2. SIGNIFICANT ACCOUNTING POLICIES
I. Basis of preparation and presentation of financial statements
A. Basis of preparation of financial statements
These financial statements have been prepared and presented on a going concern basis under the historical cost
convention (except those revalued), on the accrual basis of accounting and comply with the Indian Accounting Standards
prescribed by Section 133 of the Companies Act, 2013 ('the Act') read with Rule 7 of the Companies (Accounts) Rules,
2014, other pronouncements of the Institute of Chartered Accountants of India, guidelines issued by Securities and
exchange board of India (SEBI) and the relevant provisions of the Companies Act, 2013/Companies Act, 1956, as
adopted consistently by the Company.
B. Statement of compliance with Ind-As
The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian
Accounting Standards) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (“the Act”)
and other relevant provisions of the Act and other accounting principles generally accepted in India.
C. Basis of Measurement
The financial statements have been prepared on a historical cost convention and on an accrual basis except for the
defined benefit and other long-term employee benefits obligations and Investments measured at fair value through profit
and loss (FVTPL)/ fair value through other comprehensive income (FVTOCI) that have been measured at fair value as
required by relevant Ind-AS.
D. Use of Estimates and Judgments.
The preparation of financial statements in conformity with Ind-AS requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected. In particular, information
about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the
most significant effect on the amounts recognized in the standalone financial statements is included in the following
notes:
I. Income Taxes: The Company's tax jurisdiction is India. Significant management judgment is required to determine
the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future
taxable profits together with future tax planning strategies.
ii. Provisions and Contingencies: The assessments undertaken in recognizing the provisions and contingencies
have been made in accordance with Ind-AS 37, 'Provisions, Contingent Liabilities and Assets'. The evaluation of
the likelihood of the contingent events has required best judgment by management regarding the probability of
exposure to potential loss. Should circumstances change following unforeseeable developments, this likelihood
could after.
iii. Post-Employment benefit plan: Employee benefits obligations are measured on the basis of actuarial assumptions
which include mortality and withdrawal rates as well as assumptions concerning future developments in discount
rates, the rate of salary increase and the inflation rate. The company considers that the assumptions used to
measure its obligations are appropriate and documented. However, any changes in these assumptions may have
a material impact on the resulting calculations.
iv. Other estimates: The preparation of standalone financial statements involves estimates and assumptions that
affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of standalone financial
statements and the reported amount of revenues and expenses for the reporting period. Specifically, the Company
estimates the probability of collection of accounts receivable by analyzing historical payment patterns etc.
E. Functional and Presentation Currency
Items included in the standalone financial statements of the company are measured using Indian Rupee (Rs.) which
is the functional currency of the company and the currency of the primary economic environment in which the entity
operates. The presentation currency of the company is also Indian Rupee (Rs.) (Rounded off to Rs. lacs up to two
decimals)
I. Summary of significant accounting policies
A. Financial Instruments
I. Financial Assets
Financial assets comprise investments in equity and debt instruments, mutual funds, security deposits, inter-corporate
deposits, trade receivables, Cash and cash equivalents and other eligible assets.
Initial recognition and measurement
All financial assets are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the
financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of
the financial assets. Purchase or sale of financial assets that require delivery of assets within a time frame established
by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that
the Company commits to purchase or sell the asset.
Subsequent Measurement
Financial Assets measured at amortized cost: Financial assets held within a business model whose objective is to hold
financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payment of principal and interest (SPPI) on principal amount outstanding
are measured at amortized cost using effective interest rate (EIR) method. They are presented as current assets, except
for those maturing later than 12 months after the reporting date which are presented as non-current assets. These
financial assets are subsequently carried at amortized cost using the effective interest method, less any impairment
loss. The EIR amortization is recognized as finance income in the Statement of Profit and Loss. Assets at amortized
cost are represented by inter corporate deposits, trade receivables, security deposits, cash and cash equivalents and
other eligible current and noncurrent financial assets.
Ý Financial assets at fair value through other comprehensive income (FVTOCI): Financial assets held within a business
model whose objective is achieved by both collecting the contractual cash flows and selling the financial assets and
the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payment towards
principal and interest (SPPI) on principal outstanding are subsequently measured at FVTOCI. Fair value movements in
financial assets at FVTOCI are recognized in other comprehensive income. However, the Company recognizes interest
income, impairment losses & reversals and foreign exchange gain loss in statement of profit and loss. On de-recognition
of the asset, cumulative gain or loss previously recognized in OCI is reclassified from equity to profit and loss. Interest
earned is recognized under the expected interest rate (EIR) model.
