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Accounting Policies of Parsvnath Developers Ltd. Company
Mar 31, 2024
1. CORPORATE INFORMATION
Parsvnath Developers Limited ("the Company") was set up as a Company registered under the Companies Act, 1956. It was incorporated on 24 July, 1990. The Company is primarily engaged in the business of promotion, construction and development of integrated townships, residential and commercial complexes, multi-storeyed buildings, flats, houses, apartments, shopping malls, IT parks, hotels, SEZ, etc.
The Company is a public limited company incorporated and domiciled in India. The address of its corporate office is Parsvnath Tower, Near Shahdara Metro Station, Shahdara, Delhi - 110 032. The Company is listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).
2. MATERIAL ACCOUNTING POLICIES2.1 Basis of preparation
The standalone financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 and presentation requirement of Division II of Schedule III to the Companies Act, 2013 (Ind AS Compliant Schedule III), as applicable to the standalone financial statement .
Upto the year ended 31 March, 2016, the Company prepared its standalone financial statements in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ''Previous GAAP''). The date of transition to Ind AS is 1 April, 2015.
The standalone financial statements are presented in Indian Rupee and all values are rounded to the nearest lakhs, except when otherwise stated.
2.2 Basis of measurement and presentation
The standalone financial statements have been prepared on the historical cost basis unless otherwise indicated.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability
the principal accounting policies are set out below.2.3 Revenue recognition
Revenue is recognised to the extent that it is probable that the Company will collect the consideration to which it will be entitled in exchange of goods or services that will be transferred to the customers taking into account contractually defined terms of payments. Revenue excludes taxes and duties collected on behalf of the Government and is net of customer returns, rebates, discounts and other similar allowances.
i. Revenue from real estate projects - The Company derives revenue, primarily from sale of properties comprising of both commercial and residential units. Revenue from sale of constructed properties is recognised at a ''Point of Time'', when the Company satisfies the performance obligations, which generally coincides with completion/ possession and offer for possession of the unit/NOC received for fitout offer. To estimate the transaction price in a contract, the Company adjusts the contracted amount of consideration to the time value of money if the contract includes a significant financing component.
ii. In case of joint development projects, wherein land owner provides land and the Company acts as a developer and in lieu of land, the Company has agreed to transfer certain percentage of the revenue proceeds, the revenue is accounted on gross basis. In case, where, in lieu of the land, the Company has agreed to transfer certain percentage of constructed area, revenue is recognised in respect of Company''s share of constructed area to the extent of Company''s percentage share of the underlying real estate development project.
iii. Revenue from sale of land without any significant development is recognised when the sale agreement is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer. Revenue is recognised, when transfer of legal title to the buyer is not a condition precedent for transfer of significant risks and rewards of ownership to the buyer.
iv. Revenue from sale of development rights is recognised when agreements are executed.
v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the standalone financial statements. The related costs there against are charged to the Standalone Statement of Profit and Loss. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
vi The revenue on account of interest on delayed payment / transfer charges / forfeiture income and other associated charges by customers and expenditure on account of compensation / penalty for project delays are accounted for at the time of acceptance / settlement with the customers due to uncertainties with regard to determination of amount receivable / payable.
vii Income from licence fee is recognised on accrual basis in accordance with the terms of agreement with the sublicensees.
viii Income from rent is recognised on accrual basis in accordance with the terms of agreement with the lessee.
ix. Income from maintenance charges is recognised on accrual basis.
x. Interest income on bank deposits is recognised on accrual basis on a time proportion basis. Interest income on other financial instruments is recognised using the effective interest rate method.
2.4 Leasing
The company has applied Ind AS 116 for recognition of revenue from leasing.
The company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment and intangible assets. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company''s incremental borrowing rate. Generally, the company uses its incremental borrowing rate as the discount rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the company''s estimate of the amount expected to be payable under a residual value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of 12 months and low-value asset. The company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
As lessor
Receipts from operating leases are recognised in the Standalone Statement of Profit and Loss on a straight-line basis over the term of the relevant lease. Where the lease payments are structured to increase in line with expected general inflation to compensate for expected inflationary cost increases, lease income is recognised as per the contractual terms.
2.5 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised/inventorised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.6 Employee benefits
a. Defined contribution plan
The Company''s contribution to provident fund and employee state insurance scheme are considered
as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
For defined benefit plan in the form of gratuity, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is not reclassified to profit or loss in subsequent periods. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost comprising current service costs, past service costs, gains and losses on curtailments and settlements;
⢠net interest expense or income; and
⢠remeasurement
c. short-term and other long-term employee benefits
Liabilities recognised in respect of short-term employee benefits in respect of wages and salaries, performance incentives, leaves etc. are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Accumulated leaves expected to be carried forward beyond twelve months, are treated as long-term employee benefits. Liability for such long term benefit is provided based on the actuarial valuation using the projected unit credit method at year-end.
Income tax expense for the year comprises of current tax and deferred tax.
Current tax is the expected tax payable on the taxable income for the year calculated in accordance with the Income Tax Act and any adjustment to taxes in respect of previous years.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding amounts used in the computation of taxable income. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax losses and unused tax credits. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
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 asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate Tax (MAT) is payable when the taxable profit is lower than the book profit. Taxes paid under MAT are available as a set off against regular income tax payable in subsequent years. MAT paid in a year is charged to the standalone Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified
period i.e the period for which MAT credit is allowed to be carried forward. MAT credit is recognised as an asset and is shown as ''MAT Credit Entitlement'' The Company reviews the ''MAT Credit Entitlement'' asset at each reporting date and write down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
2.8 Property, plant and equipment
Property, plant and equipment is stated at their cost of acquisition/construction, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent expenditure related to an item of property, plant and equipment is included in the carrying amount only if it increases the future benefits from the existing asset beyond its previously assessed standards of performance.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from the use. Any gain or loss arising on rerecognition to the asset is included in the standalone Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Capital work-in-progress''
Investment properties are properties held to earn rentals and/or for capital appreciation. 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 purchase/construction cost, directly attributable cost and borrowing costs, if the recognition criteria are met. The fair value of investment property is disclosed in the notes.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
2.10 Depreciation on property, plant and equipment and investment property
Depreciation on property, plant and equipment and investment property is provided on straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013, except in respect of Shuttering and Scaffolding, in which case the life of the asset has been assessed on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technology changes and maintenance support etc. Accordingly the useful life of the assets taken is as under:
|
Asset |
useful life |
|
Buildings |
60 years |
|
Plant and equipment |
8 years |
|
Shuttering and scaffolding |
6 years |
|
Furniture and fixture |
8 years |
|
Vehicles |
8 years |
|
Office equipment |
5 years |
|
Computer |
3 years |
|
Investment properties (Buildings) |
60 years |
Free hold land is not depreciated.
2.11 intangible assets and intangible asset under development
Intangible assets comprises buildings constructed on ''Build-operate-Transfer''(BOT) basis. The company has unconditional right to use/lease such assets during the specified period. After expiry of specified period, these assets will get transferred to licensor without any consideration. Since, the Company has no ownership rights over these assets and has limited right of use during the specified period, these assets are classified as intangible assets. These intangible assets are initially recognised at their cost of construction. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Intangible assets which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Intangible assets under development''
Intangible assets are amortised on a straight line basis over the licence period (right to use) which ranges from 20 to 44 years.
2.12 impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.13 investment in equity instrument of subsidiaries (including partnership firm) and associates
Investment in equity instrument of subsidiaries and associates are stated at cost as per Ind AS 27 ''Separate Financial Statements''. Where the carrying amount of an investment is greater than its estimated recoverable amount, it is assessed for recoverability and in case of permanent diminution provision for impairment is recorded in Standalone statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and carrying amount is charged or credited to the standalone statement of Profit and Loss.
Inventory comprises completed property for sale and property under construction (work-in-progress),
Land cost, construction cost, direct expenditure relating to construction activity and borrowing cost during construction period is inventorised to the extent the expenditure is directly attributable to bring the asset to its working condition for its intended use. Costs incurred/items purchased specifically for projects are taken as consumed as and when incurred/ received.
i. Completed unsold inventory is valued at lower of cost and net relisable value. Cost of inventories are determined by including cost of land (including development rights), internal development cost, external development charges, materials, services, related overheads and apportioned borrowing costs.
ii. Work in progress is valued at lower of cost and net relisable value. Work-in-progress represents costs incurred in respect of unsold area of the real estate
projects or costs incurred on projects where the revenue is yet to be recognised. Cost comprises cost of land (including development charges), internal development cost, external development charges, materials, services, overhead related to projects under construction and apportioned borrowing costs.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised 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.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pretax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. When discounting is used the increase in the provisions due to the passage of time is recognised as finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.16 contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable
that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. The Company does not recognise a contingent liability, but discloses its existence in the standalone financial statements.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
2.17 Cash and cash equivalents
Cash and cash equivalents for the purpose of Standalone Cash Flow Statement comprises cash on hand, cash at bank and short-term deposits with banks with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cost of constructed properties includes cost of land/ development rights, construction and development costs, borrowing costs and direct overheads, which is charged to the standalone statement of profit and loss based on the corresponding revenue recognized from sale of unit on proportionate basis.
Basic earnings per share is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period and for all period presented is adjusted for events, such as bonus shares, that have changed the number of equity shares outstanding without a corresponding change in resources.
Diluted earnings per share is computed by dividing the net profit for the year attributable to equity shareholders as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.
2.20 Foreign currency translations
The standalone financial statements are presented in Indian Rupee, the functional and presentation currency of the Company.
Transactions in foreign currencies entered into by the Company are recorded at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Foreign currency monetary items of the Company, outstanding at the reporting date are restated at the exchange rates prevailing at the reporting date. Non-monetary items denominated in foreign currency, are reported using the exchange rate at the date of the transaction.
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Standalone Statement of Profit and Loss.
2.21 Current/non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. As 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;
⢠Cash and cash equivalents 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 treated as 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
All other liabilities are classified as non-current.
The operating cycle is the time gap between the acquisition of the asset for processing and their realization in cash and cash equivalents. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classification of its assets and liabilities as current and non-current.
2.23 Optionally convertible redeemable preference shares and compulsorily convertible debenturesi) Optionally convertible redeemable preference shares
Optionally convertible redeemable preference share issued by wholly owned subsidiaries are accounted as investment carried at cost. In such instruments, preference shares are convertible with the option of company at any time before expiry of stipulated period from the date of issue into such number as defined in the agreement. This share shall be mandatorily redeemed by subsidiaries companies on expiry of defined period from the date of issue. Amount is fixed at upfront and conversion will be into fixed number of shares.
ii) Compulsorily convertible debentures
Compulsorily convertible debentures issued by wholly owned subsidiaries are accounted as equity instrument carried at cost based upon the terms of the contract. These instruments are convertible into fixed number of equity shares within the term stipulated in contract at the option of holder. Amount is fixed at upfront and conversion will be into fixed number of shares.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
investments in equity instruments at FVTOCi
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognised in profit or loss are included in the ''Other income'' line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value
in other comprehensive income for investments in equity instruments which are not held for trading
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit -adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and
represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company''s measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
⢠For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
⢠Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
⢠For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income.
