2. MATERIAL ACCOUNTING POLICIES
A. Statement of Compliance
The Standalone financial statements of the Company have been prepared in accordance with the Indian
Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended)
notified under the section 133 of the Companies Act, 2013 ("the Act") and presentation requirements of Division
II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III).
Accounting policies have been consistently applied except where a newly issued accounting standard is initially
adopted or a revision to an existing accounting standard requires a change in the accounting policy in use.
B. Basis of Preparation of Financial Statements:
The Standalone financial statements have been prepared on the historical cost and accrual basis except for
certain financial instruments which are measured at fair values at the end of each reporting period, as explained
in the accounting policies below.
The Standalone financial statements are presented in H, which is also the Company's functional currency and all
values are rounded to the nearest lakhs (H 00,000), except when otherwise indicated.
C. Use of accounting judgements, estimates and assumptions:
The preparation of standalone financial statements in conformity with Ind AS requires the management to make
judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of the reporting period. 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. The effect of change in an accounting estimate is recognized prospectively.
The following are significant management judgements and estimates in applying the accounting policies of the
Company that have the most significant effect on the financial statements:
1. Identification of performance obligation and timing of revenue recognition on revenue from real estate
development - Revenue consists of sale of undivided share of land and constructed area to the customer,
which have been identified by the Company as a single performance obligation, as they are highly interrelated/
interdependent. In assessing whether performance obligations relating to sale of undivided share of land and
constructed area are highly interrelated/ interdependent, the Company considers factors such as:
- whether the customer could benefit from the undivided share of land or the constructed area on its own
or together with other resources readily available to the customer.
- whether the entity will be able to fulfil its promise under the contract to transfer the undivided share of
land without transfer of constructed area or transfer the constructed area without transfer of undivided
share of land.
Timing of satisfaction of performance obligation - Revenue from sale of real estate units is recognised when (or
as) control of such units is transferred to the customer. The entity assesses timing of transfer of control of such
units to the customers as transferred over time if one of the following criteria are met:
- The customer simultaneously receives and consumes the benefits provided by the entity's performance
as the entity performs.
- The entity's performance creates or enhances an asset that the customer controls as the asset is created
or enhanced.
- The entity's performance does not create an asset with an alternative use to the entity and the entity has
an enforceable right to payment for performance completed to date.
If control is not transferred over time as above, the entity considers the same as transferred at a point in time.
2. Financial instruments (NCDs) measured at amortised costs - Financial instruments (NCDs) are subsequently
measured at amortised cost using the effective interest ('EIR') method. The computation of amortised cost is
sensitive to the inputs to EIR including effective rate of interest, contractual cash flows from the underlying
project and the expected life of the financial instrument. Changes in assumptions about these inputs could
affect the reported value of financial instruments (Refer note 22).
3. Evaluation of net realisable value of inventories (including land advances for real estate developments) -
Inventories comprising of finished goods and construction work- in progress are valued at lower of cost and
net realisable value (NRV). NRV for completed inventory is assessed by reference to market conditions and
prices existing at the reporting date and is determined by the Company, based on comparable transactions
identified by the Company for properties in the same geographical market serving the same real estate
segment. NRV in respect of inventory under construction is assessed with reference to market prices at the
reporting date for similar completed property, less estimated costs to complete construction and estimate of
time value of money till date of completion.
4. Defined benefit obligation (DBO) - Management's estimate of the DBO is based on a number of critical
underlying actuarial assumptions such as standard rates of inflation, mortality, discount rate and anticipation
of future salary increases. An actuarial valuation involves making various assumptions that may differ from
actual developments in the future. Variation in these assumptions may significantly impact the DBO amount
and the annual defined benefit expenses. Due to the complexities involved in the valuation and its long-term
nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are
reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining
the appropriate discount rate for plans operated in India, the management considers the interest rates of
government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables
tend to change only at interval in response to demographic changes.
5. Useful lives and residual value of depreciable / amortisable assets - The useful life and residual value of
property, plant and equipment, investment property and intangible assets are determined based on
evaluation made by the management of the expected usage of the asset, the physical wear and tear and
technical or commercial obsolescence of the asset. Due to the judgments involved in such estimates the
useful life and residual value are sensitive to the actual usage in future period.
6. Impairment losses on investment / loans to subsidiaries - Impairment exists when the carrying value of an
asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs
of disposal and its value in use. The fair value less costs of disposal calculation is based on available data
from binding sales transactions, conducted at arm's length, for similar assets or observable market prices
less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The
cash flows are derived from the budget for the underlying projects. The recoverable amount is sensitive to the
discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used
for extrapolation purposes.
