Solarworld Energy Solutions Ltd. कंपली की लेखा नीति

Mar 31, 2025

Material accounting policies

E. Fair value measurement

Certain accounting policies and disclosures of the
Company 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 valuation
team regularly reviews significant unobservable inputs
and valuation adjustments.

Fair values are categorized 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.

F. Revenue recognition

Revenue from contracts with customers is recognized 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. When a performance obligation is satisfied, the
revenue is measured at the transaction price which
is consideration received or receivable, net of returns
and allowances, trade discounts and volume rebates
after taking into account contractually defined terms
of payment and excluding taxes or duties collected on
behalf of the government.

When another party is involved in providing goods or
services to a customer, the Company determines whether
the nature of its promise is a performance obligation to
provide the specified goods or services itself (i.e., the
Company is a principal) or to arrange for the other party
to provide those goods or services (i.e., the Company
is an agent). When the Company considers itself as a
principal and satisfies its performance obligation in a
given arrangement, the Company recognizes revenue
in the gross amount of consideration to which it expects
to be entitled in exchange for those goods or services
transferred. When the Company considers itself as an
agent and satisfies its performance obligation in a given
arrangement, the Company recognizes revenue in the
amount of any fee or commission to which it expects
to be entitled in exchange for arranging for the other
party to provide its goods or services. The Company''s
fee or commission is the net amount of consideration
that the Company retains after paying the other party
the consideration received in exchange for the goods or
services to be provided by that party.

The Company derives revenues primarily from sale
of solar modules, solar cells, solar accessories and
construction/project related activity, engineering,

procurement and construction (EPC) and operation and
maintenance.

Revenue from sale of goods

Revenue is recognized at point of time when the control
of the same is transferred to the customer and it is
probable that the Company will collect the consideration
to which it is entitled for the exchanged goods. The point
at which control passes is determined based on the
terms and conditions by each customer arrangement.

Revenue from construction/project related
activity

Contract revenue is recognized over time to the
extent of performance obligation satisfied and control
is transferred to the customer. Contract revenue
is recog nized at allocable transaction price which
represents the cost of work performed on the contract
plus proportionate margin, using the percentage of
completion method. Percentage of completion is the
proportion of cost of work performed to-date, to the
total estimated contract costs. With respect to contracts,
where the outcome of the performance obligation cannot
be reasonably measured, but the costs incurred towards
satisfaction of performance obligation are expected to be
recovered, the revenue is recognized only to the extent of
costs incurred.

Revenue from operation and maintenance

Revenue from operation & maintenance is recognized
as the proportion of the total period of services contract
that has elapsed at the end of the reporting period.

For contracts where the aggregate of contract cost
incurred to date plus recognized profits (or minus
recognized losses as the case may be) exceeds the
progress billing, the surplus is shown as contract asset
and termed as "Unbilled revenue”. For contracts where
progress billing exceeds the aggregate of contract costs
incurred to-date plus recognized profits (or minus
recognized losses, as the case may be), the surplus
is shown as contract liability and termed as "Excess
of billing over revenue". Amounts received before the
related work is performed are disclosed in the balance
sheet as contract liability and termed as "Advances from
customer". The amounts billed on customer for work
performed and are unconditionally due for payment i.e.
only passage of time is required before payment falls due,
are disclosed in the balance sheet as trade receivables.

The amount of retention money held by the customers
pending completion of performance milestone is
disclosed as part of contract asset and is reclassified as
trade receivables when it becomes due for payment.

Contract balances

(i) Contract liabilities

A contract liability is the obligation to transfer goods
or services to a customer for which the Company has
received consideration (or the amount is due) from the
customer. If a customer pays consideration before the
Company transfers goods or services to the customer,
a contract liability is recognized when the payment is
made, or the payment is due (whichever is earlier).
Contract liabilities are recognized as revenue when the
Company performs under the contract.

(ii) Trade receivables

A receivable represents the Company''s right to an
amount of consideration that is unconditional (i .e., only
the passage of time is required before payment of the
consideration is due).

(iii) Contract assets

A contract asset is the right to consideration in exchange
for goods or services transferred to customer. If the
Company performs by transferring goods or services to
a customer before the customer pays consideration or
before payment is due, a contract asset is recognized for
the earned consideration that is conditional.

G. Other income

Interest Income from bank deposits and loan:

Interest income is accrued on a time proportion basis by
reference to the principal outstanding and the effective
interest rate.

Other items of income are accounted as and when
the right to receive arises and it is probable that the
economic benefits will flow to the Company and the
amount of income can be measured reliably.