2.26 Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition
or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL
in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liability''s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the gross carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ''Other income''.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
3. SiGNiFiCANT ACCOUNTiNG JUDGEMENTS, ESTiMATES AND Assumptions
The preparation of the standalone financial statements in conformity with recognition and measurement principles of Ind AS requires the Management to make judgments, estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that these assumptions and estimates used in preparation of the standalone financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
Recognition of revenue at a point in time based on satisfaction of performance obligation requires estimates and judgements regarding timing of satisfaction of performance obligation, allocation of cost incurred to segment/units and
the estimated cost for completion of some final pending works.
3.2 Net realisable value of inventory
Inventory of real estate property including work-in-progress is valued at lower of cost and net realisable value (NRV). NRV of completed property is assessed by reference to market prices existing at the reporting date and based on comparable transactions made by the Company and/ or identified by the Company for properties in same geographical area. NRV of properties under construction/ development is assessed with reference to marked value of completed property as at the reporting date less estimated cost to complete. The effect of changes is recognised in the standalone financial statements during the period in which such changes are determined.
Recognition of deferred tax assets is based on estimates of taxable profits in future years. The Company prepares detailed cash flow and profitability projections, which are reviewed by audit committee and the board of directors of the Company.
3.4 Valuation of investments in subsidiaries
Investments in subsidiaries are carried at cost. The management estimates the indicators of impairment of such investments. This requires assessment of key assumptions used in calculation of cash flows, sale price, discount rate etc., which may effect the estimation of impairment in value of investments.
Significant judgements and other estimates and assumptions that may have the significant effect on the carrying amount of assets and liabilities in future years are:
a. Classification of property as investment property or inventory
b. Measurement of defined benefit obligations
c. Useful life of property, plant and equipment
d. Measurement of contingent liabilities and expected cash outf
Mar 31, 2023
1. CORPORATE INFORMATION
Parsvnath Developers Limited ("the Company") was set up as a Company registered under the Companies Act, 1956. It was incorporated on 24 July, 1990. The Company is primarily engaged in the business of promotion, construction and development of integrated townships, residential and commercial complexes, multi-storeyed buildings, flats, houses, apartments, shopping malls, It parks, hotels, SEZ, etc.
the Company is a public limited company incorporated and domiciled in India. The address of its corporate office is Parsvnath Tower, Near Shahdara Metro Station, Shahdara, Delhi - 110 032. The Company is listed on the national Stock exchange of India limited (NSE) and BSE limited (BSE).
2. Significant accounting policies2.1 Basis of preparation
The standalone financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 and presentation requirement of Division II of Schedule III to the Companies Act ,2013 (Ind AS Compliant Schedule III) ,as applicable to the standalone financial statement .
upto the year ended 31 March, 2016, the Company prepared its standalone financial statements in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ''Previous GAAP''). The date of transition to Ind AS is 1 April, 2015.
The standalone financial statements are presented in Indian Rupee and all values are rounded to the nearest lakhs, except when otherwise stated.
2.2 Basis of measurement and presentation
The standalone financial statements have been prepared on the historical cost basis unless otherwise indicated.
Historical cost is generally based on the fair value of the con
sideration given in exchange for goods and services.
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.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability
The principal accounting policies are set out below.
Revenue is recognised to the extent that it is probable that the Company will collect the consideration to which it will be entitled in exchange of goods or services that will be transferred to the customers taking into account contractually defined terms of payments. Revenue excludes taxes and duties collected on behalf of the Government and is net of customer returns, rebates, discounts and other similar allowances.
i. Revenue from real estate projects - The Company derives revenue, primarily from sale of properties comprising of both commercial and residential units. Revenue from sale of constructed properties is recognised at a ''Point of Time'', when the Company satisfies the performance obligations, which generally coincides with com-pletion/possession and offer for possession of the unit/ NOC received for fitout offer. To estimate the transaction price in a contract, the Company adjusts the contracted amount of consideration to the time value of money if the contract includes a significant financing compo-
nent.
ii. In case of joint development projects, wherein land owner provides land and the Company acts as a developer and in lieu of land, the Company has agreed to transfer certain percentage of the revenue proceeds, the revenue is accounted on gross basis. In case, where, in lieu of the land, the Company has agreed to transfer certain percentage of constructed area, revenue is recognised in respect of Company''s share of constructed area to the extent of Company''s percentage share of the underlying real estate development project.
iii. Revenue from sale of land without any significant development is recognised when the sale agreement is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer. Revenue is recognised, when transfer of legal title to the buyer is not a condition precedent for transfer of significant risks and rewards of ownership to the buyer.
iv. Revenue from sale of development rights is recognised when agreements are executed.
v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the standalone financial statements. The related costs there against are charged to the Standalone Statement of Profit and Loss. the stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
vi the revenue on account of interest on delayed payment / transfer charges / forfeiture income and other associated charges by customers and expenditure on account of compensation / penalty for project delays are accounted for at the time of acceptance / settlement with the customers due to uncertainties with regard to determination of amount receivable / payable.
vii Income from licence fee is recognised on accrual basis in accordance with the terms of agreement with the sub-licensees.
viii Income from rent is recognised on accrual basis in accordance with the terms of agreement with the lessee.
ix. Income from maintenance charges is recognised on accrual basis.
x. Interest income on bank deposits is recognised on accrual basis on a time proportion basis. Interest income on other financial instruments is recognised using the effective interest rate method.
the company has applied Ind AS 116 for recognition of revenue from leasing.
the company recognises a right-of-use asset and a lease liability at the lease commencement date. the right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
the right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. the estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment and intangible assets. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
the lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, company''s incremental borrowing rate. Generally, the company uses its incremental borrowing rate as the discount rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the company''s estimate of the amount expected to be payable under a residual value guarantee, or if company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
the company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of 12 months and low-value asset. the company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Receipts from operating leases are recognised in the Standalone Statement of Profit and Loss on a straight-line basis over the term of the relevant lease. Where the lease payments are structured to increase in line with expected general inflation to compensate for expected inflationary cost increases, lease income is recognised as per the contractual terms.
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised/inventorised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.6 Employee benefitsa. Defined contribution plan
the Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
For defined benefit plan in the form of gratuity, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is not reclassified to profit or loss in subsequent periods. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost comprising current service costs, past service costs, gains and losses on curtailments and settlements;
⢠net interest expense or income; and
⢠remeasurement
c. Short-term and other long-term employee benefits
liabilities recognised in respect of short-term employee benefits in respect of wages and salaries, performance incentives, leaves etc. are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Accumulated leaves expected to be carried forward beyond twelve months, are treated as long-term employee benefits. Liability for such long term benefit is provided based on the actuarial valuation using the projected unit credit method at year-end.
Income tax expense for the year comprises of current tax and deferred tax.
Current tax is the expected tax payable on the taxable income for the year calculated in accordance with the Income Tax Act and any adjustment to taxes in respect of previous years.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding amounts used in the computation of taxable income. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax losses and unused tax credits. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
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 asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case,
the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate tax (Mat) is payable when the taxable profit is lower than the book profit. Taxes paid under MAT are available as a set off against regular income tax payable in subsequent years. MAT paid in a year is charged to the standalone Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e the period for which MAT credit is allowed to be carried forward. MAT credit is recognised as an asset and is shown as ''MAT Credit Entitlement''. The Company reviews the ''MAT Credit Entitlement'' asset at each reporting date and write down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
2.8 Property, plant and equipment
Property, plant and equipment is stated at their cost of ac-quisition/construction, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent expenditure related to an item of property, plant and equipment is included in the carrying amount only if it increases the future benefits from the existing asset beyond its previously assessed standards of performance.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from the use. Any gain or loss arising on re-recognition to the asset is included in the standalone Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Capital work-in-progress''
2.9 Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation. 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 purchase/construc-tion cost, directly attributable cost and borrowing costs, if the recognition criteria are met. the fair value of investment property is disclosed in the notes.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
2.10 Depreciation on property, plant and equipment and investment property
Depreciation on property, plant and equipment and investment property is provided on straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013, except in respect of Shuttering and Scaffolding, in which case the life of the asset has been assessed on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technology changes and maintenance support etc. Accordingly the useful life of the assets taken is as under:
|
Asset |
Useful life |
|
Buildings |
60 years |
|
Plant and equipment |
8 years |
|
Shuttering and scaffolding |
6 years |
|
Furniture and fixture |
8 years |
|
Vehicles |
8 years |
|
Office equipment |
5 years |
|
Computer |
3 years |
|
Investment properties (Buildings) |
60 years |
|
Free hold land is not depreciated. |
|
2.11 Intangible assets and Intangible asset under development
Intangible assets comprises buildings constructed on ''Build-operate-Transfer'' (BOT) basis. the company has unconditional right to use/lease such assets during the specified period. After expiry of specified period, these assets will get transferred to licensor without any consideration. Since, the Company has no ownership rights over these assets and has limited right of use during the specified period, these assets are classified as intangible assets. These intangible assets are initially recognised at their cost of construction. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Intangible assets which are not ready for intended use as on the date of Balance Sheet are disclosed as ''Intangible assets under development''
Intangible assets are amortised on a straight line basis over the licence period (right to use) which ranges from 20 to 44 years.
1.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.13 Investment in equity instrument of subsidiaries (including partnership firm) and associates
Investment in equity instrument of subsidiaries and associates are stated at cost as per Ind AS 27 ''Separate Financial Statements''. Where the carrying amount of an investment is greater than its estimated recoverable amount, it is assessed for recoverability and in case of permanent diminution provision for impairment is recorded in Standalone statement of Profit and Loss. On disposal of investment, the difference between the net disposal proceeds and carrying amount is charged or credited to the standalone statement of Profit and Loss.
Inventory comprises completed property for sale and property under construction (work-in-progress),
Land cost, construction cost, direct expenditure relating to construction activity and borrowing cost during construction period is inventorised to the extent the expenditure is directly attributable to bring the asset to its working condition for its intended use. Costs incurred/items purchased specifically for projects are taken as consumed as and when incurred/received.
i. Completed unsold inventory is valued at lower of cost and net relisable value. Cost of inventories are determined by including cost of land (including development rights), internal development cost, external development charges, materials, services, related overheads and apportioned borrowing costs.
ii. Work in progress is valued at lower of cost and net relisable value. Work-in-progress represents costs incurred in respect of unsold area of the real estate projects or costs incurred on projects where the revenue is yet to be recognised. Cost comprises cost of land (including development charges), internal development cost, external development charges, materials, services, overhead related to projects under construction and apportioned borrowing costs.
