1. Accounting Policies of Havells India Ltd.

Company…

1. Basis of preparation :
 The financial statements of the Company have been prepared in
accordance with Indian Accounting Standards (Ind AS) notified under
the section 133 of the Companies Act 2013 (the Act) read with
Companies (Indian Accounting Standards) Rule 2015 (as amended
from time to time), presentation requirement of Division II of schedule
III to the Companies Act, 2013, (Ind As compliant schedule III) and
other relevant provision of the Act. The financial statements have been
prepared on a historical cost basis, except for the following assets and
liabilities:
- Certain financial assets and liabilities that is measured at fair
value
- Assets held for sale-measured at fair value less cost to sell
- Defined benefit plans-plan assets measured at fair value
- Share - based payments

2. Current versus 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 purpose of trading
- Expected to be realised within twelve months after the reporting
period, or
- cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least twelve months after the reporting period
 The operating cycle is the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents. the
Company has identified twelve months as its operating cycle.

3. Property, plant and equipment :

 Property, Plant and equipment including capital work in progress are

stated at historical cost, less accumulated depreciation and
accumulated impairment losses, if any. The cost comprises of purchase
price, taxes, duties, freight and other incidental expenses directly
attributable and related to acquisition and installation of the concerned
assets and are further adjusted by the amount of input tax credit availed
wherever applicable.
 Subsequent costs are included in assets carrying amount or recognised
as separate assets, as appropriate, only when it is probable that future
economic benefit associated with the item will flow to the Company
 and the cost of item can be measured reliably. When significant parts
of plant and equipment are required to be replaced at intervals, the
Company depreciates them separately based on their respective useful
lives.
 Capital work- in- progress includes cost of property plant and
equipment under installation / under development as at the balance
sheet date.
 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.
 Lease hold improvements are depreciated on straight line basis over
shorter of the assets useful life and their initial agreement period.
 Leasehold land is amortised on a straight line basis over the unexpired
period of their respective lease ranging from 90-99 years.

4. Investment Properties :

 Property that is held for long term rental yields or for capital
appreciation or for both , and that is not occupied by the Company, is
classified as investment property. Investment property is measured
initially at its cost, including related transaction cost and where
applicable borrowing costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation
and accumulated impairment loss, if any
 Subsequent expenditure is capitalised to assets carrying amount 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. When significant parts of investment property are
required to be replaced at intervals, the Company depreciates them
separately based on their respective useful lives. All other repair and
maintenance cost are expensed when incurred.
 Though the Company measures investment property using cost based
measurement, the fair value of investment property is disclosed in the
notes. Fair values are determined based on an annual evaluation
performed by an external independent valuer applying a valuation
model as per Ind AS 113 Fair value measurement.
 Investment properties are derecognised either when they have been
disposed of or when they are permanently withdrawn from use and no
future economic benefit is expected from their disposal. The difference
between the net disposal proceeds and the carrying amount of the asset
is recognised in profit or loss in the period of derecognition.
 Investment properties are depreciated using straight line method over
their estimated useful life. Investment properties comprising of factory
building is depreciated over useful life of 30 years and leasehold land
is amortised on a straight line basis over the unexpired period of the
lease.
  Transfer of property from investment property to the property, plant
and equipment is made when the property is no longer held for long
term rental yields or for capital appreciation or both at carrying amount
of the property transferred.