Ý Equity instruments other than investment in associates: The management determines at the initial recognition of
investments in Equity instruments whether to measure it at FVTPL or FVTOCI. However, the equity instruments held for
trading are always classified at fair value through Profit or Loss (FVTPL). The classification of investments at FVTOCI
is irrevocable. Fair value changes on equity instruments at FVTOCI, excluding dividends, are recognized in other
comprehensive income (OCI).
Ý Financial assets at fair value through Profit or Loss (FVTPL): Financial assets are measured at FVTPL if it does not
meet the criteria for classification as measured at amortized cost or at fair value through other comprehensive income.
Fair value changes are recognized in Statement of Profit and Loss.
De-recognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the financial assets expire or
the financial asset is transferred and the transfer qualified for de-recognition. On de-recognition of financial asset in
its entirety the difference between the carrying amount (measured at the date of de-recognition) and the consideration
received (including any new asset obtained less any new liability assumed) shall be recognized in Statement of Profit
and Loss.
Impairment of financial assets
Trade receivables, contract assets, receivables under Ind-AS 109, investments in debt instruments that are carried at
amortized cost, investments in debt instruments that are carried at FVTOCI are tested for impairment based on the
expected credit losses (ECL) for the respective financial asset. ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/expense in the Statement of Profit and Loss. The approach followed by the
company for recognizing the impairment loss is given below:
Ý Trade receivables
An impairment analysis is performed at each reporting date. The expected credit losses over lifetime of the asset are
estimated by adopting the simplified approach using a provision matrix which is based on historical loss rates reflecting
current condition and forecasts of future economic conditions. The company estimatesthe following provision matrix at
the reporting date:
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly,
12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL
is sued. If in subsequent period, credit quality of the instrument improves such that there is no longer a significant
increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on
12-month ECL.
ii. Financial liabilities
Financial liabilities comprise trade payables and other eligible liabilities.
Initial recognition and measurement
Financial liabilities are initially recognized at fair value. Any transaction costs that are attributable to the acquisition of
the financial liabilities (except financial liabilities at fair value through profit or loss) are deducted from the fair value of
financial liabilities.
Subsequent measurement
Financial liabilities at amortized cost: The Company has classified the following under amortized cost:
a) Trade payables
b) Other eligible financial liabilities
Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition
minus the cumulative amortization using the effective interest rate (EIR) method of any difference between that initial
amount and the maturity amount.
Financial liabilities at fair value through profit or loss (FVTPL): Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit
or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term.
Financial liabilities designated upon initial recognition at fair value through profits or losses are designated as such at
the initial date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes in own credit risks are recognized in OCI. These gains/ losses are not
subsequently transferred to P&L. However, the company may transfer the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognized in the statement of profit or loss. The company has not designated
any financial liability as at fair value through profit and loss.
De-recognition of financial liabilities
A financial liability shall be de-recognized when, and only when, it is extinguished i.e. when the obligation specified in
the contract is discharged or cancelled or expires.
iii. Off-setting of financial assets and financial liabilities:
Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when,
the Company has a legal enforceable right to offset the recognized amounts and intends either to settle on a net basis
or to realize the assets and settle the liability simultaneously.
iv. Reclassification of financial assets
The Company determines the classification of financial assets and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are categorized as equity instruments at FVTOCI and financial
assets or financial liabilities that are specifically designated at FVTPL. For financial assets, which are debt instruments,
a reclassification is made only if there is a change in the business model for managing those assets. Changes to the
business model are expected to be infrequent. The management determines change in the business model as a result
of external or internal changes which are significant to the Company's operations. A change in the business model
occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the
company reclassifies financial assets, it applies the reclassification
B. Inventories
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realizable
value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods
comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the
latter being allocated on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred
in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on
the basis of first-in first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts.
C. Property, P lant and Equipment
Property, Plant and Equipment is carried at cost less accumulated depreciation and accumulated impairment losses.
The cost comprises its purchase price, including import duties and other non-refundable taxes or levies and any directly
attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are
deducted in arriving at the purchase price. Cost of self-constructed asset include the cost of material, direct labour and
ran p other costs; directly attributable to bringingthe asset to its working condition for its intended use, and the costs of
dismantling add removing the items and restoring the site on which they are located.Perchased softwane that isintegral
to the functionality of the related equipment is capitalized as part of the equipment.
Gains andlosses on diseosal nf ao item of ProperTy, Plant and Equ ipme nt are determined by comped ng the p roeeeds
from dirposal wit hi the carfyirg amount of Property, Plaot and Equipment anO are recognized not within“Oteer income/
Other expenses” in the Statement of Profit and Loss.
