(v) Material accounting policies
(a) Property, Plant and Equipment (PPE):
The Company had applied for the one time transition exemption of considering the carrying cost on the transition
date i.e. 1st April, 2016 as the deemed cost under IND AS. Hence regarded thereafter as historical cost.
Recognition and measurement:
Items of property, plant and equipment (PPE) are measured at cost less accumulated depreciation and
impairment, if any. The cost of property, plant and equipment includes purchase price, including freight, duties,
taxes and expenses incidental to acquisition and installation. If significant parts of an item of property, plant and
equipment have different useful lives, then they are accounted for as separate items (major components) of
property, plant and equipment. Property, plant and equipment are derecognized from financial statements,
either on disposal or when no economic benefits are expected from its use or disposal. The gain or losses
arising from disposal of property, plant and equipment are recognized in the Statement of Profit and Loss in the
year of occurrence.
Subsequent expenditures:
Subsequent expenditures related to an item of property, plant and equipment are added to its carrying value
only when it is probable that the future economic benefits from the asset will flow to the Company and cost can
be reliably measured. All other repair and maintenance costs are recognized in the Statement of Profit and
Loss during the year in which they are incurred.
Depreciation methods, estimated useful lives and residual value:
Depreciation is provided on all property, plant and equipment on straight-line method in the manner and useful
life prescribed in Schedule II of the Companies Act, 2013. Depreciation on additions/deletion is provided on
pro-rata basis with reference to the date of addition/deletion as the case may be. Capital work-in-progress is
not depreciated.
If the management's estimate of the useful life of a item of property, plant and equipment at the time of
acquisition or the remaining useful life on a subsequent review is shorter than the envisaged in the aforesaid
schedule, depreciation is provided at a higher rate based on the management's estimate of the useful life/
remaining useful life.
Useful lives and residual values of assets are reviewed at the end of each reporting period.
Losses arising from the retirement of, and gains or losses arising from disposal/adjustments of PPE are
recognised in the Statement of Profit and Loss.
(b) Capital work-in-progress (‘CWIP’):
Capital work-in-progress comprises cost of PPE that are not yet ready for their intended use at the year end.
Such cost includes indirect expenses incurred during construction period if the recognition criteria are met.
Projects under commissioning and other CWIP are carried at cost, comprising direct cost, related incidental
expenses and attributable borrowing cost.
(c) Impairment of Non-Financial Assets:
The Company assesses at each Balance Sheet date whether there is any indication that an asset may be
impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The
recoverable amount is the higher of an asset's or cash generating unit’s (CGU) fair value less costs of disposal
and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its useful life. If such recoverable amount of the
asset or cash generating unit is less than its carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss.
If at the Balance Sheet date there is any indication that any impairment loss recognized for an asset in prior
years may no longer exist or may have decreased, the recoverable amount is reassessed and such reversal of
impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously
charged to the Statement of Profit and Loss.
(d) Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets and financial liabilities are recognized when the Company
becomes a party to the contractual provisions of the instruments.
Financial Assets-
Initial recognition and measurement
The Company recognizes financial assets when it becomes a party to the contractual provisions of the
instrument. All financial assets are recognized initially at fair value plus transaction costs that are directly
attributable to the acquisition of the financial asset.
Subsequent measurement
For the purpose of subsequent measurement, the financial assets are classified as under:
Ý Financial assets at amortised cost
A financial asset is measured at the amortised cost, if both the following conditions are met:
• The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using
the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any
discount or premium and fees or costs that are an integral part of the EIR. Interest income from these
financial assets is included in other income using the EIR in the Statement of Profit and Loss. The
losses arising from impairment are recognized in the Statement of Profit and Loss.
Ý Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI, if both of the following criteria are met:
• These assets are held within a business model whose objective is achieved both by collecting
contractual cash flows and selling the financial assets; and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.
Fair value movements are recognised in the other comprehensive income (OCI), except for the
recognition of impairment gains or losses, interest income and foreign exchange gains or losses which
are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to Profit or Loss and recognised in other
income/(loss).
Ý Financial assets at fair value through profit or loss (FVTPL)
Financial assets that do not meet the criteria for amortized cost or FVTOCI are measured at fair value
through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value
through profit or loss and is recognized in profit or loss and presented net in the Statement of Profit and
Loss within other income in the period in which it arises.
Ý Impairment of financial assets
The Company applies ‘simplified approach’ for recognition of impairment loss on financial assets for loans,
deposits and trade receivables.
The application of simplified approach does not require the company to track changes in credit risk. Rather,
it recognizes impairment loss allowance based on lifetime Expected Credit Loss at each reporting date,
right from its initial recognition.
Ý De-recognition
A financial asset is derecognized when:
• the rights to receive cash flows from the assets have expired or
• the Company has transferred substantially all the risk and rewards of the asset, or
• the Company has neither transferred nor retained substantially all the risk and rewards of the asset,
but has transferred control of the asset.
Ý Cash and Cash Equivalents:
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand, demand deposit and
short-term deposits with an original maturity of three months or less, which are subject to an insignificant
risk of changes in value.
Financial Liabilities-
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction cost.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method.
