Accounting Policies of Oriana Power Ltd. Company

Mar 31, 2025

attributable costs, attributable overheads and
costs specifically chargeable to the customer.
Expected losses, if any, are recognised
immediately. Claims, variations and incentives
are recognised when reasonably certain of
acceptance/realisation.

• Unbilled / Billing in Advance: Amounts due
from customers for contract work, where
revenue recognised exceeds progress billings,
are presented as unbilled revenue under trade
receivables. Where billings exceed revenue
recognised, the net amount is presented
as income received in advance under other
current liabilities.

• Services (O&M and others): Revenue is recognised
as the services are rendered, based on contractual
terms and the stage of completion.

• Interest: Recognised on a time-proportion basis
using the applicable rate of interest.

• Other operating revenue includes income
from sale of equity shares in Special Purpose
Vehicles (SPVs) to offtakers in line with sectoral
requirements, sale of Renewable Energy
Certificates (RECs) and carbon credits, lease
income from project assets, and other ancillary
income arising from operating activities. Such
income is recognised when the related risks
and rewards are transferred and collection is
reasonably certain.

) Property, Plant and Equipment (PPE)

PPE are stated at cost less accumulated depreciation
and impairment, if any. Cost includes purchase price,
non-refundable taxes and duties, directly attributable
costs to bring the asset to its working condition for
intended use (including site preparation, installation
and commissioning), and borrowing costs directly
attributable to qualifying assets.

Subsequent expenditure that increases the future
economic benefits from the asset beyond its
previously assessed standard of performance is
capitalised; other repairs and maintenance are
expensed as incurred. Component accounting is
applied where significant parts have materially
different useful lives. Major spare parts and stand¬
by equipment that meet the definition of PPE are
capitalised; others are carried as inventory.

3. MATERIAL ACCOUNTING POLICIES

a) Use of Estimates

The preparation of financial statements in
conformity with Indian GAAP requires management
to make judgements, estimates and assumptions
that affect the reported amounts of assets, liabilities,
income and expenses and disclosure of contingent
liabilities at the reporting date. Key areas include
revenue recognition on long-term contracts,
percentage-of-completion measures, allowance
for inventory obsolescence and receivables, useful
lives and residual values of PPE, impairment
of assets, actuarial assumptions for employee
benefits, provisions and taxation. Actual results
may differ from these estimates. Revisions, if any, are
recognised prospectively in the period of change.

b) Revenue Recognition

Revenue is recognised when it is reasonably certain
that the ultimate collection will be made and no
significant uncertainty exists regarding the amount
of consideration. Revenue is measured at the fair
value of consideration received or receivable, net
of returns, discounts, rebates and indirect taxes
collected on behalf of the government.

• Sale of Goods (including renewable equipment):
Revenue is recognised upon transfer of significant
risks and rewards of ownership to the buyer, which
generally coincides with dispatch or delivery
in terms of the contract. Where installation/
commissioning is a significant obligation, revenue
is recognised upon completion of such obligation.

• Sale of Power: Power revenue is recognised on
the basis of units generated and supplied as
per meter readings and PPA terms (including
applicable variable/adjustment clauses).

• EPC Contracts / Project Sales (Percentage of
Completion): Revenue is recognised using the
percentage-of-completion method (POCM),
measured by the proportion of contract costs
incurred to date to the estimated total contract
costs, when the outcome of a contract can be
reliably estimated. Contract costs include directly

Depreciation is provided on a straight-line basis over
the useful lives prescribed in Part C of Schedule
II to the Companies Act, 2013, except where
management has estimated different useful lives
based on technical evaluation. The useful lives
considered are:

Low-value items (below ^5,000) are fully depreciated
in the year of acquisition. Gains or losses arising on
disposal are recognised in the Statement of Profit
and Loss.

d) Intangible Assets

Intangible assets acquired separately are stated at
cost less accumulated amortisation and impairment,
if any. They are amortised on a straight-line basis
over their estimated useful lives. Residual value is
assumed to be nil unless there is a commitment
by a third party to purchase or an active market
exists. Costs that are directly attributable to the
development of identifiable software/products,
where the criteria for capitalisation are met, are
recognised as intangible assets.

e) Capital Work-in-Progress (CWIP) /
Intangible Assets Under Development

Expenditure directly attributable to projects under
implementation is classified as CWIP/Intangible
Assets under Development and capitalised under
the appropriate heads upon completion and
readiness for intended use. Capital advances relating
to such projects are disclosed under long term loans
and advances.

f) Inventories

Inventories are valued at the lower of cost and
net realisable value (NRV). Cost is determined on
a weighted average basis and includes all costs
incurred in bringing inventories to their present
location and condition.

• Raw materials: Weighted average cost including
attributable procurement costs.

• Work-in-progress/Finished goods: Cost includes
direct materials, direct labour and proportionate
production overheads based on normal
operating capacity.

• Traded goods: Weighted average purchase cost.

