exchange for that service. Liabilities recognized in
respect of short-term employee benefits are measured at
the undiscounted amount of the benefits expected to be
paid in exchange for the related service.
Defined Contribution Plans
Payments to defined contribution retirement benefit
plans are recognized as an expense when employees
have rendered service entitling them to the contributions.
Defined Benefit Plans
For defined retirement benefit plans, the cost of
providing benefits is determined using the projected unit
credit method which considers each period of service
as giving rise to an additional unit of benefit entitlement
and measures each unit separately to build up the final
obligation, with actuarial valuations being carried out at
the end of each annual reporting period. Remeasurement,
comprising actuarial gains and losses, the effect of
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 in the
period in which they occur. Remeasurement recognized
in other comprehensive income is reflected immediately
in retained earnings and is not re classified to profit or
loss. Past services cost is recognized in profit or loss in
the period of plan amendment. Net interest is calculated
by applying the discount rate at the beginning of the
period to the net defined benefit liability or asset. Defined
benefit costs are categorized as service cost (including
current service cost, past service cost, as well as gains
and losses on curtailments and settlements); net interest
expense or income and remeasurement. The company
presents the first two components of defined benefit
costs in profit or loss in the line item 'Employee benefits
expense'. Curtailment gains and losses are accounted for
as past service costs. The retirement benefit obligation
recognized in the balance sheet represents the actual
deficit or surplus in the company's defined benefit plans.
Any surplus resulting from this calculation is limited to
the present value of any economic benefits available in
the form of refunds from plans or reductions in future
contributions to the plans.
A liability for a termination benefit is recognized at the
earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity
recognizes any related restructuring costs.
2.16 Research and Development
Revenue expenditure pertaining to research is charged
to the Statement of Profit and Loss. Development
costs are capitalised as an intangible asset if it can be
demonstrated that the project is expected to generate
future economic benefits; it is probable that those future
economic benefits will flow to the entity and the costs of
the asset can be measured reliably, else it is charged to
the Statement of Profit and Loss.
2.17 Taxes on Income
Income tax expense comprises current and
deferred income tax.
Current Tax
Current income tax for current and prior periods is
recognized at the amount expected to be paid to or
recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively
enacted by the end of the reporting date. The company
offsets current tax assets and current tax liabilities, where
it has a legally enforceable right to set off the recognized
amounts and where it intends either to settle on a
net basis, or to realize the asset and settle the liability
simultaneously. The income tax provision for the interim
period is made based on the best estimate of the annual
average tax rate expected to be applicable for the full
financial year.
Deferred Tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases
used in the computation of taxable profit. Deferred tax
liabilities are generally recognized for all taxable temporary
differences. Deferred tax assets are generally recognized
for all deductible temporary differences to the extent that
it is probable that taxable profits will be available against
which those deductible temporary differences can be
utilized. Such deferred tax assets and liabilities are not
recognized if the temporary difference arises from the
initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit. In addition,
deferred tax liabilities are not recognized if the temporary
difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets / liabilities
is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Current and Deferred Tax for the year
Current and deferred tax are recognized in profit or loss,
except when they relate to items that are recognized
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognized in other comprehensive income or directly
in equity respectively.
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