5. Intangible assets :

 I intangible assets acquired separately are measured on initial

recognition at cost. Cost of intangible assets acquired in business
combination is their fair value at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less accumulated
amortisation and accumulated impairment losses, if any. Internally
generated intangibles, excluding capitalised development cost, are not
capitalised and the related expenditure is reflected in statement of
Profit and Loss in the period in which the expenditure is incurred. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use.
A. Research and development cost:
 Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognised as an intangible asset
when the Company can demonstrate all the following:
- The technical feasibility of completing the intangible asset so
that it will be available for use or sale;
- Its intention to complete the asset;
- Its ability to use or sale the asset;
- How the asset will generate future economic benefits;
- The availability of adequate resources to complete the
development and to use or sale the asset; and
- The ability to measure reliably the expenditure attributable to
the intangible asset during development.
B. Brand and Trademarks:
 Brand and Trademarks acquired in business combination are initially
recognised at fair value at the date of acquisition. Following initial
recognition, brand and trademark are carried at the above recognised
value less accumulated amortisation and accumulated impairment
losses, if any
C. Distributor/ Dealer Network:
 Distributor/ Dealer Network acquired in business combination are
initially recognised at fair value at the date of acquisition. Following
initial recognition, Distributor/ Dealer Network are carried at the above
recognised value less accumulated amortisation and accumulated
impairment losses, if any. They are amortised on a straight line basis
over their estimated useful life of 8 years assessed by the management
at the time of acquisition.
D. Non-Compete Fee:
 Non-Compete fee is recognised based on agreement with seller or
competitor. It is amortised on a straight line basis over their estimated
useful life of 7 years based on agreed terms as per contract.
E. Goodwill:
  Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred over the fair value of net
identifiable assets acquired and liabilities assumed. If the fair value of
the net assets acquired is in excess of the aggregate consideration
transferred, the Company re-assesses whether it has correctly identified
all of the assets acquired and all of the liabilities assumed and reviews
the procedures used to measure the amounts to be recognised at the
acquisition date. If the reassessment still results in an excess of the fair
value of net assets acquired over the aggregate consideration
transferred, then the gain is recognised in other comprehensive income
and accumulated in equity as capital reserve. However, if there is no
clear evidence of bargain purchase, the entity recognises the gain
directly in equity as capital reserve, without routing the same through
other comprehensive income.

6. Impairment of non- financial assets :

 Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment, or
more frequently if events or changes in circumstances indicate that
they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate the carrying
amount may not be recoverable. An impairment loss is recognised for
the amount by which the assets carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an assets
fair value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for the
which there are separately identifiable cash inflows which largely
independent of the cash inflows from other assets or groups of assets
(cash - generating units). Non -financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.

7. Derivative financial instruments and hedge accounting Initial

recognition and subsequent measurement :

 Derivative financial instruments are initially recognised at fair value on

the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as
financial assets when the fair value is positive and as financial
liabilities when the fair value is negative. Any gains or losses arising
from changes in the fair value of derivatives are taken directly to profit
or loss, except for the effective portion of cash flow hedges, which is
recognised in OCI and later reclassified to profit or loss when the
hedge item affects profit or loss or treated as basis adjustment if a
hedged forecast transaction subsequently results in the recognition of a
non-financial asset or non-financial liability
 For the purpose of hedge accounting,
  hedges are classified as:
 Fair value hedges when hedging the exposure to
changes in the fair value of a recognised asset or
liability or an unrecognised firm commitment
 Cash flow hedges when hedging the exposure to
variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or
liability or a highly probable forecast transaction or the
foreign currency risk in an unrecognised firm
commitment

8. Investment in Subsidiaries and joint venture :

 The investment in subsidiary and Joint venture are carried at cost as

per IND AS 27. The Company regardless of the nature of its
involvement with an entity (the investee), determines whether it is a
parent by assessing whether it controls the investee. The Company
controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee. Thus, the
Company controls an investee if and only if it has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the
investee and
(c) the ability to use its power over the investee to affect the amount of the
returns.

9. Inventories :
a) Basis of valuation:
i) Inventories other than scrap materials are valued at lower of cost and net
realizable value after providing cost of obsolescence, if any. However,
materials and other items held for use in the production of inventories are not
written down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. The comparison of cost
and net realizable value is made on an item-by-item basis.
ii) Inventory of scrap materials have been valued at net realizable value.
b) Method of Valuation:
i) Cost of raw materials has been determined by using moving weighted
average cost method and comprises all costs of purchase, duties, taxes (other
than those subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventories to their present location and condition.
ii) Cost of finished goods and work-in-progress includes direct labour and an
appropriate share of fixed and variable production overheads and excise duty
as applicable. Fixed production overheads are allocated on the basis of normal
capacity of production facilities. Cost is determined on moving weighted
average basis.
10.Non-current assets held for sale :