7. Provisions for litigations and contingencies - Provision for litigations and contingencies is determined based
on evaluation made by the management of the present obligation arising from past events the settlement of
which is expected to result in outflow of resources embodying economic benefits, which involves judgments
around ultimate outcome and measurement of the obligation amount. Due to judgments involved in such
estimation the provision is sensitive to the actual outcome in future period.
D. Business combinations involving entities under common control:
A business combination involving entities or businesses under common control is a business combination in which
all of the combining entities or businesses are ultimately controlled by the same party or parties both before
and after the business combination and the control is not transitory. Business Combination involving entities or
businesses under common control is accounted for using the pooling of interest method as per Appendix C to Ind
AS 103 - Business Combinations based on the predecessor values retrospectively for all periods presented as
appearing in the consolidated financial statements of the acquirer. The pooling of interest method is considered to
involve the following: (i) The assets and liabilities of the combining entities are reflected at their carrying amounts.
(ii) No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments
that are made are to harmonies accounting policies and tax adjustments if any. (iii) The components of other
equity of the acquired companies are added to the same components within other equity except that any share
capital and investments in the books of the acquiring entity is cancelled and the differences, if any, is adjusted
in the opening retained earnings. (iv) The financial information in the financial statements in respect of prior
periods are restated as if the business combination had occurred from the beginning of the preceding period in
the financial statements, irrespective of the actual date of the combination. However, if business combination had
occurred after that date, the prior period information shall be restated only from that date.
E. Inventories (including Land):
Direct expenditure relating to real estate activity is inventorised. Other expenditure (including borrowing costs)
during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing
the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred
during the construction period which is not directly attributable for bringing the asset to its working condition for
its intended use is charged to the statement of profit and loss. Direct and other expenditure is determined based
on specific identification to the real estate activity.
i. Work-in-progress (including land): Represents cost incurred in respect of unsold area (including land) of the
real estate development projects or cost incurred on projects where the revenue is yet to be recognized.
Work-in-progress is valued at lower of cost and net realizable value.
ii. Finished goods - Units and plots: Valued at lower of cost and net realizable value.
iii. Raw materials, components and stores: Valued at lower of cost and net realizable value. Cost is determined
based on weighted average basis.
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.
Advances paid by the Company to the seller/intermediary toward outright purchase of land is recognized
as land advance under loans and advances during the course of obtaining clear and marketable title, free
from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock
under inventories.
F. Property, Plant and Equipment and Intangible assets
Property, Plant and Equipment are stated at actual cost less accumulated depreciation and net of impairment.
The actual cost capitalised includes material cost, freight, installation cost, duties and taxes, eligible borrowing
costs and other incidental expenses incurred during the construction / installation stage.
Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
Property, plant and equipment are derecognised either on disposal or when no economic benefits are expected
from its use or disposal. The gain or loss arising from disposal of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of property, plant and equipment recognised
in the Standalone Statement of Profit and Loss in the year of occurrence.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated
residual value. Depreciation / amortisation on Property, Plant S Equipment is charged based on straight line
method on an estimated useful life as prescribed in Schedule II to the Act.
Computer software is amortized over a period of six years.
The estimated useful lives and residual values of the Property, Plant and Equipment are reviewed at the end of
each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
G. Investment property and depreciation
i. Recognition and Measurement:
Investment properties comprising of land and building 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. Though the Company measures investment property using cost based
measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based
on an annual evaluation.
ii. Depreciation:
Depreciation on Investment Property is provided using the straight line method based on the useful lives specified
in Schedule II (i.e. 60 years) to the Companies Act, 2013.
H. Leases:
As a lessee:
The Company's lease asset classes primarily consist of leases for land and buildings. The Company assesses
whether a contract contains a lease, at inception of a contract. 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. To
assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether: (1) the contract involves the use of an identified asset (2) the Company has substantially all of the
economic benefits from use of the asset through the period of the lease and (3) the Company has the right to
direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of
the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term.
ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter
of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For
the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and
the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that
are largely independent of those from other assets. In such cases, the recoverable amount is determined for the
Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The
lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using
the incremental borrowing rates in the country of domicile of the leases. Lease liabilities are remeasured with a
corresponding adjustment to the related right of use asset if the Company changes its assessment for exercise of
extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have
been classified as financing cash flows.
Short-term lease 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 less than 12 months or less and leases of low-value assets, including IT Equipment. The
Company recognises the lease payments associated with these leases as an expense on a straight-line basis
over the lease term.
The election for short-term leases shall be made by class of underlying asset to which the right of use relates. A
class of underlying asset is a grouping of underlying assets of a similar nature and use in Company's operations.