2.15 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised 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.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. When discounting is used the increase in the provisions due to the passage of time is recognised as finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.16 Contingent liabilities and Contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. The Company does not recognise a contingent liability, but discloses its existence in the standalone financial statements.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
2.17 Cash and cash equivalents
Cash and cash equivalents for the purpose of Standalone Cash Flow Statement comprises cash on hand, cash at bank and short-term deposits with banks with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cost of constructed properties includes cost of land/ development rights, construction and development costs, borrowing costs and direct overheads, which is charged to the standalone statement of profit and loss based on the corresponding revenue recognized from sale of unit on proportionate basis.
Basic earnings per share is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. the weighted average number of equity shares outstanding during the period and for all period presented is adjusted for events, such as bonus shares, that have changed the number of equity shares outstanding without a corresponding change in resources.
Diluted earnings per share is computed by dividing the net profit for the year attributable to equity shareholders as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.
2.20 Foreign currency translations
the standalone financial statements are presented in Indian Rupee, the functional and presentation currency of the Company.
transactions in foreign currencies entered into by the Company are recorded at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Foreign currency monetary items of the Company, outstanding at the reporting date are restated at the exchange rates prevailing at the reporting date. Non-monetary items denominated in foreign currency, are reported using the exchange rate at the date of the transaction.
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Standalone Statement of Profit and Loss.
2.21 Current/non-current classification
the Company presents assets and liabilities in the balance
sheet based on current / non-current classification. As 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;
⢠Cash and cash equivalents 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 treated as 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
All other liabilities are classified as non-current.
the operating cycle is the time gap between the acquisition of the asset for processing and their realization in cash and cash equivalents. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classification of its assets and liabilities as current and non-current.
2.23 Optionally convertible redeemable preference shares and compulsorily convertible debenturesi) Optionally convertible redeemable preference shares
Optionally convertible redeemable preference share issued
by wholly owned subsidiaries are accounted as investment carried at cost. In such instruments, preference shares are convertible with the option of company at any time before expiry of stipulated period from the date of issue into such number as defined in the agreement. this share shall be mandatorily redeemed by subsidiaries companies on expiry of defined period from the date of issue. Amount is fixed at upfront and conversion will be into fixed number of shares.
i) Compulsorily convertible debentures
Compulsorily convertible debentures issued by wholly owned subsidiaries are accounted as equity instrument carried at cost based upon the terms of the contract. these instruments are convertible into fixed number of equity shares within the term stipulated in contract at the option of holder. Amount is fixed at upfront and conversion will be into fixed number of shares.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the "Other income" line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income'' The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognised in profit or loss are included in the ''Other income'' line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost
of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit -adjusted effective interest rate for purchased or originated credit-impaired financial assets). the Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company''s measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
the Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumula-
tive gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
the fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
⢠For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
⢠Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
⢠For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair
value of FVTOCI financial assets are recognised in other comprehensive income.
2.26 Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repur-
chasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVT-PL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. the net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount
of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liability''s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the gross carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance
with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ''Other income''
the fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of
a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
3. Significant accounting judgements, estimates and assumptions
The preparation of the standalone financial statements in conformity with recognition and measurement principles of Ind AS requires the Management to make judgments, estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that these assumptions and estimates used in preparation of the standalone financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
Recognition of revenue at a point in time based on satisfaction of performance obligation requires estimates and judgements regarding timing of satisfaction of performance obligation, allocation of cost incurred to segment/units and the estimated cost for completion of some final pending works.
3.2 Net realisable value of inventory
Inventory of real estate property including work-in-progress is valued at lower of cost and net realisable value (NRV). NRV of completed property is assessed by reference to market prices existing at the reporting date and based on comparable transactions made by the Company and/or identified by the Company for properties in same geographical area. NRV of properties under construction/development is assessed with reference to marked value of completed property as at the reporting date less estimated cost to complete. The effect of changes is recognised in the standalone financial statements during the period in which such changes are determined.
Recognition of deferred tax assets is based on estimates of
taxable profits in future years. The Company prepares detailed cash flow and profitability projections, which are reviewed by audit committee and the board of directors of the Company.
3.4 Valuation of investments in subsidiaries
Investments in subsidiaries are carried at cost. the management estimates the indicators of impairment of such investments. this requires assessment of key assumptions used in calculation of cash flows, sale price, discount rate etc., which may effect the estimation of impairment in value of investments.
Significant judgements and other estimates and assumptions that may have the significant effect on the carrying amount of assets and liabilities in future years are:
a. Classification of property as investment property or inventory
b. Measurement of defined benefit obligations
c. useful life of property, plant and equipment
d. Measurement of contingent liabilities and expected cash outflows<
Mar 31, 2018
1. Significant accounting policies
1.1 Basis of preparation
The financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Upto the year ended 31 March, 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as âPrevious GAAPâ). The date of transition to Ind AS is 1 April, 2015.
The financial statements are presented in Indian Rupee and all values are rounded to the nearest lakhs, except when otherwise stated.
1.2 Basis of measurement and presentation
The financial statements have been prepared on the historical cost basis unless otherwise indicated.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability
The principal accounting policies are set out below.
1.3 Revenue recognition
Revenue is recognised to the extent that it is probable that economic benefit will flow to the Company and that 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 payments and excluding taxes and duties collected on behalf of the Government. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
i. Revenue from real estate projects is recognised when it is reasonable certain that ultimate collection will be made. Revenue from real estate project including integrated townships is recognised on transfer of all significant risks and rewards of ownership of such property, which generally coincides execution of agreement to sell/application form (containing salient features of agreement to sell).
Revenue from constructed properties, where the Company still has obligations to perform substantial acts even after the transfer of all significant risk and rewards, is recognised by applying the percentage of completion method, provided following conditions are met as at the reporting date:
a. all critical approvals necessary for commencement of the project have been obtained;
b. the expenditure incurred on construction and development costs (excluding land and finance cost) is not less than 25 % of the total estimated construction and development costs;
c. at least 25% of the saleable project area is secured by contracts or agreements with buyers; and
d. at least 10% of the contract consideration as per the agreements of sale/application form are realised at the reporting date in respect of such agreement and it is reasonable to expect that parties to the agreement will comply with payment terms as defined in the agreement.
When the outcome of a real estate project can be estimated reliably and the above conditions are satisfied, revenue is recognised by following the âPercentage of Completion Methodâ of accounting. Revenue is recognised, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon (including land) as against the total estimated cost of the project under execution. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined.
ii. In case of joint development projects, wherein land owner provides land and the Company acts as a developer and in lieu of land, the Company has agreed to transfer certain percentage of the revenue proceeds, the revenue is accounted on gross basis. In case, where, in lieu of the land, the Company has agreed to transfer certain percentage of constructed area, revenue is recognised in respect of Companyâs share of constructed area to the extent of Companyâs percentage share of the underlying real estate development project.
iii. Revenue from sale of land without any significant development is recognised when the sale agreement is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer. Revenue is recognised, when transfer of legal title to the buyer is not a condition precedent for transfer of significant risks and rewards of ownership to the buyer.
iv. Revenue from sale of development rights is recognised when agreements are executed.
v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the financial statements. The related costs there against are charged to the Statement of Profit and Loss. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
vi The revenue on account of interest on delayed payment by customers and expenditure on account of compensation / penalty for project delays are accounted for at the time of acceptance / settlement with the customers due to uncertainties with regard to determination of amount receivable / payable.
vii Income from licence fee is recognised on accrual basis in accordance with the terms of agreement with the sublicensees.
viii Income from rent is recognised on accrual basis in accordance with the terms of agreement with the lessee.
ix. Income from maintenance charges is recognised on accrual basis.
x. Interest income on bank deposits is recognised on accrual basis on a time proportion basis. Interest income on other financial instruments is recognised using the effective interest rate method.
1.4 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
a. As lessor
Receipts from operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the term of the relevant lease. Where the lease payments are structured to increase in line with expected general inflation to compensate for expected inflationary cost increases, lease income is recognised as per the contractual terms.
b. As lessee
Payments for operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the term of the relevant lease. Where the lease payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, lease expense is recognised as per the contractual terms. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
1.5 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised/inventorised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.6 Employee benefits
a. Defined contribution plan
The Companyâs contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
b. Defined benefit plan
For defined benefit plan in the form of gratuity, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is not reclassified to profit or loss in subsequent periods. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
- service cost comprising current service costs, past service costs, gains and losses on curtailments and settlements;
- net interest expense or income; and
- remeasurement
c. Short-term and other long-term employee benefits
Liabilities recognised in respect of short-term employee benefits in respect of wages and salaries, performance incentives, leaves etc. are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Accumulated leaves expected to be carried forward beyond twelve months, are treated as long-term employee benefits. Liability for such long term benefit is provided based on the actuarial valuation using the projected unit credit method at year-end.
1.7 Taxation
Income tax expense for the year comprises of current tax and deferred tax.
Current tax
Current tax is the expected tax payable on the taxable income for the year calculated in accordance with the Income Tax Act and any adjustment to taxes in respect of previous years.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding amounts used in the computation of taxable income. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax losses and unused tax credits. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
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 asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) is payable when the taxable profit is lower than the book profit. Taxes paid under MAT are available as a set off against regular income tax payable in subsequent years. MAT paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e the period for which MAT credit is allowed to be carried forward. MAT credit is recognised as an asset and is shown as âMAT Credit Entitlementâ. The Company reviews the âMAT
Credit Entitlementâ asset at each reporting date and write down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
1.8 Property, plant and equipment
Property, plant and equipment is stated at their cost of acquisition/ construction, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent expenditure related to an item of property, plant and equipment is included in the carrying amount only if it increases the future benefits from the existing asset beyond its previously assessed standards of performance.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from the use. Any gain or loss arising on re-recognition to the asset is included in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progressâ
1.9 Investment properties
Investment properties are properties held to earn rentals and/ or for capital appreciation. 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 purchase/construction cost, directly attributable cost and borrowing costs, if the recognition criteria are met. The fair value of investment property is disclosed in the notes.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
1.10 Depreciation on property, plant and equipment and investment property
Depreciation on property, plant and equipment and investment property is provided on straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013, except in respect of Shuttering and Scaffolding, in which case the life of the asset has been assessed on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technology changes and maintenance support etc. Accordingly the useful life of the assets taken is as under:
Free hold land is not depreciated
1.11 Intangible assets
Intangible assets comprises buildings constructed on âBuild-operate-Transferâ (BOT) basis. The company has unconditional right to use/lease such assets during the specified period. After expiry of specified period, these assets will get transferred to licensor without any consideration. Since, the Company has no ownership rights over these assets and has limited right of use during the specified period, these assets are classified as intangible assets. These intangible assets are initially recognised at their cost of construction. The cost comprises purchase price, directly attributable costs for making the asset ready for its intended use, borrowing costs attributable to construction of qualifying asset, upto the date the asset is ready for its intended use.
Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
Intangible assets which are not ready for intended use as on the date of Balance Sheet are disclosed as âIntangible assets under developmentâ
Intangible assets are amortised on a straight line basis over the licence period (right to use) which ranges from 12 to 30 years.