 The Company classifies non-current assets as held for sale if their

carrying amounts will be recovered principally through a sale rather
than through continuing use.
 The criteria for held for sale classification is regarded as met only
when the assets is available for immediate sale in its present condition,
subject only to terms that are usual and customary for sales of such
assets, its sale is highly probable; and it will genuinely be sold. The
Company treats sale of the asset to be highly probable when:
o The appropriate level of management is committed to a plan to
sell the asset
o An active programme to locate a buyer and complete the plan
has been initiated (if applicable)
o The asset is being actively marketed for sale at a price that is
reasonable in relation to its current fair value,
o The sale is expected to qualify for recognition as a completed
sale within one year from the date of classification , and
o Actions required to complete the plan indicate that it is unlikely
that significant changes to the plan will be made or that the plan
will be withdrawn.
 Property, plant and equipment and intangible assets once classified as
held for sale are not depreciated or amortised. Assets and liabilities
classified as held for sale are presented separately as current items in
the balance sheet.

11.Revenue recognition :

 The Company manufactures/ trades and sells a range of consumer

electrical and electronic products. Sale of these products is recognised
at a point in time when control of the product has been transferred,
being when the products are delivered to the customers and there are
no unfulfilled obligation that could affect the customers’ acceptance of
the products. Delivery occurs when the products are shipped to specific
location and control has been transferred to the customers. The
Company also provides installation, annual maintenance and extended
warranty services that are either sold separately or bundled together
with the sale of goods. The Company has objective evidence that all
criterion for acceptance has been satisfied.

(a) Sale of goods

(i) Variable consideration
(ii) Warranty obligations
(iii) Significant Financing Components
(iv) Schemes
 (b) Sale of service
(c) Contract balances
(d) Rental Income
(e) Interest Income
(f) Export benefit

2. Accounting Policies of Suzlon Energy Ltd. Company…

1. Current versus 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.

2. Foreign currencies :

The Company’s financial statements are presented in Indian Rupees, which is

also the Company functional currency.
 Transactions and balances :
 Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
 Foreign currency monetary items are retranslated using the exchange rate
prevailing at the reporting date. Exchange differences arising on settlement or
translation of monetary items are recognised in profit or loss.
  Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value is
determined.

3. Fair value measurement :

 The Company measures financial instruments, such as, derivatives at

fair value at each balance sheet date.
 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 fair value measurement is
based on the presumption that the transaction to sell the asset or
transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous
market for the asset or liability.
 All assets and liabilities for which fair value is measured or disclosed
in the 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.
 For assets and liabilities that are recognised in the financial statements
on a recurring basis, the Company determines whether transfers have
occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

4. Revenue recognition:

Revenue is recognised to the extent it is probable that the economic benefits

will flow to the Company and that the revenue can be reliably measured,
regardless of when the payment is being made. Revenue is measured at the fair
value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duties collected
on behalf of the government. The Company assesses its revenue arrangements
against specific criteria, i.e., whether it has exposure to the significant risks
and rewards associated with the sale of goods or the rendering of services, in
order to determine if it is acting as a principal or as an agent.
 Revenue is recognised, net of trade discounts, Goods and Service tax or other
taxes, as applicable.
a) Sale of goods :
Revenue from sale of goods is recognised in the statement of profit and loss
when the significant risks and rewards in respect of ownership of goods have
been transferred to the buyer as per the terms of the respective sales order and
the Company neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold.
Revenue from the sale of goods is measured at the fair value of consideration
received or receivable, net of returns and allowances and discounts.
b) Operation and maintenance income :
Revenues from operation and maintenance contracts are recognised pro-rata
over the period of the contract and when services are rendered.
c) Power evacuation infrastructure facilities :
Revenue from power evacuation infrastructure facilities is recognised upon
commissioning and electrical installation of the Wind Turbine Generator
(WTG) to the said facilities followed by approval for commissioning of WTG
from the concerned authorities.
d) Land revenue :
Revenue from land lease activity is recognised upon the transfer of leasehold
rights to the customers. Revenue from sale of land / right to sale land is
recognised when significant risks and rewards in respect of title of land are
transferred to the customers as per the terms of the respective sales order.
e) Sale of services :
Revenue from sale of services is recognised in the statement of profit and loss
as and when the services are rendered.
f) Dividend income :
Dividend income from investments is recognised when the right to receive the
payment is established, which is generally when shareholders approve the
dividend.

