Note 2: Summary of significant accounting policies.
2.1 Use of estimates
The preparation of the standalone financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the standalone financial statements and reported amounts of income and
expenses during the period. Examples of such estimates include computation of percentage of completion which
requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or
costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans,
income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets.
Management believes that the estimates used in the preparation of standalone financial statements are prudent
and reasonable. Any revision to accounting estimates is recognised prospectively in current and future periods.
2.2 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured.
Sale of Goods/Services
Revenue is recognized when/as the company satisfies a performance obligation by transferring a promised
goods or services (i.e. an asset) to a customer who has obtained control over the asset.
The Company is recognizing revenue as the percentage of completion method of accounting which requires the
reporting of revenues and expenses on a period-by-period basis, as determined by the percentage of the
contract that has been fulfilled.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate
applicable.
2.3 Fixed Assets & Depreciation
Property, Plant and Machinery are stated at cost less depreciation / amortization and impairment losses, if
any. The cost of Fixed Assets comprises its purchase price includes any taxes, duties, freight and other
incidental expenses related to acquisition, improvements and installation of the assets.
Borrowing costs that are directly attributable to the acquisition / construction of the Qualifying asset are
capitalized as part of the cost of such asset, up to the date of acquisition / completion of construction.
Depreciation on tangible assets is provided on the WDV Method over the useful lives of assets estimated by the
management. Depreciation for assets purchased/ Sold during a period is proportionately charged. The
Management estimates are based on the useful life provided in the Schedule II to Companies Act 2013, however
for certain assets the Management Estimation may differs from the useful life mentioned in Schedule II in future.
2.4 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortization and accumulated impairment losses if any.
Internally generated intangible assets, excluding capitalize development costs, are not capitalized and
expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
Intangible assets are amortized on a straight line basis over the estimated useful economic life. All other
intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be
impaired.
The amortization period and the amortization method are reviewed at least at each financial year end. If the
expected useful life of the asset is significantly different from previous estimates, the amortization period is
changed accordingly. If there has been a significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in
accordance with AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.
Gains or losses arising from derecognizing of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
2.5 Inventories
Inventories are valued at Lower of cost and net realizable value. Net realizable value is the estimated selling
price in the ordinary course of business, less estimated costs of Completion and estimated costs necessary to
make the sale.
2.6 Investment:
Investments that are readily realizable and intended to be held for not more than a year are classified as current
investments. All other investments are classified as long term investments. Current investments are carried at
lower of cost and fair value determined on an individual investment basis. Long term investments are carried
at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the
value of the investments.
2.7 Foreign currency transaction:
Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the
transaction and adjusted appropriately to capital or revenue, with the difference in the rate of exchange arising
on actual receipt/payment during the year.
2.8 Leases:
Where the Company is the lessee
Leases which effectively transfer to the Company substantially all the risks and benefits incidental to
ownership of the leased item, are classified as finance leases and are capitalized at the lower of the fair value
and present value of the minimum lease payments at the inception of the lease term and disclosed as assets
acquired on finance lease. Lease payments are apportioned between the finance charges and reduction of the
lease liability based on the implicit rate of return. Finance charges on account of finance leases are charged to
statement of profit and loss.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased
item, are classified as operating leases. Operating lease payments are recognized as an expense in the
statement of profit and loss on a straight line basis over the lease term.
2.9 Taxes on Income:
Tax expense comprises both current and deferred tax.
Current Tax
Current Tax is the amount of tax payable on the assessable income for the year determined in accordance
with the provisions of the Income tax Act, 1961.
Minimum Alternate Tax (MAT)
MAT credit entitlement available under the provisions of the section 115JJA of the Income Tax Act, 1961 is
recognized in accordance with the principles laid down in the Guidance Note on Accounting for credit
available in respect of MAT under the Income Tax Act, 1961 issued by the ICAI, to the extent that the credit
will be available for discharge of future normal tax liability.
Deferred tax
Deferred tax is recognised on timing differences, between taxable income and accounting income that
originated in one period and is capable of reversal in one or more subsequent periods. The deferred tax charge
or credit and the corresponding deferred tax assets or liabilities are recognised using the tax rates that have
been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised when
there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed
depreciation or carried forward loss under taxation laws, deferred tax assets are recognised to the extent
there is virtual certainty of realisation of such assets. The Company reviews the carrying value of Deferred
tax assets on each reporting date and written down and written up to reflect the amount that is reasonably /
virtually certain (as the case may be) to be realized.
2.10 Segment Reporting:
The company is operating in single segment “business of Real Estate Developments And Financial
Intermediation Services” and hence segment wise separate reporting as per AS 17 issued by ICAI is not required.
2.11 Impairment of Assets:
At the date of each Balance Sheet the company evaluates, indications of the impairment internally if any, to the
carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated
at the higher of the realizable value and value in use, as considered appropriate. If the estimated realizable value
is less than the carrying amount, an impairment loss is recognized.
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