1.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.13 Inventories
Inventory comprises completed property for sale and property under construction (work-in-progress),
Land cost, construction cost, direct expenditure relating to construction activity and borrowing cost during construction period is inventorised to the extent the expenditure is directly attributable to bring the asset to its working condition for its intended use. Costs incurred/items purchased specifically for projects are taken as consumed as and when incurred/received.
i. Completed unsold inventory is valued at lower of cost and net relisable value. Cost of inventories are determined by including cost of land (including development rights), internal development cost, external development charges, materials, services, related overheads and apportioned borrowing costs.
ii. Work in progress is valued at lower of cost and net relisable value. Work-in-progress represents costs incurred in respect of unsold area of the real estate projects or costs incurred on projects where the revenue is yet to be recognised. Cost comprises cost of land (including development charges), internal development cost, external development charges, materials, services, overhead related to projects under construction and apportioned borrowing costs.
1.14 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised 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.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessment of the time value of money and the risks specific to the obligation. When discounting is used the increase in the provisions due to the passage of time is recognised as finance cost.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
1.15 Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. The Company does not recognise a contingent liability, but discloses its existence in the financial statements.
1.16 Cash and cash equivalents
Cash and cash equivalents for the purpose of Cash Flow Statement comprises cash on hand, cash at bank and short-term deposits with banks with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
1.17 Unbilled receivables
Unbilled receivables represent revenue recognised onâPercentage of Completion Methodâ less amount due from customers as per payment plans adopted by them.
1.18 Earnings per share
Basic earnings per share is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period and for all period presented is adjusted for events, such as bonus shares, that have changed the number of equity shares outstanding without a corresponding change in resources.
Diluted earnings per share is computed by dividing the net profit for the year attributable to equity shareholders as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.
1.19 Foreign currency translations
The financial statements are presented in Indian Rupee, the functional currency of the Company.
Transactions in foreign currencies entered into by the Company are recorded at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Foreign currency monetary items of the Company, outstanding at the reporting date are restated at the exchange rates prevailing at the reporting date. Non-monetary items denominated in foreign currency, are reported using the exchange rate at the date of the transaction.
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.
1.20 Current/non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. As 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;
- Cash and cash equivalents 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 treated as 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
All other liabilities are classified as non-current.
1.21 Operating cycle
The operating cycle is the time gap between the acquisition of the asset for processing and their realization in cash and cash equivalents. Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classification of its assets and liabilities as current and non-current.
1.22 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
1.23 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive incomeâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Dividends on these investments in equity instruments are recognised in profit or loss when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognised in profit or loss are included in the âOther incomeâ line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther incomeâ line item. Dividend on financial assets at FVTPL is recognised when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit -adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Companyâs measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
- For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
- Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
- For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income.
1.24 Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a
financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companyâs documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
However, for non-held-for-trading financial liabilities that are
designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liabilityâs credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liabilityâs credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costsâ line item.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the gross carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the
cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Mar 31, 2016
Note 1: Corporate information
PARSVNATH DEVELOPERS LIMITED ("the Company") was set up
as a Company registered under the Companies Act, 1956. It was incorporated on 24 July, 1990. The Company is primarily engaged in the business of promotion, construction and development of integrated townships, residential and commercial complexes, multistoried buildings, flats, houses, apartments, shopping malls, IT parks, hotels, SEZ, etc.
Note 2: Significant Accounting Policies
a. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b. Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize.
c. Inventories
Inventory comprises completed property for sale and property under construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net realizable value. Cost is determined by including cost of land (including development rights), internal development cost, external development charges, materials, services, related overheads and apportioned borrowing costs.
ii. Work-in-progress is valued at lower of cost and net realizable value. Cost comprises cost of land (including development rights), internal development cost, external development charges, materials, services, overheads related to projects under construction and apportioned borrowing costs.
d. Cash and cash equivalents (for purposes of Cash flow statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
e. Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
f. Fixed assets
Fixed assets are carried at cost less accumulated depreciation. The cost of fixed assets comprises its purchase price, directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition or construction of qualifying fixed assets, unto the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase/completion is capitalized only if such expenditure results in an increase in the future benefits from such assets beyond its previously assessed standard of performance.
g. Capital work-in-progress
Projects under which tangible fixed assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing costs.
h. Pre-operative expenditure pending allocation
Pre-operative expenditure incurred in relation to construction of fixed assets in respect of projects which are yet to commence commercial operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment to and provision for employees, professional fees and other directly attributable expenses pending allocation to fixed assets on completion of the Project.
ii. Borrowing costs net of interest income pending allocation to fixed assets on completion of the Project.
i. Depreciation
i. Depreciation on tangible fixed assets has been provided on the straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of ''Shuttering and Scaffolding'', in whose case the life of the assets has been assessed on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technology changes and maintenance support etc. Accordingly the useful life of the assets taken is as under:
ii. Cost of building on land held on lease / license basis is amortized over the period of license of project facility on straight line basis.
j. Revenue recognition
i. Revenue from real estate projects including integrated townships is recognized on the ''Percentage of Completion Method'' of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including land as against the total estimated cost of the project under execution subject to such actual costs being 30% or more of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined.
In accordance with the Revised Guidance Note issued by the Institute of Chartered Accountants of India (ICAI), on ''Accounting for Real Estate Transactions (Revised 2012)'', revenue recognition for all real estate projects commencing on or after 1 April, 2012 or where the revenue is recognized for the first time on or after 1 April, 2012, revenue is recognized on percentage of completion method if (a) Critical approvals for commencement of the project have been obtained (b) actual construction and development cost (excluding land cost) incurred is 25% or more of the estimated cost,
(c) At least 25% of the saleable project area is secured by contracts or agreements with buyers and (d) At least 10% of the total revenues as per sales agreement or any other legally enforceable document are realized as at the reporting date.
ii. In case of joint development projects, revenue is recognized to the extent of Company''s percentage share of the underlying real estate development project.
iii. Revenue from sale of land without any significant development is recognized when the agreement to sell is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer.
iv. Revenue from sale of development rights is recognized when agreements are executed.
v. Income from construction contracts is recognized by reference to the stage of completion of the contract activity at the reporting date of the financial statements. The related costs there against are charged to the Statement of Profit and Loss of the year. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract.
vi. Any expected loss on real estate projects or construction contracts is recognized as an expense when it is probable that the total cost will exceed the total revenue.
vii. The revenue on account of interest on delayed payment by customers and expenditure on account of compensation / penalty for project delays are accounted for at the time of acceptance / settlement with the customers due to uncertainties with regard to determination of amount receivable / payable.
viii. Income from license fee is recognized on accrual basis in accordance with the terms of agreement with the sublicenses.
ix. Income from rent is recognized on accrual basis in accordance with the terms of agreement with the lessee.
x. Income from maintenance charges is recognized on accrual basis.
xi. Interest income is recognized on accrual basis on a time proportion basis.
xii. Dividend income is recognized when the Company''s right to receive dividend is established.
k. Cost of construction / development
Cost of construction / development (including cost of land / development rights) incurred is charged to the Statement of Profit and Loss based on the proportionate area in respect of which revenue is recognized as per policy in ''j'' above. Adjustments, if required, are made on completion of the respective projects.
l. Unbilled receivables
Unbilled receivables represent revenue recognized on ''Percentage of Completion Method'' less amount due from customers as per payment plans adopted by them.
m. Foreign currency transactions and translations
i. Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
ii. Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
iii. Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
n. Investments
Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investments in non corporate entities includes share of profit / loss attributable to the Company.
o. Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
i. Defined contribution plan
The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.
ii. Defined benefit plan
For defined benefit plans in the form of gratuity, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The employee benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost.
iii. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. Cost of short-term compensated absences is accounted when employees render the services that increase their entitlement of future compensated absences.
iv. Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date on the basis of actuarial valuation.
p. Borrowing cost
Borrowing costs include interest and amortization of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity of the qualifying asset is interrupted.
q. Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
r. Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
Assets given under operating leases are included in fixed assets. Lease income is recognized in the Statement of Profit and Loss on a straight line basis over the lease term. Costs, including depreciation are recognized as expense in the Statement of Profit and Loss.
s. Earnings per share
Basic earnings per share is computed by dividing the profit/ (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.
t. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
Current and deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
u. Accounting for joint ventures
i. Jointly controlled operations - The Company''s share of revenue, expenses, assets and liabilities are included in the financial statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities - The Company''s investment in jointly controlled entities is reflected as investment and accounted for in accordance with the Company''s accounting policy of investments (see note 2 n above).
v. Impairment of assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.
w. Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding employee benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
x. Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
y. Operating cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classification of its assets and liabilities as current and noncurrent.
ii. Rights, preferences and restrictions attached to equity shares:
The Company has issued only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share held. The dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Mar 31, 2015
Note 1: Corporate information
PARSVNATH DEVELOPERS LIMITED ("the Company") is a Company registered
under the Companies Act, 1956. It was incorporated on 24 July, 1990.
The Company is primarily engaged in the business of promotion,
construction and development of integrated townships, residential &
commercial complexes, multistoried buildings, fats, houses, apartments,
shopping malls, IT parks, hotels, SEZ, etc.
a. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards specified under Section
133 of the Companies Act, 2013, read with Rule 7 of the Companies
(Accounts) Rules, 2014 and the relevant provisions of the Companies
Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as
applicable. The financial statements have been prepared on accrual
basis under the historical cost convention. The accounting policies
adopted in the preparation of the financial statements are consistent
with those followed in the previous year, except for change in the
accounting policy for depreciation (see note 45).
b. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
c. Inventories
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land
(including development rights), internal development cost, external
development charges, materials, services, related overheads and
apportioned borrowing costs.
ii. Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
internal development cost, external development charges, materials,
services, overheads related to projects under construction and
apportioned borrowing costs.
d. Cash and cash equivalents (for purposes of Cash flow statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances and highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
e. Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash flows from operating,
investing and financing activities of the Company are segregated based
on the available information.
f. Fixed assets
Fixed assets are carried at cost less accumulated depreciation. The
cost of fixed assets comprises its purchase price, directly attributable
expenditure on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable to
acquisition or construction of qualifying fixed assets, up to the date
the asset is ready for its intended use. Subsequent expenditure on fixed
assets after its purchase/completion is capitalised only if such
expenditure results in an increase in the future benefits from such
assets beyond its previously assessed standard of performance.
g. Capital work-in-progress
Projects under which tangible fixed assets are not ready for their
intended use and other capital work- in-progress are carried at cost,
comprising direct cost, related incidental expenses and attributable
borrowing costs.
h. Pre-operative expenditure pending allocation
Pre-operative expenditure incurred in relation to construction of fixed
assets in respect of projects which are yet to commence commercial
operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment
to and provision for employees, professional fees and other directly
attributable expenses pending allocation to fixed assets on completion
of the Project.
ii. Borrowing costs net of interest income pending allocation to fixed
assets on completion of the Project.
i. Depreciation
i. Depreciation on tangible fixed assets has been provided on the
straight line basis as per the useful life prescribed in Schedule II to
the Companies Act, 2013 except in respect of 'Shuttering and
Scafolding', in whose case the life of the assets has been assessed on
technical advice, taking into account the nature of asset, the
estimated usage of the asset, the operating conditions of the asset,
past history of replacement, anticipated technology changes and
maintenance support etc. Accordingly the useful life of the assets
taken is as under:
ii. Cost of building on land held on lease/license basis is amortised
over the period of license of project facility on straight line basis.
j. Revenue recognition
i. Revenue from real estate projects including integrated townships is
recognised on the 'Percentage of Completion Method' of accounting.