5. Government grants and subsidies :

 Grants and subsidies from the government are recognised when there is
reasonable assurance that
 the Company will comply with the conditions attached to them, and
 the grant/subsidy will be received.
 When the grant or subsidy relates to revenue, it is recognised as
income on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs, which they
are intended to compensate. Where the grant relates to an asset, it is
recognised as deferred income and released to income in equal
amounts over the expected useful life of the related asset.
 When the Company receives grants of non-monetary assets, the asset
and the grant are recorded at fair value amounts and released to profit
or loss over the expected useful life in a pattern of consumption of the
benefit of the underlying asset i.e. by equal annual instalments. When
 loans or similar assistance are provided by governments or related
institutions, with an interest rate below the current applicable market
rate, the effect of this favourable interest is regarded as a government
grant. The loan or assistance is initially recognised and measured at
fair value and the government grant is measured as the difference
between the initial carrying value of the loan and the proceeds
received. The loan is subsequently measured as per the accounting
policy applicable to financial liabilities.

6.  Taxes :

A. Current income tax :

 Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date. Current income
tax relating to items recognised outside profit or loss is recognised
either in other comprehensive income or in equity.
B. Deferred tax :
 Deferred tax is provided using the balance sheet method on temporary
differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date.
 Deferred tax liabilities are recognised for all taxable temporary
differences, except:
- When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss.
- In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
- When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss.

7. Property, plant and equipment:

 Property, plant and equipment are stated at cost, net of accumulated

depreciation and accumulated impairment loss, if any. Such cost
includes the cost of replacing part of the plant and equipment and
borrowing costs for long-term construction projects if the recognition
criteria are met. When significant parts of plant and equipment are
 required to be replaced at intervals, the Company depreciates them
separately based on their specific useful lives.
 Capital work-in-progress comprises of the cost of PPE that are not yet
ready for their intended use as at the balance sheet date.
 Likewise, when a major inspection is performed, its cost is recognised
in the carrying amount of the plant and equipment as a replacement if
the recognition criteria are satisfied. All other repair and maintenance
costs are recognised in the statement of profit and loss when they are
incurred.
 Depreciation is calculated on the written down value method based on
the useful lives and residual values estimated by the management in
accordance with Schedule II to the Companies Act, 2013. The
identified components are depreciated separately over their useful
lives; the remaining components are depreciated over the life of the
principal asset.

8.  Investment properties:

 Investment properties are measured initially at cost, including

transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and
accumulated impairment loss, if any.
 The cost includes the cost of replacing parts and borrowing costs for
long-term construction projects if the recognition criteria are met.
When significant parts of the investment property are required to be
replaced at intervals, the Company depreciates them separately based
on their specific useful lives. All other repair and maintenance costs
are recognised in profit or loss as incurred.
 The Company depreciates building component of investment property
over 58 years from the date of original purchase/date of capitalisation.
 Though the Company measures investment property using cost based
measurement, the fair value of investment property is disclosed in the
notes.

9.  Intangible assets :

 Intangible assets acquired separately are measured on initial

recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any
accumulated amortisation and accumulated impairment losses, if any.
Internally generated intangibles, excluding capitalised development
costs, are not capitalised and the related expenditure is reflected in
statement of profit and loss in the year in which the expenditure is
incurred.
 Intangible assets are amortised over the useful economic life and
assessed for impairment whenever there is an indication that the
 intangible asset may be impaired. The amortisation period and the
amortisation method are reviewed at least at the end of each reporting
period. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life.