The election for leases for which the underlying asset is of low value can be made on a lease-by-lease basis.
As a lessor:
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership
of an asset is classified as operating leases. Rental income arising is accounted for on a straight-line basis over
the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Contingent rents are recognised as revenue in the period in which they are earned.
I. Revenue recognition:
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange
for those goods or services. Revenue is measured based on the transaction price, which is the consideration,
adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company
presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price,
the Company considers the effects of variable consideration, the existence of significant financing components,
noncash consideration, and consideration payable to the customer, if any.
Timing of satisfaction of performance obligation - Revenue from sale of real estate units is recognised when (or
as) control of such units is transferred to the customer. The entity assesses timing of transfer of control of such
units to the customers as transferred over time if one of the following criteria are met:
- The customer simultaneously receives and consumes the benefits provided by the entity's performance as
the entity performs.
- The entity's performance creates or enhances an asset that the customer controls as the asset is created
or enhanced.
- The entity's performance does not create an asset with an alternative use to the entity and the entity has an
enforceable right to payment for performance completed to date.
If control is not transferred over time as above, the entity considers the same as transferred at a point in time.
i. Revenue from sale of real estate
Revenue from real estate development of residential/commercial unit is recognised at the point in time,
when the control of the asset is transferred to the customer, which generally coincides with either of the two
conditions below:
(i) on transfer of legal title of the residential or commercial unit to the customer; or
(ii) transfer of physical possession of the residential/commercial unit to the customer i.e., handover/deemed
handover of the residential units. Deemed handover of the residential units is considered upon receipt of
occupancy certificate and final intimation to the customers as per the agreement.
Revenue consists of sale of undivided share of land and constructed area to the customer, which have been
identified by the Company as a single performance obligation, as they are highly interrelated/interdependent.
The performance obligation in relation to real estate development is satisfied upon completion of project
work and transfer of control of the asset to the customer.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance
with the terms of the contract in proportion of the percentage of completion of such real estate project
and represents payments made by customers to secure performance obligation of the Company under
the contract enforceable by customers. Such consideration is received and utilised for specific real estate
projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016.
Consequently, the Company has concluded that such contracts with customers do not involve any financing
element since the same arises for reasons explained above, which is other than for provision of finance to/
from the customer.
ii. Revenue from management fees
Facility charges, management charges, project management fees, rental, hire charges, sub lease and
maintenance income are recognized on accrual basis as per the terms and conditions of relevant agreements.
iii. Contract balances
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.
Trade receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the consideration is due).
Contract liability i.e. advance received from customers is the obligation to transfer goods or services to a
customer for which the Company has received consideration (or an amount of consideration is due) 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 or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the Company performs under the contract.
iv. Costs to obtain contract
The Company pays sales commission for contracts that they obtain to sell certain units of property and
capitalises the incremental costs of obtaining a contract. These costs are recognised in statement of profit
and loss in the period that is consistent with the transfer of the property to the customer. Capitalised costs to
obtain such contracts are presented separately as a current asset (prepaid expenses) in the Balance Sheet.
Other income
i. Interest income is accounted on accrual basis on a time proportion basis.
ii. Dividends are recognised in the Statement of Profit and Loss only when the right to receive payment
is established, and it is probable that the economic benefits associated with the dividend will flow to the
Company and that the amount of the dividend can be measured reliably.
iii. The Company's share in profits/ losses from an LLP where the Company is a partner, is recognized as income/
loss in the statement of profit and loss as and when the right to receive its profit/ loss share is established by
the Company in accordance with the terms of contract between the Company and the partnership entity.
iv. Rental income receivable under operating leases (excluding variable rental income) is recognized in the income
statement on a straight-line basis over the term of the lease including lease income on fair value of refundable
security deposits. Rental income under operating leases having variable rental income is recognized as per
the terms of the contract.
J. Cost of Construction / Development:
Cost of Construction/Development (including cost of land, direct depreciation, borrowing cost and compensation
cost) incurred is charged to the statement of profit and loss proportionate to project area sold/performance
obligation is satisfied as explained in accounting policy for revenue from sale of real estate projects. Costs incurred
for projects which have not received Occupancy/Completion Certificate is carried over as construction work-in¬
progress. Costs incurred for projects which have received Occupancy/Completion Certificate is carried over as
Completed Properties.
K. Employee Benefits:
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
Short-term obligations
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.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee
benefit. The Company measures the expected cost of such absences as the additional amount that it expects to
pay as a result of the unused entitlement that has accumulated at the reporting date. The Company recognizes
expected cost of short-term employee benefit as an expense, when an employee renders the related service.