Revenue is recognised, in relation to the sold areas only, on the basis
of percentage of actual cost incurred thereon including land as against
the total estimated cost of the project under execution subject to such
actual costs being 30% or more of the total estimated cost. The
estimates of saleable area and costs are revised periodically by the
management. The effect of such changes to estimates is recognised in the
period such changes are determined.
In accordance with Revised Guidance Note issued by the Institute of
Chartered Accountants of India (ICAI), on 'Accounting for Real Estate
Transactions (Revised 2012)', revenue recognition for all real estate
projects commencing on or after 1 April, 2012 or where the revenue is
recognised for the first time on or after 1 April, 2012, revenue is
recognised on percentage of completion method if (a) Critical approvals
for commencement of the project have been obtained (b) actual
construction and development cost (excluding land cost) incurred is 25%
or more of the estimated cost, (c) At least 25% of the saleable project
area is secured by contracts or agreements with buyers and (d) At least
10% of the total revenue as per sales agreement or any other legally
enforceable document are realised as at the reporting date. However,
there was no such project during the year.
ii. In case of joint development projects, revenue is recognised to the
extent of Company's percentage share of the underlying real estate
development project.
iii. Revenue from sale of land without any signifcant development is
recognised when the agreement to sell is executed resulting in transfer
of all significant risk and rewards of ownership and possession is
handed over to the buyer.
iv. Revenue from sale of development rights is recognised when
agreements are executed.
v. Income from construction contracts is recognised by reference to the
stage of completion of the contract activity at the reporting date of
the financial statements. The related costs there against are charged to
the Statement of profit and loss of the year. The stage of completion of
the contract is measured by reference to the proportion that contract
cost incurred for work performed up to the reporting date bears to the
estimated total contract cost for each contract.
vi. Any expected loss on real estate projects or construction contracts
is recognised as an expense when it is probable that the total cost
will exceed the total revenue.
vii. The revenue on account of interest on delayed payment by customers
and expenditure on account of compensation/penalty for project delays
are accounted for at the time of acceptance/ settlement with the
customers due to uncertainties with regard to determination of amount
receivable/ payable.
viii. Income from licence fee is recognised on accrual basis in
accordance with the terms of agreement with the sub-licensees.
ix. Income from rent is recognised on accrual basis in accordance with
the terms of agreement with the lessee.
x. Income from maintenance charges is recognised on accrual basis.
xi. Interest income is recognised on accrual basis on a time proportion
basis.
xii. Dividend income is recognised when the Company's right to receive
dividend is established.
k. Cost of construction/development
Cost of construction/development (including cost of land/development
rights) incurred is charged to the Statement of Profit and Loss based on
the proportionate area in respect of which revenue is recognised as per
policy in 'j' above. Adjustments, if required, are made on completion
of the respective projects.
l. Unbilled receivables
Unbilled receivables represent revenue recognised on 'Percentage of
Completion Method' less amount due from customers as per payment plans
adopted by them.
m. Foreign currency transactions and translations
i. Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
ii. Foreign currency monetary items of the Company, outstanding at the
balance sheet date are restated at the year-end rates. Non-monetary
items of the Company are carried at historical cost.
iii. Exchange differences arising on settlement/ restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Profit and Loss.
n. Investments
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments include acquisition charges such as
brokerage, fees and duties.
o. Employee benefits
Employee benefits include provident fund, employee state insurance
scheme, gratuity and compensated absences.
i. Defined contribution plan
The Company's contribution to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made and when services are rendered by the employees.
ii. Defined benefit plan
For defined benefit plans in the form of gratuity, the cost of providing
benefits is determined using the Projected Unit Credit method, with
actuarial valuations being carried out at each balance sheet date.
Actuarial gains and losses are recognised in the Statement of Profit and
Loss in the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight-line basis over the average period
until the benefits become vested. The employee benefit obligation
recognised in the Balance Sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service
cost.
iii. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. Cost of short-term
compensated absences is accounted when employees render the services
that increase their entitlement of future compensated absences.
iv. Long-term employee benefits
compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the balance sheet date on the basis
of actuarial valuation.
p. Borrowing cost
Borrowing costs include interest and amortisation of ancillary costs
incurred. Costs in connection with the borrowing of funds to the extent
not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the loan.
Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity of the qualifying asset is interrupted.
q. Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for
which separate financial information is available and for which
operating profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
r. Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
Assets given under operating leases are included in fixed assets. 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 expense in the Statement of Profit and Loss.
s. Earnings per share
Basic earnings per share is computed by dividing the profit after tax by
the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the profit
after tax as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share from continuing
ordinary operations.
t. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that there will be sufficient future taxable
income available to realise the assets. Deferred tax assets and
liabilities are offset if such items relate to taxes on income levied by
the same governing tax laws and the Company has a legally enforceable
right for such set of. Deferred tax assets are reviewed at each balance
sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
u. Accounting for joint ventures
i. Jointly controlled operations  The Company's share of revenue,
expenses, assets and liabilities are included in the financial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities  The Company's investment in jointly
controlled entities is reflected as investment and accounted for in
accordance with the Company's accounting policy of Investments (see
note 2 n above).
v. Impairment of assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated
and impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss.
w. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding employee benefits)
are not discounted to their present value and are determined based on
the best estimate required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect the current best estimates. Contingent liabilities are
disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
x. Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is
reasonable certainty in availing / utilising the credits.
y. Operating cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
48 months for real estate projects and 12 months for others for the
purpose of classification of its assets and liabilities as current and
non-current.
ii. Rights, preferences and restrictions attached to equity shares:
The Company has issued only one class of equity shares having a par
value of Rs. 5/- per share. Each holder of equity shares is entitled to
one vote per share held. The dividend, if any, proposed by the Board of
Directors is subject to approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation of the Company, the holders of equity shares will
be entitled to receive remaining assets of the Company after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
Mar 31, 2014
A. Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards notifed under Section
211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to
be applicable in respect of Section 133 of the Companies Act, 2013
("the 2013 Act") in terms of General Circular 15/2013 dated 13
September, 2013 of the Ministry of Corporate Afairs) and the relevant
provisions of the 1956 Act/ 2013 Act, as applicable. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
B. USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could difer due to these estimates and the diferences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
C. INVENTORIES
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land
(including development rights), materials, services, related overheads
and apportioned borrowing costs.
ii. Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
materials, services, overheads related to projects under construction
and apportioned borrowing costs.
d. Cash and cash equivalents (for purposes of cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
E. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the efects of
transactions of non-cash nature and any deferrals or accruals of past
or future cash receipts or payments. The cash flows from operating,
investing and fnancing activities of the Company are segregated based
on the available information.
F. FIXED ASSETS
Fixed assets are carried at cost less accumulated depreciation. The
cost of fixed assets comprises its purchase price, directly attributable
expenditure on making the asset ready for its intended use, other
incidental expenses and interest on borrowings attributable to
acquisition or construction of qualifying fixed assets, up to the date
the asset is ready for its intended use. Subsequent expenditure on fixed
assets after its purchase/completion is capitalised only if such
expenditure results in an increase in the future benefits from such
assets beyond its previously assessed standard of performance.
G. DEPRECIATION
i. Depreciation on fixed assets is provided on written down value method
as per the rates prescribed in Schedule XIV to the Companies Act, 1956
or based on the management''s estimates of the useful life of the
assets, whichever is higher. Accordingly, the depreciation rates used
are as under:
ii. Cost of building on land held on license basis is amortized over
the period of license of project facility on straight line basis.
iii. Assets costing Rs. 5,000 or less individually are fully depreciated
in the year of purchase.
H. CAPITAL WORK-IN-PROGRESS
Projects under which tangible fixed assets are not ready for their
intended use and other capital work-in-progress are carried at cost,
comprising direct cost, related incidental expenses and attributable
borrowing costs.
I. PRE-OPERATIVE EXPENDITURE PENDING ALLOCATION
Pre-operative expenditure incurred in relation to construction of fixed
assets in respect of projects which are yet to commence commercial
operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment
to and provision for employees, professional fees and other
administrative expenses pending allocation to fixed assets on completion
of the Project.
ii. Borrowing costs net of interest income pending allocation to fixed
assets on completion of the Project.
J. REVENUE RECOGNITION
i. Revenue from real estate projects including integrated townships is
recognised on the ''Percentage of Completion Method'' of accounting.
Revenue is recognized, in relation to the sold areas only, on the basis
of percentage of actual cost incurred thereon including land as against
the total estimated cost of the project under execution subject to such
actual costs being 30% or more of the total estimated cost. The
estimates of saleable area and costs are revised periodically by the
management. The efect of such changes to estimates is recognised in the
period such changes are determined.
In accordance with Revised Guidance Note issued by the Institute of
Chartered Accountants of India (ICAI), on ''Accounting for Real Estate
Transactions (Revised 2012)'', revenue recognition for all real estate
projects commencing on or after 1 April, 2012 or where the revenue is
recognised for the first time on or after 1 April, 2012, revenue is
recognised on percentage of completion method if (a) actual
construction and development cost (excluding land cost) incurred is 25%
or more of the estimated cost, (b) At least 25% of the saleable project
area is secured by contracts or agreements with buyers and (c) At least
10% of the total revenue as per sales agreement or any other legally
enforceable document are realised as at the reporting date. However,
there was no such project during the year.
ii. In case of joint development projects, revenue is recognised to the
extent of Company''s percentage share of the underlying real estate
development project.
iii. Revenue from sale of land without any significant development is
recognised when the agreement to sell is executed resulting in transfer
of all significant risk and rewards of ownership and possession is
handed over to the buyer.
iv. Revenue from sale of development rights is recognised when
agreements are executed.
v. Income from construction contracts is recognised by reference to the
stage of completion of the contract activity at the reporting date of
the financial statements. The related costs there against are charged to
the Statement of profit and loss of the year. The stage of completion of
the contract is measured by reference to the proportion that contract
cost incurred for work performed up to the reporting date bears to the
estimated total contract cost for each contract.
vi. Any expected loss on real estate projects or construction contracts
is recognised as an expense when it is certain that the total cost will
exceed the total revenue.
vii. The revenue on account of interest on delayed payment by customers
and expenditure on account of compensation/ penalty for project delays
are accounted for at the time of acceptance/settlement with the
customers due to uncertainties with regard to determination of amount
receivable/payable.
viii. Income from license fee is recognised on accrual basis in
accordance with the terms of agreement with the sub- licensees.
ix. Interest income is recognised on accrual basis on a time proportion
basis.
x. Dividend income is recognised when the Company''s right to receive
dividend is established.