10. Research and development costs :

 Research costs are expensed as incurred. Development expenditures on

an individual project are recognised as an intangible asset when the
Company can demonstrate:
- The technical feasibility of completing the intangible asset so that the asset
will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development
 Following initial recognition of the development expenditure as an
asset, the asset is carried at cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use. It is
amortised on a straight line basis over the period of expected future
benefit from the related project, i.e., the estimated useful life.
Amortisation is recognised in the statement of profit and loss. During
the period of development, the asset istested for impairment annually.

11. Borrowing costs :

 Borrowing costs directly attributable to the acquisition, construction or

production of a qualifying asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as
part of the cost of the asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of
funds. Borrowing cost also includes exchange differences to the extent
regarded as an adjustment to the borrowing costs.

3. Accounting Policies of Siemens Ltd.:

1. Basis of preparation of financial statements :

 The financial statements of the Company have been prepared in

accordance with Indian Accounting Standards (Ind AS) notified
pursuant to section 133 of the Companies Act 2013 read with Rule 3 of
the Companies (Indian Accounting Standards) Rules, 2015 (as
amended from time to time).
 The financial statements have been prepared and presented under the
historical cost convention, except for derivative instruments and
certain other financial assets and liabilities which have been measured
at fair value (refer accounting policy regarding financial instruments).
 The accounting policies adopted in the preparation of financial
statements are consistent for all the periods presented.

2. Current versus non-current classification :

 All assets and liabilities have been classified as current or non-current

as per the Company operating cycle. Based on the nature of business
and the time between acquisition of assets for processing and their
realisation in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current or non-
current classification of assets and liabilities.

3. Property, plant and equipment :

 Property, plant and equipment are stated at cost of acquisition less

accumulated depreciation and impairment losses, if any. The cost
includes taxes, duties, freight and other incidental expenses related to
the acquisition and installation of the respective assets.
 Depreciation on property, plant and equipment is provided on a
straight-line basis over the useful lives of assets estimated by the
management, taking into account the nature of the asset on technical
evaluation of the useful life, which may not necessarily be in alignment
with the indicative useful lives prescribed by Schedule II to the
Companies Act, 2013.

4. Intangible assets :
 Intangible assets comprises of software and technical know-how.
Intangible assets are stated at cost of acquisition less accumulated
amortisation and impairment losses, if any. These intangible assets are
amortised on straight-line basis based on the following useful lives,
which in managements estimate represents the period during which
economic benefits will be derived from their use.
5. Investment property :
  Investments in land or buildings (including property under
construction) which are held to earn rentals and/or for capital
appreciation are classified as investment property. Investment
properties are initially measured at cost, including transaction costs.
The cost comprises purchase price and borrowing costs, if
capitalisation criteria are met and directly attributable cost of bringing
the investment property to its working condition for the intended use.
Investment properties are derecognised either when they have been
disposed of or when they are permanently withdrawn from use and no
future economic benefit is expected from their disposal. On disposal of
an investment property, the difference between its carrying amount and
net disposal proceeds is recognised in the Statement of Profit and Loss.
6. Revenue recognition :

 Revenue is recognised to the extent it is probable that the economic

benefits will flow to the Company and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration
received or receivable, taking into account contractually defined terms
of payment. Revenue are stated exclusive of sales tax, value added tax,
goods and service tax and net of trade and quantity discount.
 Revenue from sale of products is recognised on transfer of significant
risk and rewards of ownership of the products to the customers, which
is usually on dispatch of goods.
 When the outcome of a construction contract can be estimated reliably,
revenue from construction contracts are recognized under the
percentage-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.

