Emmvee Photovoltaic Power Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

appropriate category of property, plant and equipment
and depreciation commences. Costs associated with
the commissioning of an asset and present value of
any obligatory decommissioning costs are capitalised
in the asset when recognition criteria for provision
are satisfied. Revenue (net of cost) generated from
production during the trial period is capitalised.

Freehold land is not depreciated. Depreciation is
provided on all other items of property, plant and
equipment on a straight line basis so as to write
off their carrying value over their expected useful
economic lives as follows:

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

Management is of the view that wherever it is not
practicable to identify the component of an asset as
a separate depreciable asset, have been identified and
depreciated considering the useful life of the asset or
the component whichever is shorter.

In case of certain class of assets, the Company uses
different useful lives than those prescribed in Schedule
II of Companies Act, 2013. The useful live has been
assessed based on technical assessment, taking
into account the nature of the asset, the estimated
usage of the asset, the operating conditions of
the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and
maintenance support, etc.

(b) Intangible assets

Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortisation and accumulated
impairment losses.

Other Indirect Expenses incurred relating to project,
net of income earned during the project development
stage prior to its intended use, are disclosed under
Intangible Assets Under Development.

Amortisation is calculated on a straight-line basis over
the estimated useful lives of the assets as follows:

The amortisation period and the amortisation method
for an intangible assets are reviewed at each financial
year end and adjusted prospectively, if appropriate.

(c) Leases

The Company assesses at contract inception whether
a contract is or contains a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets.

The Company recognises lease liabilities to make lease
payments and right-of-use assets representing the
right to use the underlying assets.

i) Right-of-use assets

The Company recognises right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement
date less any lease incentives received. Right-
of-use assets are depreciated on a straight-line
basis over the shorter of the lease term and the
estimated useful lives of the assets. The right-of-
use assets are also subject to impairment.

ii) Lease liabilities

At the commencement date of the lease, the
Company recognises lease liabilities measured at
the present value of lease payments to be made
over the lease term. The lease payments include
fixed payments (including in substance fixed
payments) less any lease incentives receivable,
variable lease payments that depend on an
index or a rate, and amounts expected to be
paid under residual value guarantees if any. The
lease payments also include the exercise price
of a purchase option reasonably certain to be
exercised by the Company and payments of
penalties for terminating the lease, if the lease
term reflects the Company exercising the option
to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as
expenses (unless they are incurred to produce
inventories) in the period in which the event or
condition that triggers the payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate
at the lease commencement date because the
interest rate implicit in the lease is not readily
determinable. After the commencement date, the
amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the
lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there
is a modification, a change in the lease term,
a change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset.

iii) Short-term leases and leases of low-value
assets

The Company applies the short-term lease
recognition exemption to its short-term leases of
buildings (i.e., those leases that have a lease term
of 12 months or less from the commencement
date and do not contain a purchase option).
It also applies the lease of low-value assets
recognition exemption to certain leases that are
considered to be low value. Lease payments on
short-term leases and leases of low-value assets
are recognised as expense on a straight-line
basis over the lease term.

(d) Impairment of non-financial assets (excluding
inventories and deferred tax assets)

The Company assesses at each reporting date, whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or cash-generating

unit''s (CGU) fair value less costs of disposal and its
value in use. The recoverable amount is determined
for an individual asset, unless the asset does not
generate cash inflows that are largely independent
of those from other assets or group of assets. When
the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.

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 the risks
specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken
into account. If no such transactions can be identified,
an appropriate valuation model is used.

Impairment losses of non financial assets are recognised
in the standalone statement of profit and loss.

(e) Fair value measurement

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.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorised within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active
markets for identical assets or liabilities

Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable

(f) Financial instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair
value through profit or loss.

The classification of financial assets at initial recognition
depends on the financial asset''s contractual cash flow
characteristics and the Company''s business model
for managing them. With the exception of trade
receivables that do not contain a significant financing
component or for which the Company has applied the
practical expedient, the Company initially measures
a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or
loss, transaction costs. Trade receivables that do not
contain a significant financing component or for which
the Company has applied the practical expedient are
measured at the transaction price determined under
Ind AS 115. Refer to the accounting policies in section
(k) Revenue from contracts with customers.

Subsequent measurement

For purposes of subsequent measurement all financial
assets are currently classified at amortised cost except
equity instruments.

Financial assets at amortised cost

A ‘financial asset'' is measured at the amortised cost if
both the following conditions are met:

a) The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

b) 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 amortised cost using the
effective interest rate (EIR) method. Amortised 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 amortisation is
included in other income in the standalone statement
of profit or loss. The losses arising from impairment are
recognised in the standalone statement of profit or loss.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial

assets) is primarily derecognised (i.e. removed from
the Company''s standalone balance sheet) when:

- The rights to receive cash flows from the asset
have expired, or

- The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
‘pass-through'' arrangement; and either (a) the
Company has transferred substantially all the
risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred its rights to
receive cash flows from an asset or has entered into
a pass-through arrangement, it evaluates if and to
what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the Company
continues to recognise the transferred asset to the
extent of the Company''s continuing involvement. In
that case, the Company also recognises an associated
liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights
and obligations that the Company has retained.

Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.

Impairment of financial assets

The Company recognises an allowance for expected
credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based on
the difference between the contractual cash flows due
in accordance with the contract and all the cash flows
that the Company expects to receive, discounted at
an approximation of the original effective interest rate.
The expected cash flows will include cash flows from
the sale of collateral held or other credit enhancements
that are integral to the contractual terms.

ECLs are recognised in two stages. For credit
exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default
events that are possible within the next 12-months

Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount is reported in the standalone balance
sheet if there is a currently enforceable legal right to
offset the recognised amounts and there is an intention
to settle on a net basis, to realise the assets and settle
the liabilities simultaneously.

(g) Cash and cash equivalents

Cash and cash equivalent in the standalone balance sheet
comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less,
that are readily convertible to a known amount of cash
and subject to an insignificant risk of changes in value.

For the purpose of the statement of cashflow, cash
and cash equivalents consists of cash and short-term
deposits, as defined above

(h) Inventories

Inventories are initially recognised at cost, and
subsequently at the lower of cost and net realisable
value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the
inventories to their present location and condition.

The method of determining cost is as follows:

- Raw material: 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 cost method.

- Finished goods: Cost includes cost of direct
materials and labour and a proportion of
manufacturing overheads based on the normal
operating capacity. Cost is determined on
weighted average basis.

- Stores and spares: 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 cost method.

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.

Raw materials and other supplies held for use in the
production of finished products are not written down
below cost except in cases where material prices have
declined and it is estimated that the cost of the finished
products will exceed their net realisable value.

Necessary adjustments/provisions are made in
respect of non-moving, slow moving and damaged
items of inventory.

(i) Earnings per share

Basic earnings per share are calculated by dividing
the net profit or loss for the year attributable to equity
shareholders by the weighted average number of
equity shares during the year.

The weighted average number of equity shares
outstanding during the period is adjusted for events
such as bonus issue and share split that have changed
the number of equity shares outstanding, without a
corresponding change in resources.

For the purpose of calculating diluted earnings per
share, the net profit or loss for the year attributable to
equity shareholders of the Company and the weighted
average number of shares outstanding during
the year are adjusted for the effects of all dilutive
potential equity shares.

The accounting policies set out below have been applied consistently to the periods presented in these financial
statements.

a) Basis of accounting and preparation of financial statements

These financial statements are prepared in accordance with Generally Accepted Accounting Principles in India under
the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair
values. The Accounting Standards (AS) are prescribed under Section 133 of the Act read with Rule 3 of the
Companies (Accounting Standards) Rules, 2015 and Companies (Accounting Standards) Amendment Rules, 2016.
The financial statements are presented in Indian rupees.

b) Use of estimates

The preparation of the financial statements in conformity with AS requires management to make estimates,
judgments, and assumptions. These estimates, judgments and assumptions affect the application of accounting policies
and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the year. Examples of such estimates
include estimates of useful life of assets, provision for slow moving and obsolete stock, provision for doubtful debts
and provision for warranty etc. Accounting estimates could change from period to period. Actual results could differ
from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in
circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in
which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

c) Current-non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a. it is expected to.be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;

b. it is held primarily for the purpose of being traded.

c. it is expected to be realised within 12 months after the reporting date; or

d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12
months after the reporting date.

Current assets include the current portion of non-current financial assets.

All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a. it is expected to be settled in the Company’s normal operating cycle;

b. it is held primarily for the purpose of being traded;

c. it is due to be settled within 12 months after the reporting date; or

d. the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after
the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the
issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities.

All other liabilities are classified as non-current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash
equivalents.

d) Property, Plant and equipment and depreciation

Property, plant and equipment are stated at the cost of acquisition or construction, less accumulated depreciation. All
costs incurred in bringing the assets to its working condition for intended use have been capitalised. Any expenditure
on account of change in liabilities, price adjustments, change in duties or change in estimates on account of
dismantling or restoration of an asset will be included in the cost of such asset. Subsequent expenditures related to an
item of Property, plant and equipment are added to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.

Advances paid towards the acquisition of Property, plant and equipment, outstanding at each balance sheet date are
shown under capital advances. The cost of the Property, plant and equipment not ready for its intended use on such
date, is disclosed under capital work-in- progress.

Freehold land is not depreciated. Leasehold improvements are amortized over the lease period.

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year
end.

Based on technical evaluation, the management believes that the useful lives as given above best represent the period
over which management expects to use these assets. Hence, the useful lives for these assets is different from the
useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

A Property, Plant and equipment is eliminated from the financial statements on disposal or when no further benefit is
expected from its use and disposal. Further, depreciation for assets purchased/ sold during the year is proportionately
charged.