K. COST OF CONSTRUCTION/DEVELOPMENT
Cost of construction/development (including cost of land/ development
rights) incurred is charged to the Statement of profit and loss
proportionate to project area sold. Adjustments, if required, are made
on completion of the respective projects.
L. UNBILLED RECEIVABLES
Unbilled receivables represent revenue recognised on ''Percentage of
Completion Method'' less amount due from customers as per payment plans
adopted by them.
M. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS
i. Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
ii. Foreign currency monetary items of the Company, outstanding at the
balance sheet date are restated at the year-end rates. Non-monetary
items of the Company are carried at historical cost.
iii. Exchange diferences arising on settlement/restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of profit and Loss.
N. INVESTMENTS
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Long-term investments are carried individually at cost
less provision for diminution, other than temporary, in the value of
such investments. Current investments are carried individually, at the
lower of cost and fair value. Cost of investments include acquisition
charges such as brokerage, fees and duties.
O. EMPLOYEE benefitS
Employee benefits include provident fund, employee state insurance
scheme, gratuity and compensated absences.
I. DEFINED CONTRIBUTION PLAN
The Company''s contribution to provident fund and employee state
insurance scheme are considered as Defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made and when services are rendered by the employees.
II. DEFINED benefit PLAN
For Defined benefit plans in the form of gratuity, the cost of providing
benefits is determined using the Projected Unit Credit method, with
actuarial valuations being carried out at each balance sheet date.
Actuarial gains and losses are recognised in the Statement of profit and
Loss in the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognised in the Balance Sheet represents the present value
of the Defined benefit obligation as adjusted for unrecognised past
service cost.
III. SHORT-TERM EMPLOYEE BENEFITS
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
IV. LONG TERM EMPLOYEE BENEFITS
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the Defined benefit obligation as at the balance sheet date.
P. BORROWING COST
Borrowing costs include interest and amortisation of ancillary costs
incurred. Costs in connection with the borrowing of funds to the extent
not directly related to the acquisition of qualifying assets are
charged to the Statement of profit and Loss over the tenure of the loan.
Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalisation of such asset is added to the cost of the assets.
Q. SEGMENT REPORTING
The Company identifes primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
R. LEASES
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of profit and Loss on a straight-line basis.
Assets given under operating leases are included in fixed assets. 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 expense in the Statement of profit and Loss.
S. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit after tax by
the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the profit
after tax as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profit per share from continuing
ordinary operations.
T. TAXES ON INCOME
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised on timing diferences, being the diferences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing diferences. Deferred tax
assets are recognised for timing diferences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufcient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufcient future taxable income available to realise the assets.
Deferred tax assets and liabilities are ofset if such items relate to
taxes on income levied by the same governing tax laws and the Company
has a legally enforceable right for such set of. Deferred tax assets
are reviewed at each balance sheet date for their realisability.
u. ACCOUNTING FOR JOINT VENTURES
i. Jointly controlled operations - The Company''s share of revenue,
expenses, assets and liabilities are included in the financial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities - The Company''s investment in jointly
controlled entities is refected as investment and accounted for in
accordance with the Company''s accounting policy of Investments (see
note 2 nd above).
v. IMPAIRMENT OF ASSETS
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of profit and Loss.
w. PROVISIONS AND CONTINGENCIES
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to refect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
x. SERVICE TAX INPUT CREDIT
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
y. OPERATING CYCLE
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
48 months for real estate projects and 12 months for others for the
purpose of classifcation of its assets and liabilities as current and
non- current.
ii. RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES:
The Company has issued only one class of equity shares having a par
value of Rs. 5/- per share. Each holder of equity shares is entitled to
one vote per share held. The dividend, if any, proposed by the Board of
Directors is subject to approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation of the Company, the holders of equity shares will
be entitled to receive remaining assets of the Company after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
Mar 31, 2013
A. Basis of accounting and preparation of fi nancial statements
The fi nancial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notifi ed under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The fi nancial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the fi nancial statements are consistent with those followed in the
previous year.
b. Use of estimates
The preparation of the fi nancial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the fi nancial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
c. Inventories
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land
(including development rights), materials, services, related overheads
and apportioned borrowing costs.
ii. Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
materials, services, overheads related to projects under construction
and apportioned borrowing costs.
d. Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to
insignifi cant risk of changes in value.
e. Cash fl ow statement
Cash fl ows are reported using the indirect method, whereby profi t /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash fl ows from
operating, investing and fi nancing activities of the Company are
segregated based on the available information.
f. Fixed assets
Fixed assets are carried at cost less accumulated depreciation. The
cost of fi xed assets comprises its purchase price, directly
attributable expenditure on making the asset ready for its intended
use, other incidental expenses and interest on borrowings attributable
to acquisition or construction of qualifying fi xed assets, up to the
date the asset is ready for its intended use. Subsequent expenditure on
fi xed assets after its purchase/completion is capitalised only if such
expenditure results in an increase in the future benefi ts from such
assets beyond its previously assessed standard of performance.
g. Depreciation
i. Depreciation on fi xed assets is provided on written down value
method as per the rates prescribed in Schedule XIV to the Companies
Act, 1956 or based on the management''s estimates of the useful life of
the assets, whichever is higher. Accordingly, the depreciation rates
used are as under:
ii. Cost of building on land held on license basis is amortized over
the period of license of project facility on straight line basis.
iii. Assets costing D 5,000 or less individually are fully depreciated
in the year of purchase.
h. Capital work-in-progress
Projects under which tangible fi xed assets are not ready for their
intended use and other capital work-in-progress are carried at cost,
comprising direct cost, related incidental expenses and attributable
borrowing costs.
i Pre-operative expenditure pending allocation
Pre-operative expenditure incurred in relation to construction of fi
xed assets in respect of projects which are yet to commence commercial
operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment
to and provision for employees, professional fees and other
administrative expenses pending allocation to fi xed assets on
completion of the Project.
ii. Borrowing costs net of interest income pending allocation to fi xed
assets on completion of the Project.
j. Revenue recognition
i. Revenue from real estate projects including integrated townships is
recognised on the ''Percentage of Completion Method'' of accounting.
Revenue is recognized, in relation to the sold areas only, on the basis
of percentage of actual cost incurred thereon including land as against
the total estimated cost of the project under execution subject to such
actual costs being 30% or more of the total estimated cost. The
estimates of saleable area and costs are revised periodically by the
management. The effect of such changes to estimates is recognised in
the period such changes are determined.
In accordance with Revised Guidance Note issued by the Institute of
Chartered Accountants of India (ICAI), on ''Accounting for Real Estate
Transactions (Revised 2012)'', revenue recognition for all real estate
projects commencing on or after 1 April, 2012 or where the revenue is
recognised fi rst time on or after 1 April, 2012, revenue is recognised
on percentage of completion method if (a) actual construction and
development cost (excluding land cost) incurred is 25% or more of the
estimated cost, (b) At least 25% of the saleable project area is
secured by contracts or agreements with buyers and (c) At least 10% of
the total revenue as per sales agreement or any other legally
enforceable document are realised as at the reporting date. However,
there was no such project during the year.
ii. In case of joint development projects, revenue is recognised to the
extent of company''s percentage share of the underlying real estate
development project.
iii. Revenue from sale of land without any signifi cant development is
recognised when the agreement to sell is executed resulting in transfer
of all signifi cant risk and rewards of ownership and possession is
handed over to the buyer.
iv. Revenue from sale of development rights is recognised when
agreements are executed.
v. Income from construction contracts is recognised by reference to the
stage of completion of the contract activity at the reporting date of
the fi nancial statements. The related costs there against are charged
to the Statement of profi t and loss of the year. The stage of
completion of the contract is measured by reference to the proportion
that contract cost incurred for work performed up to the reporting date
bear to the estimated total contract cost for each contract.
vi. Any expected loss on real estate projects or construction contracts
is recognised as an expense when it is certain that the total cost will
exceed the total revenue.
vii. The revenue on account of interest on delayed payment by customers
and expenditure on account of compensation/ penalty for project delays
are accounted for at the time of acceptance/settlement with the
customers due to uncertainties with regard to determination of amount
receivable/payable.
viii. Income from license fee is recognised on accrual basis in
accordance with the terms of agreement with the sublicensees.
ix. Interest income is recognised on accrual basis on a time proportion
basis.
x. Dividend income is recognised when the Company''s right to receive
dividend is established.
k. Cost of construction/development
Cost of construction/development (including cost of land/ development
rights) incurred is charged to the Statement of profi t and loss
proportionate to project area sold. Adjustments, if required, are made
on completion of the respective projects.
l. Unbilled receivables
Unbilled receivables represent revenue recognised on ''Percentage of
Completion Method'' less amount due from customers as per payment plans
adopted by them.
m. Foreign currency transactions and translations
i. Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
ii. Foreign currency monetary items of the Company, outstanding at the
balance sheet date are restated at the year-end rates. Non-monetary
items of the Company are carried at historical cost.
iii. Exchange differences arising on settlement/restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Profi t and Loss.
n. Investments
Investments intended to be held for more than a year are classifi ed as
long term investments. All other investments are classifi ed as current
investments. Long-term investments are carried individually at cost
less provision for diminution, other than temporary, in the value of
such investments. Current investments are carried individually, at the
lower of cost and fair value. Cost of investments include acquisition
charges such as brokerage, fees and duties.
o. Employee benefi ts
Employee benefi ts include provident fund, employee state insurance
scheme, gratuity and compensated absences.
i. Defi ned contribution plan
The Company''s contribution to provident fund and employee state
insurance scheme are considered as defi ned contribution plans and are
charged as an expense based on the amount of contribution required to
be made.
ii. Defi ned benefi t plan
For defi ned benefi t plans in the form of gratuity, the cost of
providing benefi ts is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the Statement
of Profi t and Loss in the period in which they occur. Past service
cost is recognised immediately to the extent that the benefi ts are
already vested and otherwise is amortised on a straight-line basis over
the average period until the benefi ts become vested. The retirement
benefi t obligation recognised in the Balance Sheet represents the
present value of the defi ned benefi t obligation as adjusted for
unrecognised past service cost.
iii. Short-term employee benefi ts
The undiscounted amount of short-term employee benefi ts expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefi ts
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
iv. Long term employee benefi ts
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defi ned benefi t obligation as at the balance sheet date.
p. Borrowing cost
Borrowing costs include interest and amortisation of ancillary costs
incurred. Costs in connection with the borrowing of funds to the extent
not directly related to the acquisition of qualifying assets are
charged to the Statement of Profi t and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction/ development of the qualifying asset up to the date of
capitalisation of such asset is added to the cost of the assets.
q. Segment policies
The Company identifi es primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate fi nancial information is available and for which operating
profi t / loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
r. Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profi t and Loss on a straight-line basis.
Assets given under operating leases are included in fi xed assets.