7. Inventories :

 Inventories comprise all costs of purchase, conversion and other costs

incurred in bringing the inventories to their present location and
condition.
 Raw materials, work-in-progress, finished goods and traded goods are
carried at the lower of cost and net realisable value. Cost is determined
on the basis of the weighted average method.
 The net realisable value of work-in-progress is determined with
reference to the estimated selling price less estimated cost of
completion and estimated costs necessary to make the sale of related
finished goods. Raw materials held for the production of finished
goods are not written down below cost except in case where material
prices have declined and it is estimated that the cost of the finished
product will exceed its net realisable value.

8. Leases :
  The determination of whether an arrangement is (or contains) a lease is
based on the substance of the arrangement at the inception of the lease.
- Where the Company is the lessee :
Leases where the lessor effectively retains substantially all the risk and
benefits of ownership of the leased items are classified as operating
leases. Lease payments under an operating lease, are recognised as an
expense in the Statement of Profit and Loss on a straight line basis
over the lease term.
- Where the Company is the lessor :
Assets subject to operating leases are included in property, plant and
equipment and investment property. Lease income is recognised in the
Statement of Profit and Loss on a straight-line basis over the lease
term. Costs, including depreciation are recognised as an expense in the
Statement of Profit and Loss. Initial direct costs such as legal costs,
brokerage costs, etc. are recognised immediately in the Statement of
Profit and Loss.

9. Employee benefits :

(a) Short term employee benefits:

All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits such as
salaries, wages and short term compensated absences, etc. and the
expected cost of ex-gratia are recognised in the period in which the
employee renders the related service.
(b) Post-employment and other long-term benefits:
I. Defined Contribution Plans: The Company’s approved superannuation
scheme and employee state insurance scheme are defined contribution
plans. The Company’s contribution payable under the schemes is recognised
as expense in the Statement of Profit and Loss during the period in which
the employee renders the related service.
II. Defined Benefit Plans and other Long Term Benefits: The Company
gratuity, pension and medical benefit schemes are defined benefit
plans. Leave wages, retention bonus, silver jubilee and star awards are
other long term benefits. The present value of the obligation under
such defined benefit plans and other long term benefits are determined
based on actuarial valuation using the Projected Unit Credit Method,
which recognises each period of service as giving rise to additional
unit of employee benefit entitlement and measures each unit separately
to build up the final obligation.

10.Share-based payments :
 Share-based payment consists of share awards of the Holding Company
i.e. Share matching plan (SMP) and Siemens Stock Awards (SSA) to the
 employees of the Company. These awards are predominantly designed as
cash-settled transactions. The fair value of the amount payable is
remeasured at the end of each reporting period upto the settlement date,
with the changes in the fair value recognised as employee benefits
expenses with a corresponding increase in liabilities.

11.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
 All financial assets other than investment in subsidiary are recognised
initially at fair value plus, in the case of financial assets not recorded at fair
value through profit and loss, transaction costs that are attributable to the
acquisition of the financial asset.
 Subsequent measurement
 For purposes of subsequent measurement, financial assets are classified in
the below categories:
a) Financial assets at amortised cost
b) Financial assets including derivatives at fair value through profit or loss
(FVTPL)
c) Financial assets at fair value through other comprehensive income
(FVTOCI)
d) Equity instruments

12.Foreign currency transactions :

 The Company is exposed to currency fluctuations on foreign currency
transactions. Transactions denominated in foreign currency are
recorded at the exchange rate prevailing on the date of transactions.
 Exchange differences arising on foreign exchange transactions settled
during the year are recognized in the Statement of Profit and Loss of
the year translation.
 Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end, are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of Profit and Loss. Non monetary items
are stated in the balance sheet using the exchange rate at the date of the
transaction.
 The forward exchange and options contracts are re-measured at fair
value at each reporting date with the resultant gains/ losses thereon
being recorded in Statement of Profit and Loss.

13.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.
 All assets and liabilities for which fair value is measured or disclosed in
the 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.
 For assets and liabilities that are recognised in the financial statements on a
recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.