Management is of the view that wherever it is not practicable to identify the component of an asset as a separate
depreciable asset, have been identified and depreciated considering the useful life of the asset or the component
whichever is shorter. Accordingly, same rate of depreciation has been applied for charging the depreciation as
referred above.

e) Intangible assets and amortisation

Intangible assets consist of computer software and trade-marks which are recorded at the acquisition costs. Intangible
assets are amortised over their estimated useful lives, from the date that they are available for use based on the
expected pattern of consumption of economic benefits of the asset. Accordingly, at present, these are being amortised
on straight line basis. Pursuant to this policy, the rates determined by Management based on the estimated useful
lives of the assets are as set out below.

Category of assets Life over which asset will be depreciated

Computer software 3 Years

Trademarks Remaining life as per the agreement.

f) Inventories

Inventories are carried at the lower of cost and net realisable value.

Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location
and condition.

The method of determining cost is as follows:

> Raw materials and packing materials: at weighted average cost method.

> Work-in-progress: at cost including costs of conversion;

> Manufactured finished goods: at cost including costs of conversion.

Production overheads used for valuation of finished goods are allocated on the basis of normal production.

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.

The net realisable value of work-in-progress is determined with reference to the selling prices of related finished
products. Raw materials and other supplies held for use in the production of finished products are not written down
below cost except in cases where material prices have declined and it is estimated that the cost of the finished
products will exceed their net realisable value.

The comparison of cost and net realisable value of inventory is made on an item by item basis.

Necessary adjustments/provisions are made in respect of non-moving, slow moving and damaged items of inventory.

g) Employee benefits

Short-term employee benefits

Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term
employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of
short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related
service is rendered by employees.

Post-employment benefits

Gratuity is a defined benefit scheme and is accrued based on an actuarial valuation at the balance sheet date, carried
out by an independent actuary. The Company’s gratuity scheme is administered by Life Insurance Corporation of
India. A funded defined plan for the qualifying employees. Actuarial gain/ losses are charged to the Statement of
profit and loss.

Compensated absences are a long term employee benefit is accrued based on an actuarial valuation at the balance
sheet date, carried out by an independent actuary. The liability for leave benefits is unfunded.

Contributions to provident fund are provided at pre-determined rates and deposited with the appropriate authorities.

h) Revenue recognition

Revenue from sale of goods in the course of ordinary activities is recognised when property in the goods or all
significant risks and rewards of their ownership are transferred to the customer and no significant uncertainty exists
regarding the amount of the consideration that will be derived from the sale of the goods and regarding its collection.
Revenue from services provided is recognized in accordance with the terms of the contracts entered in to with the
customers, as and when the related services are rendered, and no significant uncertainty exists regarding the
collection of the consideration.

Revenue from fixed price contracts is recognised on the percentage of completion method, measured by reference to
the percentage of cost incurred upto the reporting date to estimated total cost for each contract. The estimates of the
contract revenue and costs are reviewed periodically by the Management and any effect of change in estimate is
recognized in the period such changes are determined. Unbilled revenue represents cost and earnings in excess of
billings while unearned revenue represents the billing in excess of cost and earnings. Provision for foreseeable losses
is made in the year in which such losses are foreseen.

The amount recognised as revenue is exclusive of applicable taxes and is net of returns, trade discounts and quantity
discounts.

Export incentives are recognized in the Statement of profit and loss when the right to receive credit as per the terms
of the entitlement is established in respect of exports made.

Interest income from bank deposits are recognised on a time proportionate basis taking into account the amount
outstanding. In case there is uncertainty in the receipt of interest due to any reason including when there is doubt of
recovery, interest is accounted only when there is certainty of its recovery or upon receipt.

i) Foreign exchange transactions

Foreign exchange transactions are recorded using the exchange rates prevailing on the dates of the respective
transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in
the Statement of profit and loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the
closing exchange rate on that date; the resultant exchange differences are recognised in the Statement of profit and
loss, except in case of exchange differences relating to long-term monetary items which are dealt with in the
following manner:

Non-monetary items which are carried in terms of historical costs denominated in a foreign currency are reported
using the exchange rate at the date of the transactions.

Forward exchange contracts and other similar instruments that are not in respect of forecasted transactions are
accounted for using the guidance in Accounting Standard (''AS'') 11, ''The effects of changes in foreign exchange
rates''. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and
purpose of the contract, either the contracts are recorded based on the forward rate/fair value at the reporting date, or
based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium
or discount at the inception is amortised as income or expense over the life of the contract.

j) Warranties

Company provides performance warranty on PV Modules for 25 years. The Warranty costs are estimated by the
Management on the basis of technical evaluation and past experience. Provision is made for estimated liability in
respect of warranty costs in the year of recognition of revenue.