Lease income is recognised in the Statement of Profi t and Loss on a
straight line basis over the lease term. Costs, including depreciation
are recognised as expense in the Statement of Profi t and Loss.
s. Earnings per share
Basic earnings per share is computed by dividing the profi t after tax
by the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the profi t
after tax as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net profi t per share from continuing
ordinary operations.
t. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that suffi cient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be suffi cient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
u. Accounting for joint ventures
i. Jointly controlled operations  The Company''s share of revenue,
expenses, assets and liabilities are included in the fi nancial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities  The Company''s investment in jointly
controlled entities is refl ected as investment and accounted for in
accordance with the Company''s accounting policy of Investments (see
note 2 n above).
v. Impairment of assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash fl ows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profi t and Loss.
w. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outfl ow of
resources will be required to settle the obligation in respect of which
a reliable estimate can be made. Provisions (excluding retirement
benefi ts) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to refl ect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
fi nancial statements.
x. Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
y. Operating cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
48 months for real estate projects and 12 months for others for the
purpose of classifi cation of its assets and liabilities as current and
non-current.
Mar 31, 2012
A. Basis of accounting
The financial statements are prepared in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with
the Accounting Standards notified under the Companies (Accounting
Standards) Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make estimates and assumptions considered in
the reported amounts of assets and liabilities (including contingent
liabilities) and the reported income and expenses during the year. The
Management believes that the estimates used in preparation of the
financial statements are prudent and reasonable. Future results could
differ due to these estimates and the differences between the actual
results and the estimates are recognized in the periods in which the
results are known/materialise.
c. Fixed assets
Fixed assets are carried at cost less accumulated depreciation. Cost
includes purchase price and all other attributable costs of bringing
the assets to working condition for intended use. Borrowing costs
attributable to acquisition or construction of qualifying fixed assets,
which takes substantial period of time to get ready for its intended
use are also included, up to the date the asset is ready for its
intended use. Subsequent expenditure relating to fixed assets is
capitalised only if such expenditure results in an increase in the
future benefits from such assets beyond its previously assessed
standard of performance.
d. Depreciation
i. Depreciation on fixed assets is provided on written down value
method at the rates specified in Schedule XIV to the Companies Act,
1956 or based on the management's estimates of the useful life of the
assets, whichever is higher. Accordingly, the depreciation rates used
are as follows:
Building 5.00%
Plant and machinery 30.00%
Office equipment 30.00%
Shuttering and scaffolding 40.00%
Furniture and fixtures 30.00%
Motor vehicles 25.89%
Computers 60.00%
ii. Cost of building on land held on license basis is amortized over
the period of license of project facility on straight line basis.
iii. Assets costing Rs.5,000 or less individually are fully depreciated
in the year of purchase.
e. Capital Work In Progress
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable borrowing costs.
f. Pre-operative expenditure pending allocation
Pre-operative expenditure incurred in relation to construction of fixed
assets in respect of projects which are yet to commence commercial
operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment
to and provision for employees, professional fees and other
administrative expenses pending allocation to fixed assets on
completion of the Project.
ii. Borrowing costs net of interest income pending allocation to fixed
assets on completion of the Project.
g. Revenue Recognition
i. Revenue from real estate projects including integrated townships is
recognised on the 'Percentage of Completion Method' of accounting.
Revenue is recognized, in relation to the sold areas only, on the basis
of percentage of actual cost incurred thereon including land as against
the total estimated cost of the project under execution subject to such
actual costs being 30% or more of the total estimated cost. The
estimates of saleable area and costs are revised periodically by the
management. The effect of such changes to estimates is recognised in
the period such changes are determined.
ii. Revenue from sale of land without any significant development is
recognised when the agreement to sell is executed resulting in transfer
of all significant risk and rewards of ownership.
iii. Revenue from sale of development rights is recognised when
agreements are executed.
iv. Income from construction contracts is recognised by reference to
the stage of completion of the contract activity at the reporting date
of the financial statements. The related costs there against are
charged to the statement of profit and loss of the year. The stage of
completion of the contract is measured by reference to the proportion
that contract cost incurred for work performed up to the reporting date
bear to the estimated total contract cost for each contract.
v. Any expected loss on real estate projects or construction contracts
is recognised as an expense when it is certain that the total cost will
exceed the total revenue.
vi. The revenue on account of interest on delayed payment by customers
and expenditure on account of compensation/penalty for project delays
are accounted for at the time of acceptance/settlement with the
customers due to uncertainties with regard to determination of amount
receivable/payable.
vii. Income from license fee is recognised on accrual basis in
accordance with the terms of agreement with the sub-licensees.
viii. Interest income is recognised on accrual basis on a time
proportion basis.
ix. Dividend income is recognised when the Company's right to receive
dividend is established.
h. Cost of Construction/Development
Cost of Construction/Development (including cost of land/ development
rights) incurred is charged to the statement of profit and loss
proportionate to project area sold. Adjustments, if required, are made
on completion of the respective projects.
i. Unbilled revenue
Unbilled revenue represents revenue recognized on 'Percentage of
Completion Method' which is yet to be billed to the customers as per
payment plans adopted by them.
j. Inventories
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land
(including development rights), materials, services, related overheads
and borrowing costs.
ii Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
materials, services, overheads related to projects under construction
and borrowing costs.
k. Investments
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Long term investments are stated individually at cost less
provision for diminution in value, if such diminution is other than
temporary. Current investments are stated at lower of cost and fair
value on an individual investment basis.
l. Segment policies
The Company's reporting segments are identified based on dominant
source, nature of risks and returns and the internal organization and
management structure.
m. Accounting for joint ventures
i. Jointly controlled operations à The Company's share of revenue,
expenses, assets and liabilities are included in the financial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities à The Company's investment in jointly
controlled entities is reflected as investment and accounted for in
accordance with the Company's accounting policy of Investments (see
note 2 k above).
n. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transactions. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate prevailing on the balance sheet date.
Exchange differences arising on translation of monetary assets and
liabilities and realised gain and losses on foreign currency
transactions are recognised in the statement of profit and loss.
o. Taxes on income
Income tax comprises current tax and deferred tax. Current tax is the
amount of tax payable on the taxable income for the year as determined
in accordance with the provisions of the Income Tax Act, 1961. Deferred
tax is recognised on timing differences, being the differences between
the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted by the balance sheet date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
future taxable income will be available against which these can be
realised. Deferred tax assets and liabilities are offset. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
p. Earnings per share
Basic earnings per share is computed by dividing net profit after tax
by the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing net profit
after tax as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of shares considered for deriving basic
earnings per share and the weighted average number of equity shares
which could have been issued on conversion of all dilutive potential
equity shares. Potential equity shares are deemed to be dilutive only
if their conversion to equity shares would decrease the net profit per
share.
q. Provision for Retirement benefits
Employee benefits include provident fund, gratuity and compensated
absences and long service awards.
i. Defined contribution plan
The Company's contribution to Provident Fund is considered as defined
contribution plan. Provident fund contribution is deposited with the
Employees Provident Fund Organisation (EPFO). Company's contribution to
provident fund is charged to the statement of profit and loss when the
contribution is due.
ii. Defined benefit plan
Gratuity is a defined benefit plan covering eligible employees. The
plan provides for a lump sum payment to vested employees on retirement,
death within employment or termination of employment of an amount
equivalent to 15 days salary for each completed year of service.
Vesting occurs on completion of five years of service. Liability for
Gratuity is provided on the basis of actuarial valuation carried out at
the Balance Sheet date by an independent actuary using the Projected
Unit Credit method. Actuarial gains and losses are recognised in the
statement of profit and loss in the period in which they occur.
iii. Short-term employee benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the services.
iv. Long term employee benefits
Compensated absences are treated as long term employee benefits and
liability is recognised on the basis of valuation by an independent
actuary at the year end.
r. Borrowing cost
Borrowing costs include interest and ancillary costs incurred.
Borrowing costs allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction/development of the qualifying asset up to the date of
capitalisation of such asset is added to the cost of the asset. A
qualifying asset is an asset that necessarily requires substantial
period of time to get ready for its intended use or sale. Other
borrowing costs are recognised as an expense in the year in which they
are incurred.
s. Provisions and contingencies
Provision is recognized when the Company has a present obligation as a
result of past events and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. Provisions (excluding employee benefits)
are not discounted to their present value and are determined based on
management estimates required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect the current management estimate. Contingent liabilities are
disclosed in the Notes.
t. Impairment of assets
The carrying value of assets at each balance sheet date is reviewed for
impairment. If an indication of impairment exists, the recoverable
amount of such assets is estimated and impairment is recognised, if the
carrying amount of these assets exceeds their recoverable amount. The
recoverable amount is the higher of asset's net selling price and value
in use. Value in use is arrived by discounting the estimated future
cash flows expected from the continuing use of the asset and from its
disposal based on an appropriate discount factor. The impairment loss
as determined above is charged to statement of profit and loss. When
there is indication that an impairment loss recognised for an asset in
earlier accounting periods no longer exists or may have decreased, such
reversal of impairment loss is recognised in the statement of profit
and loss.
u. Leases
Lease arrangements where the risk and rewards incident to ownership of
an asset substantially vest with the lessor are recognised as operating
lease. Lease rentals under operating leases are recognised in the
Statement of Profit and Loss on a straight line basis over the lease
term.
Assets given under operating leases are included in fixed assets. 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 expense in the Statement of Profit and Loss.