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 service are recognised as a liability at the present value of expected
future payments to be made in respect of services provided by employees upto the end of the reporting period
using the projected unit credit method. The benefit are discounted using the market yields at the end of the
reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a
result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit
and Loss.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated absences are provided for based
on the actuarial valuation using the projected unit credit method at the reporting date. Remeasurement gains/
losses are immediately taken to the PSL and are not deferred. The obligations are presented as current liabilities
in the balance sheet if the entity does not have a right to defer the settlement for at least twelve months after
the reporting date.
Post-employment obligations
The Company operates the following post-employment schemes:
1. Defined Contribution Plan:
The Company's contribution to provident fund is considered as defined contribution plan and is charged as
an expense based on the amount of contribution required to be made. The Company has no further payment
obligations once the contributions have been paid.
2. Defined Benefit Plan:
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets.
The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows with reference to market yields at the end of the reporting period on government bonds that have
terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the
Statement of Profit and Loss.
Remeasurement gains and loss arising from experience adjustments and changes in actuarial assumptions
are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included
in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet.
Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or
curtailment, and the date that the Company recognises related restructuring costs. Changes in the present
value of the defined benefit obligation resulting from plan amendments or curtailments are recognised
immediately in Statement of Profit and Loss as past service cost.
L. Share-based payments (Equity-settled transactions):
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using
an appropriate valuation model. Further details are given in Note 48.
That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity,
over the period in which the performance and/or service conditions are fulfilled in employee benefits expense.
The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Company's best estimate of the number of
equity instruments that will ultimately vest. The expense or credit in the statement of profit and loss for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period and is
recognised in employee benefits expense.
Service and non-market performance conditions are not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company's best
estimate of the number of equity instruments that will ultimately vest. Market performance conditions are
reflected within the grant date fair value. Any other conditions attached to an award, but without an associated
service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the
fair value of an award and lead to an immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or
service conditions have not been met. Where awards include a market or non-vesting condition, the transactions
are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all
other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date
fair value of the unmodified award, provided the original vesting terms of the award are met. An additional
expense, measured as at the date of modification, is recognised for any modification that increases the total fair
value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is
cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed
immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
M. Borrowing Cost:
Borrowing costs consist of interest and other costs. 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 upto the date of capitalisation of such asset, is 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 on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale
and includes the real estate properties developed by the Company.
Borrowing costs, pertaining to development of long term projects, are transferred to Construction work in
progress, as part of the cost of the projects till the time all the activities necessary to prepare these projects for
its intended use or sale are complete.
N. Cash and cash equivalents:
Cash and cash equivalents 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.
For the purpose of the Standalone Statement of Cash Flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above.
0. Earnings Per Share:
The Company reports basic and diluted earnings per share in accordance with Ind AS - 33 on 'Earnings per
Share'. Basic earnings per share is computed by dividing the net profit or loss for the year by the weighted
average number of Equity shares outstanding during the year. Diluted earnings per share is computed by dividing
the profit / (loss) 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 conversion of all dilutive potential equity shares. If potential equity shares converted
into equity shares increases the earnings per share, then they are treated as anti-dilutive.
P. Current and Deferred Taxes:
Current Tax:
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit
and Loss is recognised outside Statement of Profit and Loss (either in Other Comprehensive Income (OCI) or in
Equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly
in Equity.
Deferred Tax:
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill.
Deferred tax is also 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 tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
end of the reporting period and are expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent there is convincing evidence that sufficient taxable profit will be available against
which such deferred tax asset can be realised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions
are reversed when the probability of future taxable profits improves. Deferred tax liabilities are recognised for
taxable temporary differences.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset 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 tax and deferred tax are recognised in Statement of Profit and 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.
Q. Impairment:
1. Financial assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets
is impaired.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes
lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing
transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12
month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the
financial asset has increased significantly since initial recognition.
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs.
Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical
credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
ii. 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, or when annual impairment testing for an asset is required, 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. Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is
provided on the revised carrying amount of the asset over its remaining useful life.
R. Investment in subsidiaries (including Partnership firms and LLPs), Joint ventures and Associates:
Investment in equity instruments of subsidiaries, joint ventures and associates are stated at cost as per Ind AS
27 'Separate Financial Statements' and reviewed for impairment annually, or more frequently when there is
indication for impairment. Where an indication of impairment exists, the carrying amount of the investment is
assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries,
joint ventures and associates, the difference between net disposal proceeds and the carrying amounts are
recognised in the Statement of Profit and Loss.
S. Dividend
The Company recognises a liability to pay dividend to equity holders of the Company when the distribution is
authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a
distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly
in equity.
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