4. Accounting Policies Bharat Heavy Electricals Ltd. of

Company…

1. Basis of preparation of Financial Statements :

a) Statement of Compliance
b) The financial statements have been prepared in accordance with Indian
Accounting Standards (Ind AS) as notified by Ministry of Corporate
Affairs under the Companies (Indian Accounting Standards) Rules,
2015 and subsequent amendments thereof as well as with the
additional requirements applicable to financial statements as set forth
in Companies Act, 2013 and amended thereof.
c) Basis of measurement
d) The financial statements have been prepared on a going concern basis
and on an accrual method of accounting. Historical cost is used in
preparation of the financial statements except as otherwise mentioned
in the policy.
e) Functional and presentation currency. The preparation of the financial
statements in conformity with Ind As requires management to make
judgements, estimates and assumptions that affect the application of
 accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.

2. Property, plant and equipment (PPE) :

 Property, plant and equipment are carried at cost less accumulated

depreciation and accumulated impairment losses, if any.
 Depreciation on property, plant and equipment (other than those used
abroad under contract) is charged on straight-line method as per the useful
life prescribed in Schedule II of the Companies act, 2013, except where
estimated useful life is shorter based on technically assessed estimated
useful life as shown hereunder:-
 Depreciation methods, useful lives and residual values are reviewed in
each financial year and changes, if any, are accounted for prospectively.
Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Company will obtain
ownership by the end of the lease term. Freehold land is not depreciated.
 Property, plant and equipment costing J10,000/- or less and those whose
written down value as at the beginning of the year is J10,000/- or less, are
depreciated fully.
 At erection/project sites: The cost of roads, bridges and culverts is fully
amortized over the tenure of the contract, while sheds, railway sidings,
electrical installations and other similar enabling works (other than
temporary structures) are depreciated over the tenure of the contract after
retaining residual value, if any.

3.  Leases :

 At the inception of an arrangement, the Company determines whether such

an arrangement is or contains a lease.
 Upon initial recognition, assets taken on finance lease are capitalized at an
amount equal to the lower of their fair value and the present value of the
minimum lease payments. Minimum lease payments made under finance
leases are apportioned between the finance expense and the reduction of
the outstanding liability. The finance expense is allocated to each period
during the lease term so as to produce a constant periodic rate of interest
on the remaining balance of the liability.
 Lease rentals arising under operating leases are recognized in the statement
of profit and loss on a straight-line basis over the lease term except where
the increment in lease rentals is in line with general rate of inflation.

4. intangible assets :

 Intangible items costing more than J10,000/- are evaluated for

capitalization and are carried at cost less accumulated amortization and
accumulated impairment, if any.
 Intangible assets are amortised in statement of profit and loss on a straight-
line basis over the estimated useful lives from the date that they are
 available for use. the estimated useful lives for the intangible assets are as
follows:
Software 3 years Others 10 years
 Intangible assets having WDV J10,000/- or less at the beginning of the
year are amortized fully.
 Amortization period and amortization methods are reviewed in each
financial year and changes, if any, are accounted for prospectively.
 Expenditure on research activities is recognized in statement of profit and
loss as incurred. Expenditure on development activities is capitalized only
if the expenditure can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits are
probable and the Company intends to and has sufficient resources to
complete development and to use or sell the asset.

5. Borrowing costs :

 Borrowing costs directly attributable to the acquisition, construction or

production of qualifying assets, are added to the cost of such assets.
 An asset that necessarily takes a substantial period of time, considered as
more than twelve months, to get ready for its intended use or sale is a
qualifying asset for the purpose.
 ah other borrowing costs are recognized in the statement of profit and loss
in the period in which they are incurred.

6. investments in Subsidiaries & Joint ventures :

 Investments in subsidiaries and joint ventures are accounted at cost less

impairment losses, if any.
 If the intention of the management is to dispose the investment in near
future, it is classified as held for sale and measured at lower of its carrying
amount and fair value less costs to sell.

7. Inventories :

 Inventory is valued at cost or net realizable value, whichever is lower. In

respect of valuation of finished goods and work-in-progress, cost means
factory cost. In respect of raw material, components, loose tools, stores
and spares cost means weighted average cost.