Mar 31, 2011
A. Basis of accounting
The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
Generally Accepted Accounting Principles ('GAAP') in India and comply
with Accounting Standards prescribed by the Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
Act, 1956.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting policies requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported accounts of revenues and expenses for the
years presented. Actual results could differ from these estimates.
c. Fixed assets
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost includes purchase price and all other
attributable costs of bringing the assets to working condition for
intended use. Financing costs relating to borrowed funds attributable
to acquisition or construction of fixed assets, which takes substantial
period of time to get ready for its intended use are also included, for
the period till such asset is put to use.
d. Depreciation
i. Depreciation on fixed assets is provided on written down value
method at the rates specified in Schedule XIV to the Companies Act,
1956 or based on the management's estimates of the useful life of the
assets, whichever is higher. Accordingly, the depreciation rates used
are as follows:
Building 5.00%
Plant & Machinery (including Office Equipment) 30.00%
Shuttering & Scaffolding 40.00%
Furniture & Fixtures 30.00%
Motor Vehicles 25.89%
Computers 60.00%
ii. Cost of building on land held on license basis is amortized over
the period of license of project facility.
iii. Assets costing Rs.5,000 or less individually are fully depreciated
in the year of purchase.
e. Capital Work In Progress
Capital work in progress includes advances given and expenditure
incurred in connection with the purchase/ construction of fixed assets
and pending allocation to the fixed assets.
f. Pre-operative expenditure pending allocation
Pre-operative expenditure incurred in relation to construction of fixed
assets in respect of projects which are yet to commence commercial
operations pending allocation includes:
i. Incidental expenditure during construction period comprising payment
to and provision for employees, professional fees and other
administrative expenses pending allocation to fixed assets on
completion of the Project.
ii. Interest and financing cost net of interest income pending
allocation to fixed assets on completion of the Project.
g. Revenue Recognition
i. Revenue from projects is recognised on the 'Percentage of Completion
Method' of accounting. Revenue is recognized, in relation to the sold
areas only, on the basis of percentage of actual cost incurred thereon
including land as against the total estimated cost of the project under
execution subject to such actual costs being 30% or more of the total
estimated cost. The estimates of saleable area and costs are revised
periodically by the management. The effect of such changes to estimates
is recognised in the period such changes are determined.
ii. Income from construction contracts is recognised by reference to
the stage of completion of the contract activity at the reporting date
of the financial statements. The related costs there against are
charged to the profit and loss account of the year. The stage of
completion of the contract is measured by reference to the proportion
that contract cost incurred for work performed up to the reporting date
bear to the estimated total contract cost for each contract.
iii. Any expected loss on real estate project or construction contract
is recognised as an expense when it is certain that the total cost will
exceed the total revenue.
iv. The revenue on account of interest on delayed payment by customers
and expenditure on account of compensation/penalty for project delays
are accounted for at the time of acceptance/settlement with the
customers due to uncertainties with regard to determination of amount
receivable/payable.
v. Income from license fee is recognised on accrual basis in accordance
with the terms of agreement with the sub-licensees.
vi. Interest income is recognised on accrual basis on a time proportion
basis.
vii. Dividend income is recognised when the Company's right to receive
dividend is established.
h. Cost of Construction/Development
Cost of Construction/Development (including cost of land) incurred is
charged to the profit and loss account proportionate to project area
sold. Adjustments, if required, are made on completion of the
respective projects.
i. Inventories
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land,
materials, services and other related overheads.
ii Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
materials, services and other overheads related to projects under
construction.
j. Investments
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Long term investments are stated at cost less provision
for diminution in value, if such diminution is other than temporary.
Current investments are stated at lower of cost and fair value on an
individual investment basis.
k. Segment policies
The Company's reporting segments are identified based on
activities/products, risk and reward structure, organization structure
and internal reporting systems.
l. Accounting for joint ventures
i. Jointly controlled operations à The Company's share of revenue,
expenses, assets and liabilities are included in the financial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities à The Company's investment in jointly
controlled entities is reflected as investment and accounted for in
accordance with the Company's accounting policy of Investments (See
Note 2 j above).
m. Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transactions. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate prevailing on the balance sheet date.
Exchange differences on translation of monetary assets and liabilities
and realised gain and losses on foreign currency transactions are
recognised in the profit and loss account.
n. Taxation
Income tax comprises current tax and deferred tax. Current tax is the
amount of tax payable as determined in accordance with the provisions
of the Income Tax Act, 1961. Deferred tax assets and liabilities are
recognized subject to the consideration of prudence for the future tax
consequences of timing differences, being the difference between
taxable income and accounting income, that originate in one period and
are capable of reversal in one or more subsequent periods. Deferred tax
assets and liabilities are measured using the tax rates enacted or
substantively enacted by the balance sheet date.
o. Earnings per share
The earnings considered in ascertaining the Company's EPS is the net
profit after tax. The number of shares used in computing basic EPS is
the weighted average number of shares outstanding during the period.
The weighted diluted earnings per equity share are computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the period.
p. Provision for Retirement benefits
i. Short term employee benefits are recognised as an expense at the
undiscounted amounts expected to be paid over the period of services
rendered by the employees of the Company.
ii. The Company's contribution to Provident Fund, a defined
contribution plan is deposited with the Employees Provident Fund
Organisation (EPFO). These are charged to the profit and loss account
when the contribution to the fund is due.
iii. Gratuity is a defined contribution plan covering eligible
employees. The plan provides for a lump sum payment to vested employees
on retirement, death with in employment or termination of employment of
an amount equivalent to 15 days salary for each completed year of
service. Vesting occurs on completion of five years of service.
Liability for Gratuity is provided on the basis of actuarial valuation
carried out at the Balance Sheet date by an independent actuary using
the Projected Unit Credit method.
iv. Liability for leave encashment/availment is treated as long term
liability and is provided on the basis of valuation by an independent
actuary at the year end.
q. Borrowing cost
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are considered as part of the cost
of that asset. A qualifying asset is an asset that necessarily requires
substantial period of time to get ready for its intended use or sale.
Other borrowing costs are recognised as an expense in the year in which
they are incurred.
r. Provisions
Provision is recognized when an enterprise has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. Provisions are determined based on
management estimates required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect the current management estimate.
s. Impairment of assets
At each balance sheet date, the Company reviews the carrying amounts of
its fixed assets to determine whether there is any indication that
those assets suffered impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss. Recoverable amount is the higher of an
asset's net selling price and value in use. In assessing value in use,
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a pre-discount rate that reflect the current market assessment of time
value of money and the risks specific to the asset. The impairment loss
as determined above is expensed off.
t. Leases
Lease arrangements where the risk and rewards incident to ownership of
an asset substantially vest with the lessor are recognised as operating
lease. Lease rent under operating leases are charged to the Profit and
Loss account on a straight line basis over the lease term.
Assets given under operating leases are included in fixed assets. Lease
income is recognised in the Profit & Loss Account on a straight line
basis over the lease term. Costs, including depreciation are recognised
as expense in the profit and loss account.
Mar 31, 2010
A. Basis of accounting
The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
Generally Accepted Accounting Principles (ÃGAAPÃ) in India and comply
with Accounting Standards prescribed by the Companies (Accounting
Standards) Rules, 2006 and in accordance with the provisions of the
Companies Act, 1956.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting policies requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported accounts of revenues and expenses for the
years presented. Actual results could differ from these estimates.
c. Fixed assets
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation. Cost includes purchase price and all other
attributable costs of bringing the assets to working condition for
intended use. Financing costs relating to borrowed funds attributable
to acquisition or construction of fixed assets, which takes substantial
period of time to get ready for its intended use are also included, for
the period till such asset is put to use.
d. Depreciation
i. Depreciation on fixed assets is provided on written down value
method at the rates specified in Schedule XIV to the Companies Act,
1956 or based on the managements estimates of the useful life of the
assets, whichever is higher. Accordingly, the depreciation rates used
are as follows:
ii. Cost of building on land held on license basis is amortized over
the period of license of project facility.
iii. Assets costing Rs. 5,000 or less individually are fully
depreciated in the year of purchase.
e. Revenue Recognition
i. Revenue from projects is recognised on the ÃPercentage of Completion
Methodà of accounting. Revenue is recognized, in relation to the sold
areas only, on the basis of percentage of actual cost incurred thereon
including land as against the total estimated cost of the project under
execution subject to such actual costs being 30% or more of the total
estimated cost. The estimates of saleable area and costs are revised
periodically by the management. The effect of such changes to
estimates is recognised in the period such changes are determined.
ii. Income from construction contracts is recognised by reference to
the stage of completion of the contract activity at the reporting date
of the financial statements. The related costs there against are
charged to the profit and loss account of the year.
iii. Income from license fee is recognised on accrual basis in
accordance with the terms of agreement with the sub-licensees.
iv. Interest income is recognised on accrual basis on a time proportion
basis.
v. Dividend income is recognised when the CompanyÃs right to receive
dividend is established.
f. Cost of Construction/Development
Cost of Construction/Development (including cost of land) incurred is
charged to the profit and loss account proportionate to project area
sold. Adjustments, if required, are made on completion of the
respective projects.
g. Inventories
Inventory comprises completed property for sale and property under
construction (work-in-progress).
i. Completed unsold inventory is valued at lower of cost and net
realisable value. Cost is determined by including cost of land,
materials, services and other related overheads.
ii. Work-in-progress is valued at lower of cost and net realisable
value. Cost comprises cost of land (including development rights),
materials, services and other overheads related to projects under
construction.
h. Investments
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Long term investments are stated at cost less provision
for diminution in value, if such diminution is other than temporary.
Current investments are stated at lower of cost and fair value on an
individual investment basis.
i. Segment policies
The CompanyÃs reporting segments are identified based on
activities/products, risk and reward structure, organization structure
and internal reporting systems.
j. Accounting for joint ventures
i. Jointly controlled operations à The CompanyÃs share of revenue,
expenses, assets and liabilities are included in the financial
statements as revenue, expenses, assets and liabilities respectively.
ii. Jointly controlled entities à The CompanyÃs investment in jointly
controlled entities is reflected as investment and accounted for in
accordance with the CompanyÃs accounting policy of Investments (See
Note 2h above).
k. Foreign Currency Transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transactions. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate prevailing on the balance sheet date.
Exchange differences on translation of monetary assets and liabilities
and realised gain and losses on foreign currency transactions are
recognised in the profit and loss account.
l. Taxation
Income tax comprises current tax, deferred tax and fringe benefit tax.
Current tax and fringe benefit tax is the amount of tax payable as
determined in accordance with the provisions of the Income Tax Act,
1961. Deferred tax assets and liabilities are recognized for the future
tax consequences of timing differences, subject to the consideration of
prudence. Deferred tax assets and liabilities are measured using the
tax rates enacted or substantively enacted by the balance sheet date.
m. Earnings per share
The earnings considered in ascertaining the CompanyÃs EPS is the net
profit after tax. The number of shares used in computing basic EPS is
the weighted average number of shares outstanding during the period.
The weighted diluted earnings per equity share are computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the period.
n. Provision for Retirement benefits
i. The CompanyÃs contribution to Provident Fund is deposited with the
Employees Provident Fund Organisation (EPFO). These are charged to the
profit and loss account when the contribution to the fund is due.
ii. Liability for Gratuity and balance of unavailed leave due to
employees are provided on the basis of actuarial valuation carried out
at the Balance Sheet date by an independent actuary using the Projected
Unit Credit method.
o. Borrowing cost
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are considered as part of the cost
of that asset. Other borrowing costs are recognised as an expense in
the year in which they are incurred.
p. Provisions
Provision is recognized when an enterprise has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation and in respect of which a
reliable estimate can be made. Provisions are determined based on
management estimates required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect the current management estimate.
q. Impairment of assets
At each balance sheet date, the Company reviews the carrying amounts of
its fixed assets to determine whether there is any indication that
those assets suffered impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine
the extent of impairment loss. Recoverable amount is the higher of an
assetÃs net selling price and value in use. In assessing value in use,
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a pre-discount rate that reflect the current market assessment of time
value of money and the risks specific to the asset. The impairment loss
as determined above is expensed off.
r. Leases
Lease arrangements where the risk and rewards incident to ownership of
an asset substantially vest with the lessor are recognised as operating
lease. Lease rent under operating leases are charged to the Profit and
Loss account on a straight line basis over the lease term.
Assets given under operating leases are included in fixed assets. Lease
income is recognised in the Profit & Loss Account on a straight line
basis over the lease term. Costs, including depreciation are recognised
as expense in the profit and loss account.
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