H. Property, plant and equipment

i) Recognition and measurement

Items of property, plant and equipment are measured
at cost less accumulated depreciation and accumulated

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

Capital work- in- progress includes cost of property, plant
and equipment under installation / under development
as at the balance sheet date.

ii) Subsequent expenditure

Subsequent expenditure relating to property, plant and
equipment is capitalized only when it is probable that
future economic benefits associated with the expenditure
will flow to the Company and the cost of the item can be
measured reliably. All other expenses on existing fixed
assets, including day-to-day repair and maintenance
expenditure and cost of replacing parts, are charged
to the standalone statements of profit and loss for the
period during which such expenses are incurred.

iii) Depreciation and useful lives

Depreciation on property, plant and equipment is
calculated on a straight-line basis over the estimated
useful life of property, plant and equipment which
coincide with Schedule II to the Companies Act, 2013.
Estimated useful life of the assets is given below:

Tangible assets	Useful life
Plant and equipment	8-15 Years
Furniture and fixtures	10 Years
Office equipment	5 Years
Computers	3 Years
Motor vehicles	8-10 Years

iv) Gain and loss on disposal of item of property,
plant and equipment

Property, plant rind equipment are eliminated from
standalone financial statements, either on disposal
or when retired from active use. Losses/gains arising
in case retirement/disposals of property, plant and
equipment are recognized in the statement of profit and
loss in the year of occurrence.

v) Residual values

The Company reviews the residual value, useful lives and
depreciation method annually and, if expectations differ
from previous estimates, the change is accounted for as
a change in accounting estimate on a prospective basis.

I. Inventories

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

a) Raw materials, components, construction materials,
stores, spares and loose tools: cost includes cost of
purchase and other costs incurred in bringing the
inventories to their present location and condition.
Cost is determined on cost is determined on ''First
in First Out'' ("FIFO") method.

b) Cost of finished goods include 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 ''First in First Out'' ("FIFO") method.

c) Cost of traded goods include purchase cost and
inward freight. Costs are determined on ''First in
First Out'' ("FIFO") method.

Assessment of net realizable value is made at each
reporting period end and when the circumstances that
previously caused inventories to be written-down below
cost no longer exist or when there is clear evidence of
an increase in net realizable value because of changed
economic circumstances, the write-down, if any, in
the past period is reversed to the extent of the original
amount written-down so that the resultant carrying
amount is the lower of the cost and the revised net
realizable value.

|. Financial instruments

Financial assets and/or financial liabilities are
recognized when the Company becomes party to a
contract embodying the related financial instruments.
All financial assets, financial liabilities and financial
guarantee contracts are initially measured at fair
value excepting for trade receivables not containing a
significant financing component are initially measured at
transaction price. Transaction costs that are attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial

liabilities at fair value through profit or loss) are added
to or deducted from as the case may be, the fair value of
such financial assets or liabilities, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value
through profit or loss are recognized in profit or loss.

In case of funding to subsidiary companies in the form of
interest free or concession loans and preference shares,
the excess of the actual amount of the funding over
initially measured fair value is accounted as an equity
investment.

A financial asset and a financial liability are offset and
presented on net basis in the balance sheet when there
is a current legally enforceable right to set-off the
recognized amounts and it is intended to either settle on
net basis or to realise the asset and settle the liability
simultaneously.

Subsequent measurement of financial assets and
financial liabilities is described below.

I. Financial assets Classification and subsequent
measurement for the purpose of subsequent
measurement, financial assets are classified into
the following categories upon initial recognition:

(i) Financial assets at amortized cost - a financial
instrument is measured at amortized cost if both
the following conditions are met:

The asset is held within a business model whose
objective is to hold assets for collecting contractual cash
flows, and contractual terms of the asset give rise on
specified dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount
outstanding. After initial measurement, such financial
assets are subsequently measured at amortized cost
using the effective interest method.

(ii) Financial assets at fair value

Investments in equity instruments - All equity
investments in scope of Ind AS 109 are measured at fair
value. Equity instruments which are held for trading
are classified as at fair value through profit and loss
(''FVTPL"). For all other equity instruments, the Company
decides to classify the same either as at fair value through
other comprehensive income ("FVOCI") or FVTPL. The
Company makes such election on an instrument-by-

instrument basis. The classification is made on initial
recognition and is irrevocable.

If the Company decides to classify an equity instrument
as at FVOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is
no recycling of the amounts from OCI to profit or loss,
even on sale of investment. However, the Company
may transfer the cumulative gain or loss within equity.
Dividends on such investments are recognized in profit
or loss unless the dividend clearly represents a recovery
of part of the cost of the investment.

