Accounting Policies of Oriana Power Ltd. Company

Mar 31, 2024

3. Significant accounting policies:

a) Use of estimates:

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

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

b) Revenue Recognitions:

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

i) Sale of products:

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

ii) Variable Consideration:

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

resolved. The volume rebates give rise to variable consideration.

iii) Volume rebates and discounts:

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

iv) Other Deductions:

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

v) Sale of projects:

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

vi. Revenue from Services:

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

vii) Interest Income:

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

c) Property, Plant and Equipment and

depreciation:

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

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

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

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

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

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

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

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

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

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

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

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

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

d) Inventory:

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

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

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

(ii) Finished goods and work in progress:

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

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

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

e) Borrowing Cost:

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

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