1.3 Material Accounting Policies
1.3.1 Operating Cycle
The Operating Cycle is the time between the acquisition of assets for processing and their realisation in cash
and cash equivalents. The Company has evaluated and considered its operating cycle as 5 to 7 years and
accordingly has reclassified its assets and liabilities into current and non-current.
An asset is treated as current when it is:
- Expected to be realised or 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, or
- Cash or cash equivalent 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 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.
1.3.2 Foreign Currency Transactions & Translations
The functional currency of the Company is Indian Rupees. The Financial Statements are prepared and
presented in Indian Rupees and has been rounded off to the nearest lakhs, unless otherwise stated.
Transactions in foreign currencies entered into by the Company are translated to the Company's functional
currency at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into the functional currency at the
exchange rate at that date.
Foreign exchange gains and losses resulting from the settlement of transactions in foreign currencies
and from the translation of monetary assets and liabilities denominated in foreign currencies at year end
exchange rates are generally recognised in the Statement of Profit & Loss.
Non-monetary items that are measured based on historical cost in a foreign currency are translated at the
exchange rates at the dates of transactions. Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date of the fair valuation. The gain or loss arising on
translation of non-monetary items measured at fair value is treated in line with the recognition of the gain
or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or
loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
1.3.3 Use of Estimates and Judgements
The preparation of financial statements in conformity with Ind AS requires the management to make
estimates and assumptions considered in the reported amounts of assets and liabilities (including
contingent liabilities) at the end of the reporting period and the reported income and expenses during
the year. Although these estimates are based on the management's best knowledge of current events
and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in future periods.
1.3.4 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in
value.
1.3.5 Property, Plant and Equipment
Property, plant and equipment are carried at cost of acquisition on current cost basis less accumulated
depreciation and accumulated impairment if any. Cost comprises purchase price and directly attributable
cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are
deducted in arriving at the purchase price.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on de-recognition of the asset is included in the Statement of Profit or Loss when the asset is derecognised.
Depreciation is provided on written down value method over the estimated useful lives of property, plant
and equipment and is in line with the requirement of Part C of Schedule II of the Companies Act, 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if appropriate.
1.3.6 Intangible Assets
Intangible Assets are recognized only when future economic benefits arising out of the assets flow to the
enterprise and are amortised on Straight Line Method over their estimated useful life of five years. 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.
1.3.7 Capital Work-in-Progress and Intangible Assets under Development
Capital work-in-progress and intangible assets under development are carried at cost. Cost includes
land, related acquisition expenses, development / construction costs, borrowing costs and other direct
expenditure.
1.3.8 Investment Property & Depreciation
(i) Recognition & measurement
Investment properties are properties held to earn for capital appreciation or income rentals or both.
Investment properties are held initially at their cost of acquisition. The cost comprises purchase price,
borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its
working condition for the intended use.
Subsequent costs are included in the asset's carrying amount or recognised as separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the company. All other repairs and maintenance are charged to Statement of profit and loss as incurred.
(ii) Depreciation on investment property is provided using the written down method based on useful lives
specified in Schedule II to the Companies Act, 2013.
1.3.9 Impairment of Non-Financial Assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired.
If any indication exists, the Company estimates the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or groups of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount.
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. In determining net selling price, recent market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate valuation model is used.
1.3.10 Inventories
Inventories are valued at lower of Cost or Net Realisable Value.
Construction-work-in progress includes cost of land, premium for development rights, construction costs,
allocated interest and expenses incidental to the projects undertaken by the Company.
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.
1.3.11 Revenue Recognition
Revenue is recognized when it is probable that the economic benefits will flow to the Company and it can
be reliably measured. Revenue towards satisfaction of a performance obligation is measured at the amount
of transaction price (net of variable consideration) allocated to that performance obligation. The transaction
price of goods sold and services rendered is net of variable consideration on account of various discounts
and schemes offered by the Company as part of the contract. The Company applies the revenue recognition
criteria to each nature of revenue transaction as below:
In terms of Ind AS 115, Revenue from Contracts with Customers to be recognised at a point of time
(project completion method) upon satisfaction of performance obligation at an amount that reflects the
consideration to which the Company expects to be entitled in exchange for transfer of goods or services to
customers.
Interest Income is recognised using the effective interest method and is included under the head 'Other
Income' in the Statement of Profit and Loss.
Dividend Income including share of profit in LLP is recognised when the Company's right to receive dividend
is established.
All other incomes are recognised on accrual basis.
1.3.12 Employee Benefits
a. Defined Contribution Plan - Provident Fund
The Company makes contributions towards provident fund to the regulatory authorities to a defined
contribution retirement benefit plan for qualifying employees.
b. Defined Benefit Plan - Gratuity
The Company's liability is actuarially determined using the Projected Unit Credit method at the end of
the year in accordance with the provision of Ind AS 19 - Employee Benefits. The Company recognizes
the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and
losses through re-measurements of the net defined benefit liability/(asset) are recognized in other
comprehensive income and are not reclassified to profit or loss in subsequent periods. The effect of any
plan amendments are recognized in the Statement of Profit & Loss.
c. Long Term Compensated Absences
The Company's liability is actuarially determined using the Projected Unit Credit method at the end of
the year in accordance with the provision of Ind AS 19 - Employee Benefits. The Company recognizes
the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses
through re-measurements of the net defined benefit liability/(asset) are recognized in Statement of
Profit & Loss.
1.3.13 Income Tax
Tax expense comprises current and deferred tax.
Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with
the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where
the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted, at the reporting date.
Deferred tax is provided using the balance sheet method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements at the reporting
date. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the transaction affects neither accounting
profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates and laws that have
been enacted or substantially enacted by the end of the reporting period, electing not to exercise the
option permitted under Section 115BAA of the ITA, 1961 as introduced by the Taxation Laws (Amendment)
Act, 2019 and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of deferred tax assets 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 deferred
tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting
income originating during the current year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting
date, electing not to exercise the option permitted under Section 115BAA of the Income Tax Act, 1961 as
introduced by the Taxation Laws (Amendment) Act, 2019.
1.3.14 Leases
The Company at the inception of a contract, assesses whether a contract, is or contains a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. Ind AS 116 introduces a single balance sheet lease accounting model
for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and
a lease liability representing its obligation to make lease payments. Lessor accounting remains similar to
the accounting under the previous standard i.e. lessor continues to classify leases as finance or operating
lease. The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to
use the asset or assets, even if that right is not explicitly specified in an arrangement.
As a lessee
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 cost incurred and an
estimate of cost 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
over the useful life of the asset. On the balance sheet date, the right-of-use of asset is included in property,
plant and equipment and lease liabilities have been included in the borrowings and other financial liabilities.
Finance leases are capitalised at the lease's inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges,
are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
As a lessor
Lease income from operating leases, where the Company is a lessor, is recognised in income on a straight¬
line basis over the lease term unless the receipts are structured to increase in line with expected general
inflation to compensate for the expected inflation.
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