Equity instruments included within the FVTPL category
are measured at fair value with all changes recognized
in the profit or loss.

De-recognition of financial assets

Financial assets (or where applicable, a part of financial
asset or part of a Company of similar financial assets)
are derecognized from the standalone statement of
Assets and Liabilities when the contractual rights to
receive the cash flows from the financial asset have
expired, or when the financial asset and substantially
all the risks and rewards are transferred. The Company
also derecognizes the financial asset if it has both
transferred the financial asset and the transfer qualifies
for derecognition.

II. Financial liabilities
Initial recognition

Financial liabilities are classified as measured at
amortized cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held for trading. Financial
liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are
recognized in standalone statement of profit and loss.

Subsequent measurement

After initial recognition, the financial liabilities are
subsequently measured at amortized cost using the
effective interest rate ("EIR") method.

Amortized cost is calculated by considering any discount
or premium on acquisition and fees or costs that are an
integral part of the EIR. The effect of EIR amortization is
included as finance costs in the standalone statement of
profit and loss.

De-recognition of financial liabilities

A financial liability is de-recognized when the obligation
under the liability is discharged or cancelled or expired.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the de¬
recognition of the original liability and the recognition of
a new liability. The difference in the respective carrying
amounts is recognized in the standalone statement of
profit and loss.

III. Impairment of financial assets

In accordance with Ind AS 109, the Company uses
''Expected Credit Loss'' (ECL) model, for evaluating
impairment of financial assets other than those
measured at FVTPL.

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

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

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

Outstanding customer receivables are regularly
monitored. The Company periodically assesses the
financial reliability of customers, taking into account the
financial condition, current economic trends, and analysis
of historical data and ageing of accounts receivable. The
Company creates allowance for unsecured receivables
based on historical credit loss experience, industry
practice and business environment in which the entity
operates and is adjusted for forward looking Statement.
Subsequently when the Company is satisfied that no
recovery of such losses is possible, the financial asset
is considered irrecoverable and the amount charged to
the allowance account is then written off against the
carrying amount of the impaired financial asset.

IV. Impairment of non-financial assets

As at the end of each financial year, the carrying
amounts of PPE, investment property, intangible assets
and investments in subsidiary, associate and joint
venture companies are reviewed to determine whether
there is any indication that those assets have suffered

an impairment loss. If such indication exists, PPE,
investment property, intangible assets and investments
in subsidiary, associate and joint venture companies are
tested for impairment so as to determine the impairment
loss, if any. Goodwill is tested for impairment each year.
Impairment loss is recognized when the carrying amount
of an asset exceeds its recoverable amount. Recoverable
amount is determined:

(i) in the case of an individual asset, at the higher of the
fair value less costs of disposal and the value-in-use;
and

(ii) in the case of a cash generating unit (the smallest
identifiable group of assets that generates independent
cash flows), at the higher of the cash generating unit''s
fair value less costs of disposal and the value-in-use.
(The amount of value-in-use is determined as the present
value of estimated future cash flows from the continuing
use of an asset, which may vary based on the future
performance of the Company and from its disposal at the
end of its useful life. For this purpose, the discount rate
(post-tax) is determined based on the weighted average
cost of capital of the Company suitably adjusted for risks
specified to the estimated cash flows of the asset). If
recoverable amount of an asset (or cash generating
unit) is estimated to be less than its carrying amount,
such deficit is recognized immediately in the Statement
of Profit and Loss as impairment loss and the carrying
amount of the asset (or cash generating unit) is reduced
to its recoverable amount. When an impairment loss
recognized earlier is subject to full or partial reversal,
the carrying amount of the asset (or cash generating
unit), except impairment loss allocated to goodwill, is
increased to the revised estimate of its recoverable
amount, such that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss is recognized for the
asset (or cash generating unit) in prior years. A reversal
of an impairment loss (other than impairment loss
allocated to goodwill) is recognized immediately in the
Statement of Profit and Loss.

V. Loans and borrowings

This is the category most relevant to the Company. After
initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortized cost using
the EIR method. Gains and losses are recognized in
the statement of profit and loss when the liabilities are
derecognized as well as through the EIR amortization
process.

Amortized cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortization
is included as finance costs in the statement of profit and
loss.

De-recognition of financial instruments

The Company derecognizes a financial asset when the
contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the
transfer qualifies for de-recognition under Ind AS 109.
A financial liability (or a part of a financial liability) is
derecognized from the Company''s balance sheet when
the obligation specified in the contract is discharged or
cancelled or expires.