3.12 Provisions, Contingent liabilities and Contingent assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive
obligation as a result of past events and it is probable that there will be an outflow of resources, and a reliable estimate can
be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a
provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.

Contingent liabilities are not recognized and are disclosed by way of notes to the standalone financial statements when there
is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the control of the Company or when there is a present
obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle
the same or a reliable estimate of the amount in this respect cannot be made.

Contingent assets are not recognised but disclosed in the standalone financial statements by way of notes to accounts when
an inflow of economic benefits is probable.

3.13 Employee benefits

Short term employee benefits: Employee benefits are accrued in the year in which services are rendered by the employees.
Short term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the related
service is rendered.

Defined contribution plan: Contribution to defined contribution plans such as provident fund, etc, is being made in
accordance with statute and are recognised as and when incurred.

Defined benefit plan: Contribution to defined benefit plans consisting of contribution to gratuity fund are determined at
close of the year at present value of the amount payable using actuarial valuation techniques. Actuarial gains and losses
arising from experience adjustments and changes in actuarial assumptions are recognized immediately in the Balance Sheet
with a corresponding debit or credit to Retained Earnings through Other comprehensive income in the period in which they
occur.

Other Long Term Employee Benefits: Other long term employee benefits consisting of leave encashment are determined
at close of the year at present value of the amount payable using actuarial valuation techniques. The changes in the amount
payable including actuarial gains and losses are recognised in the statement of profit and loss.

All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent
actuary using the projected unit credit method. The classification of the Company's net obligation into current and non¬
current is as per the actuarial valuation report.

3.14 Revenue recognition
Revenue from operations

The Company recognises revenue when it transfers control over the products (Power) or services to a customer at an amount
that reflects the consideration to which the Company becomes entitled on such transaction in terms of agreement and/or
orders as applicable to the transaction. This excludes the rebates, discounts, taxes and other collections on behalf of the third
parties.

Sale of Power

Revenue in respect of sale of electricity generated is accounted for on delivery to the grid under long term/ mid-term Power
Purchase Agreement (PPA) read with the regulations of State Electricity Regulatory Commission and/or short-term contracts/
merchant basis on completion of supply to the respective customers.

Revenue from third party power plant under operations and maintenance is recognised when service under the contract is
rendered.

Revenue from construction contract

Revenue from construction contracts is recognized based on completion of the performance obligation in terms of the
contract when the performance creates an asset with no alternative use and an enforceable right to payment as performance
is completed.

Other Income

Dividend Income

Dividend income from investment in equity shares is recognised when the shareholders' right to receive payment has been
established.

Interest Income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash
receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

3.15 Borrowing Cost

Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing
costs are recognized in the statement of profit and loss using the effective interest method except to the extent attributable to
qualifying property, plant and equipment which is capitalized to the cost of the related assets. A qualifying PPE is an asset
that necessarily takes a substantial period of time to get ready for its intended use.

3.16 Taxes on income

Income tax expense representing the sum of current tax expense and the net charge of the deferred taxes is recognized in
profit and loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.

Current Tax

Current tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the
tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting
period. Advance tax and provisions are presented in the balance sheet after setting off advance tax paid and income tax
provision for the respective financial year.

Interest expenses and penalties, if any, related to income tax are included in finance cost and other expenses respectively.
Interest income, if any, related to income tax is included in "Other income".

Deferred Tax

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences between the
carrying amount of assets and liabilities in the standalone financial statements and the corresponding tax base used in the
computation of taxable profit as well as for unused tax losses or credits. In principle, deferred tax liabilities are recognized for
all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be utilized.

Deferred tax assets and liabilities have been offset wherever the Company has a legally enforceable right to set off current
tax assets against current tax liabilities and where deferred tax assets and liabilities relate to income tax levied by the same
taxation authority.

Deferred taxes are calculated at the enacted or substantially enacted tax rates that are expected to apply when the asset or
liability is settled. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged
directly to other comprehensive income or equity, in which case the corresponding deferred tax is also recognized directly in
other comprehensive income or equity.

Deferred tax assets include Minimum Alternate Tax (MAT) measured in accordance with the tax laws in India, which is likely
to give future economic benefits in the form of availability of set off against future income tax liability and such benefit can
be measured reliably and it is probable that the future economic benefit associated with the same will be realised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.

3.17 Earnings per share

Basic earnings per share is calculated by dividing the net profit/loss for the year by the weighted average number of equity
shares outstanding during the period.