8. Revenue Recognition :

 Revenue is recognized when it is probable that the economic benefits

associated with the transaction will flow to the entity and the amount of
revenue can be measured reliably.
a) Construction Contracts
 Revenue from construction contracts including long term service contracts
are recognized using the Percentage of Completion method. Percentage of
 completion is determined based on contract costs incurred to date as a
percentage of total estimated contract costs required to complete the
contract.
b) Other than Construction Contracts
 Revenue is recognised when the significant risks and rewards of ownership
have been transferred to the customer in accordance with the contract.
Revenue from services other than long term service contracts are
recognised when services are performed as per contract.
 Other income
- Dividend income is recognized in statement of profit and loss on the
date on which the Company right to receive payment is established.
- Interest Income is recognized using effective interest rate method.
- Claims for export incentives / duty drawbacks, duty refunds and
insurance are accounted for on accrual basis.

9. Foreign currency Translation/Transaction :

 Transaction in foreign currencies are recorded at the exchange rate

prevailing on the date of the transaction.
 Foreign currency denominated monetary assets and liabilities are
translated into the functional currency at exchange rates in effect at the end
of each reporting period. Foreign exchange gains or losses arising from
settlement and translations are recognized in the statement of profit and
loss.
 Non-monetary assets and non-monetary liabilities denominated in a
foreign currency and measured at historical cost are translated at the
exchange rate prevailing at the date of transaction.

10. Employee Benefits :

 The Company gratuity scheme, provident fund scheme, travel claims on

retirement and post-retirement medical facility scheme are in the nature of
defined benefit plans.
 The liability recognized in the balance sheet in respect of these defined
benefit plan is the present value of the defined benefit obligation at the end
of the reporting period less the fair value of plan assets, if any. The defined
benefit obligation is calculated annually by independent actuaries using the
projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows
using an appropriate government bond rate that have terms to maturity
approximating to the terms of the related liability.

11. Provisions :

(i) Claims for liquidated damages against the Company are recognized in the
financial statements based on the managements assessment of the probable
outcome with reference to the available information supplemented by
experience of similar transactions.
 (ii) For construction contracts the Company provides warranty cost at 2.5% of
the revenue progressively as and when it recognises the revenue and maintain
the same throughout the warranty period. For other contracts, provision for
contractual obligations in respect of contracts under warranty at the year end is
maintained at 2.5% of the value of contract. In the case of contracts for supply
of more than a single product 2.5% of the value of each completed product is
provided.
(iii) When it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately.
(iv) Other provisions are recognized if, as a result of a past event, the
Company has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.

12.Government Grants :

 Government grants are recognized only when there is reasonable assurance

that the conditions attached to them shall be complied with, and the grants
will be received. Non monetary grants are accounted at Fair Value of
assets and are treated as deferred income. Deferred income is recognized
in the statement of profit and loss on a systematic and rational basis over
the useful life of the asset. Government grants related to revenue are
recognized on a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related costs which they are
intended to compensate.

13.income Taxes :

 Income tax expense comprises current tax and deferred tax. Income tax
expense is recognized in statement of profit and loss except to the extent
that it relates to items recognized in other comprehensive income or
directly in equity.
 Current tax is the expected tax payable on the taxable income for the year,
using tax rates (tax laws) enacted or substantively enacted by the end of
the reporting period and includes adjustment on account of tax in respect
of previous years.
 Deferred tax is recognized using the balance sheet method, providing for
temporary difference between the carrying amount of an asset or liability
in the balance sheet and its tax base.
 Deferred tax is measured at the tax rates that are expected to apply when
the temporary differences are either realised or settled, based on the laws
that have been enacted or substantively enacted by the end of reporting
period.
 a deferred tax asset is recognized to the extent that it is probable that future
taxable profit will be available against which the temporary difference can
be utilized.
 the carrying amount of deferred tax assets are reviewed at each reporting
period and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
 Additional Income tax that arises from the distribution of dividends are
recognized at the same time when the liability to pay the related dividend
is recognized.