For trade and other payables maturing within operating cycle, the carrying amounts approximate the fair
value due to short maturity of these instruments.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost
using Effective Interest Rate (EIR) method. Gain and losses are recognized in the Statement of Profit and
Loss when the liabilities are derecognized.
Amortised cost is calculated by taking into account any discount or premium on acquisition and transaction
costs. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
Derecognition
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or have expired. When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit
and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reflected in the balance sheet when
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a
net basis, to realize the assets and settle the liabilities simultaneously.
(e) Leases
On inception of a contract, the Company assesses whether it contains a lease. A contract contains a lease
when it conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. The right to use the asset and the obligation under the lease to make payments are
recognised in the Company’s statement of financial position as a right-of-use asset and a lease liability.
Right-of-Use Assets
The right-of-use asset recognised at lease commencement includes the amount of lease liability recognised,
initial direct costs incurred, and lease payments made at or before the commencement date, less any lease
incentives received. Right-of-use assets are depreciated over the shorter of the asset’s estimated useful life
and the lease term. Right-of-use assets are also adjusted for any re-measurement of lease liabilities and
are subject to impairment testing. Residual value is reassessed annually.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the
Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if
there is a modification, a change in the lease term, a change in the lease payments.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered to be low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
(f) Revenue Recognition:
Revenue is recognised at an amount that reflects the consideration to which the Company expects to be
entitled in exchange for transferring the promised goods or services to a customer i.e. on transfer of control
of the goods or service to the customer. Revenue from sales of goods or rendering of services is net of
Indirect taxes, returns and variable consideration on account of discounts and schemes offered by the
company as part of the contract.
Revenue is measured at the fair value of the consideration received or receivable. Revenue comprises sale
of rooms, food and beverages and allied services relating to hotel operations.
Revenue is recognized upon rendering of the service, provided pervasive evidence of an arrangement
exists, tariff / rates are fixed or are determinable and collectability is reasonably certain. Revenue from
rendering of services is net of Indirect taxes, returns, variable consideration on account of discounts and
schemes offered by the company as part of the contract.
Contract Balances-
Ý Contract Assets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the Company performs by transferring goods or services to a customer before the
customer pays consideration or before payment is due, a contract asset is recognised for the earned
consideration that is conditional.
Ý Contract Liabilities
A contract liability is the obligation to transfer services to a customer for which the Company has
received consideration from the customer. If a customer pays consideration before the Company
transfers goods or services to the customer, a contract liability is recognised when the payment is
made. Contract liabilities are recognised as revenue when the Company performs under the contract.
g) Employee benefits plans
Employee benefits consist of provident fund, gratuity fund and compensated absences, etc.
Ý Short-Term Employee Benefits
Employee benefits such as salaries, wages, short-term compensated absences, bonus, ex-gratia and
performance-linked rewards falling due wholly within twelve months of rendering the service are
classified as short-term employee benefits and are expensed in the period in which the employee
renders the service.
Ý Defined contribution plan
The Company makes Provident Fund contributions to regulatory authorities for eligible employees.
Under the schemes, the Company is required to contribute a specified percentage of the payroll costs
to fund the benefits. The contributions as specified under the law are paid to the provident fund
authorities. The Company does not expect any shortfall in the foreseeable future.
Ý Defined benefit plans
The Company has a defined benefit gratuity plan. The gratuity plan is primarily governed by the
Payment of Gratuity Act, 1972 and is provided on the basis of its actuarial valuation based on the
projected unit credit method at each Balance Sheet date and funded through contributions to a
Scheme administered by the Life Insurance Corporation of India (‘LIC’). Employees who are in
continuous service for a period of five years are eligible for gratuity. The level of benefits provided
depends on the member's length of service and salary at the retirement date. Changes in actuarial
gains or losses are charged or credited to other comprehensive income in the period in which they
arise.
Ý Other long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the
period in which the employee renders the related services are recognised as a liability at the present
value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
Changes in actuarial gains or losses are charged or credited to profit or loss in the period in which
they arise.
(h) Inventories:
Stock of food and beverages and stores and operating supplies are carried at the lower of cost or net
realisable value. Cost includes the fair value of consideration paid including duties and taxes (other than
those refundable), inward freight and other expenditure directly attributable to the purchase. Trade discounts
and rebates are deducted in determining the cost of purchase.
(i) Income Taxes:
The tax expense comprises current and deferred tax. Tax is recognized in the Statement of Profit and Loss
except to the extent that it relates to items recognized directly in equity or in OCI.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates
enacted or substantially enacted at the reporting date.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the
recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities
for financial reporting purpose and the amount used for taxation purposes.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets
are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which those deductible temporary
differences can be utilised. The carrying amount of deferred tax asset is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient taxable profit 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 realized, based on tax rates that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off
assets against liabilities representing current tax and where the deferred tax assets and the deferred tax
liabilities relate to taxes on income levied by the same governing taxation laws.
MAT Credit
The Company recognizes 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. The Company reviews the “MAT credit entitlement” asset at
each reporting date and writes down the asset to the extent the Company does not have convincing
evidence that it will pay normal tax during the specified period.
(j) Borrowing Costs:
Borrowing costs attributable to the acquisition or construction of qualifying assets are captialised as part of
the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get
ready for its intended use.
All other borrowing costs are recognized as expense in the period in which these are incurred.
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