Diluted earnings per share is computed using the net profit/loss for the year and weighted average number of equity and
potential equity shares outstanding during the year including share options, convertible preference shares and debentures,
except where the result would be anti-dilutive. Potential equity shares that are converted during the year are included in the
calculation of diluted earnings per share, from the beginning of the year or date of issuance of such potential equity shares,
to the date of conversion.

3.18 Statement of Cash flows

Cash flows are reported using indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of
a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities
of the Company are segregated.

3.19 Segment Reporting

The identification of operating segment is consistent with performance assessment and resource allocation by the Chief
Operating Decision Maker. An operating segment is a component of the Company that engages in business activities from
which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the
other components of the Company and for which discrete financial information is available. Operating segments of the
Company comprises three segments namely, Generating division, Contract division and Trading division. All operating
segments operating results are reviewed regularly by the Chief Operating Decision Maker to make decisions about resources
to be allocated to the segments and assess their performance.

NOTE 4

CRITICAL ACCOUNTING JUDGMENTS, ASSUMPTIONS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

The preparation of the standalone financial statements in conformity with the recognition and measurement principle of Ind
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 standalone financial statements and reported amounts of revenues and expenses during the period.
Accounting estimates and underlying assumptions are reviewed on an ongoing basis and could change from period to period.
Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates.

Revisions to accounting estimates are recognised prospectively. Actual results may differ from these estimates. Differences between
the actual results and estimates are recognized in the year in which the results are known/ materialized and, if material, their effects
are disclosed in the notes to the standalone financial statements.

The application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use
of assumptions in the standalone financial statements have been disclosed below. The key assumptions concerning the future and
other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment
to the carrying amount of assets and liabilities within the next financial year are discussed below:

4.1 Depreciation/ amortization of and impairment loss on property, plant and equipment/ intangible assets

Depreciation on assets of generating plant and machinery, building and roads, hydraulic works, transmission lines,
transformers and cable network has been provided on straight line method over useful life as per the implementation/
other agreement with the authorities. Values of spares related to the machinery are depreciated over the effective life of
the plant and machinery to which they relate. ROU assets are depreciated over the lease term or expected useful life of the
asset, whichever is lower. Intangible assets are amortised over a period of five years. The Company reviews the estimated
useful lives of the assets regularly in order to determine the amount of depreciation/ amortization to be recorded during any
reporting period. This reassessment may result in change in such expenses in future periods.

The Company reviews the carrying value of its tangible and intangible Assets whenever there is objective evidence that the
assets are impaired. In such situation assets recoverable amount is estimated which is higher of assets or cash generating
units (CGU) fair value less cost of disposal and its value in use. In assessing value in use, the estimated future cash flows
are discounted using pre-tax discount rate which reflects the current assessment of time value of money. In determining fair
value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate
valuations are adopted.

4.2 Arrangements containing leases

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option
to extend or terminate the lease if the use of such option is reasonably certain. The Company makes an assessment on
the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to
extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any
significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to the Company's operations taking into account the location of the underlying asset and
the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the
current economic circumstances.

4.3 Impairment allowances on financial assets

The Company evaluates whether there is any objective evidence that financial asset including loan, trade and other receivables
are impaired and determines the amount of impairment allowance as a result of the inability of the concerned parties to make
required payments. The Company bases the estimates on the ageing of the trade receivables balance, creditworthiness of the
trade receivables, historical write-off experience and these factors are subject to variations leading to consequential impact on
the amounts considered in the standalone financial statements.

4.4 Application of "Service concession arrangements" accounting

In assessing the applicability of the service concession arrangement with respect to hydro power plants of the Company, the
management has exercised significant judgement considering the ownership of the assets and consideration there against,
operational capabilities and ability to sell the power generated to the consumer and determine the rate in this respect, in
concluding that the arrangements with the Company as such do not meet the criteria for recognition as service concession
arrangements.

4.5 Current tax and Deferred tax

Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during
the estimation of the provision for income taxes.

The extent to which deferred tax assets can be recognised is based on the assessment of the probability of the Company's
future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in
assessing the impact of any legal or economic benefits.

4.6 Defined benefit obligations (DBO)

Critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation,
mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this
purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual
defined benefit expenses.

4.7 Provisions and contingencies

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds
resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition
and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be
subject to change.

Management judgment is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/
litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.

The carrying amounts of provisions and liabilities and estimation for contingencies are reviewed regularly and revised to
take account of changing facts and circumstances.