• Provision for slow/non-moving and obsolete
inventories is made where appropriate.
Write-downs to NRV are reversed when the
circumstances that caused the write-down no
longer exist.

g) Borrowing Costs

Borrowing costs directly attributable to the
acquisition or construction of qualifying assets
are capitalised as part of the cost of such assets
until they are substantially ready for intended
use. Capitalisation is suspended during extended
periods in which active development is interrupted.
Other borrowing costs are recognised as an
expense in the period in which they are incurred.
Exchange differences on long-term foreign currency
borrowings, to the extent regarded as an adjustment
to interest costs, are treated as borrowing costs in
accordance with the applicable MCA notification.

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Mar 31, 2024

3. Significant accounting policies:

a) Use of estimates:

The preparation offinancial statement in conformity with generally accepted accounting principles (GAAP) requires management of the company to

make adjustments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities on the date of financial statements and the result of operations during the reporting periods. Although these estimates are based upon management''s knowledge of current events and actions, actual results could differ from those estimates and revisions, if any, are recognized in current and future periods.

b) Revenue Recognitions:

Revenue from Contract with Customer: Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer. The specific recognition criteria described below must also be met before revenue is recognized.

i) Sale of products:

Revenue from sale of products is recognized at the point of time when control of the goods is transferred to the customer, generally on shipment or delivery. The Company considers whether there are other promises in the contract those have separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods or rendering of services, the Company considers the effects of variable consideration and provisional pricing, considering contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.

ii) Variable Consideration:

If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently

resolved. The volume rebates give rise to variable consideration.

iii) Volume rebates and discounts:

The products are often sold with volume discounts based on aggregate sales over a specific time period, normally 3-12 months. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts using either the expected value method or an assessment of the most likely amount. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A contract liability is recognized for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. The estimated volume discount is revised at each reporting date.

iv) Other Deductions:

The Company accounts for deduction of contract amounts wherein certain conditions are not complied with in accordance with the arrangement with the customer i.e. mismatch in specification of products, failure of the product to blast at the customer''s site etc. The aforesaid charges are deducted by the customer, and are deducted from consideration from sale of product.

v) Sale of projects:

The Company''s contracts with customers for the sale of power plant generally include one performance obligation satisfied over a period of time. Revenue from sale of solar power plant is recognized over time based on output method where direct measurements of value to the customer based on milestones reached to date.

vi. Revenue from Services:

Revenue from Services rendered is recognized when the work is performed as per the terms of agreement/ degree of completion.

vii) Interest Income:

Interest income is recognized on a time proportion basis considering the carrying amount and the effective interest rate. Interest income is included under the head ''Other income'' in the statement of profit and loss.

c) Property, Plant and Equipment and

depreciation:

i. Property, Plant and Equipment (gross block) are stated at historical cost less accumulated depreciation and impairments (if any). When items of the Property, Plant and Equipment are sold or scrapped, the corresponding cost and any accumulated depreciation are derecognized, and any gains or losses from disposal are recognized in the profit and loss account of the period.

ii. The cost of the Property, Plant and Equipment consist of the purchase price, including freight, duties and other taxes and any directly attributable costs required to prepare the asset for its intended use. Any subsequent expenditure, such as services and maintenance charges arising once the assets is put into operation, is recognized a s expense in the period in which it is incurred. Subsequent expenditures relating to an item of Property, Plant and Equipment are only added to the carrying amount of the Property, Plant and Equipment if the expenditure improves the condition of the Property, Plant and Equipment beyond its originally 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 the statement of profit and loss for the year during which such expenses are incurred.

iii. Depreciation is recognized so as to write off the cost of assets (other than freehold land) less their residual values over their useful lives, using Straight Line method. The useful life of property, plant and equipment is considered based on life prescribed in part C of Schedule II to the Companies Act, 2013. Residual value of the all the tangible Property, Plant and Equipment have been considered as 5% of cost of acquisition in compliance with the said schedule.

iv. An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference

between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.

v. Leasehold Property, Plant and Equipment have been depreciated over the lease period of the respective asset net of residual value.

vi. Depreciation is charged on the revalued assets over the remaining useful life of such assets and the additional depreciation on account of revaluation is adjusted against revaluation reserve.

vii. Individual low-cost Property, Plant and Equipment (acquired for less than H 5,000/-) are depreciated in full in the year of purchase.

viii. Intangible assets acquired separately are carried at cost net of trade discounts and rebates less accumulated amortization and any accumulated impairment losses. The residual values, useful lives and method of amortization of Intangible Assets are reviewed at each financial year end and adjusted prospectively, if appropriate.

Amortization is recognized using Straight Line method over their estimated useful lives. Estimated useful life of the Computer Software is 5 years.

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of any intangible asset are measured as the difference between net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.

ix. Expenditure related to and incurred during implementation (net of incidental income) of capital projects to get the assets ready for intended use is included under "Capital Work in Progress (including related inventories)”. The same is allocated to the respective items of property plant and equipment on completion of construction / erection of the capital project / property, plant and equipment. Capital work in progress is stated at cost, net of accumulated impairment loss, if any.

x. The useful lives and residual values of the assets being in the nature of management estimates are reviewed at each reporting date.

d) Inventory:

Inventories are valued at the lower of cost and net realizable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

(i) Raw materials: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.

(ii) Finished goods and work in progress:

cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average basis.

(iii) Traded goods: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

e) Borrowing Cost:

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.