The coot cat property plant and equipment not ready Sor intended use Oefore such date are dierlosed under capital work-
in-progress.
Subsequent costs
The cost of replacing part of an item of Property, Plant and equipment is recognized in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be
measured reliably. The carrying amount ofthe replaced part is de-recognized. The uosts oO the day-to-day servicing of
property, plant and equipment are recoanizedin the Statement on Profit aud Loss.
Depoeciation
Depreciation on property, plant & equipment is provided on pro-rata to the period of use, on the Straight Line Method
rates; worked out based on tOe useSul lide aad in the maneer prescrined in tee Schedule II tothe Companiea Act, 2013i
The estimated useful lives of assets for the current and comparative period of significant items of property, plant and
eqaipmeet are as folfowsi
The company follsws component approach as envisaged in Schedule II to the Companies Aaf, 2013. Ttie approach
involves idantificatioe od components of teeasset whoee cost is significant to the total cost oU the; asset and has useful
life different from the usedul iife of tUe remaining assets and in respuct of such identifies components, useful life is
determined separately nrom the usefrl liSe ofthe maie asset.
Assets acquired under finance laase and leasehold improvements are amortized over the lower of estimated usefol life
and lease tern.
Depreciation on additions is provided on a pro-rata basis rrom the month of acquisitionenstallatfon. Deprecietion on
sale/deduutlon from property, plant & equipment is provided for up to the date of sale/adjustment, as the case may be.
Modification or extension to rn existing. asset, which is of capital nature and which becomes an integral part thereof is
depreciated prospectively over the remaining useful life of that asset.
The depreciation method, useful lives and residual value are reviewed at each of the reporting date.
D. Intangible assets
Intangible asset are carried at cost of acquisition less amortization. The cost of an item of intangible assets comprises
its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of
bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving
at the purchase price.
Amortization of Intangible assets
Intangible assets are amortized on straight line method on pro-rata basis over a period of three years.
E. Investment property
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 the cost of replacing parts and borrowing costs for long-term construction projects if the recognition
criteria are met.
When significant parts of the investment property are required to be replaced at intervals, the Company depreciates
them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or
loss as incurred.
The Company depreciates building component of investment property over 60 years from the date of original purchase
as per the requirement of Schedule II of the Companies Act, 2013. The leasehold investment properties are amortized
over the term of the lease.
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 performed by an accredited
external independent valuer.
Investment properties are de-recognized either when they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
F. Investments in subsidiaries and associates
Investment in subsidiaries and associates is recognized at cost less impairment. Dividend income from subsidiaries and
associates is recognized when its right to receive the dividend is established.
G. Foreign currency transactions and balances
Transactions in foreign currencies are initially recognized in the standalone financial statements using exchange rates
prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated
to the relevant functional currency at the exchange rates prevailing at the reporting date. Non- monetary assets and
liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency
at the exchange rate prevailing on the date that the fair value was determined. Non- monetary assets and liabilities
denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the
date of transaction. Foreign currency differences arising on translation are recognized in the Statement of Profit and
Loss for determination of net profit or loss during the period.
H. Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalized as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in which
they are incurred. To the extent the Company borrows funds generally and uses them for the purpose of obtaining
a qualifying asset, the Company determines the amount of borrowings costs eligible for capitalization by applying
a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined based on the
weighted average of borrowing costs applicable to the borrowings of the Company which are outstanding during the
period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing
costs that the Company capitalizes during a period does not exceed the amount of borrowing costs incurred during that
period.
I. Leases
Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased asset are
classified as operating leases. Operating lease charges are recognized as an expense in the Statement of Profit and
Loss on a straight-line basis over the lease term.
J. Deposits provided to lessor
The company is generally required to pay refundable security deposits in order to obtain property leases from various
lessors. Such security deposits are financial assets and are recorded at fair value on initial recognition. The difference
between the initial fair value and the refundable amount of the deposit is recognized as a lease prepayment. The
initial fair value is estimated as the present value of the refundable amount of security deposit, discounted using the
market interest rates for similar instruments. “Subsequent to initial recognition, the security deposit is measured at
amortized cost using the effective interest method with the carrying amount increased over the lease period up to the
refundable amount. The amount of increase in the carrying amount of deposit is recognized as interest income. The
lease prepayment is amortized on a straight line basis over the lease term as lease rental expense.
K. Revenue
Revenue from the sale of Flat/Plots is measured at the fair value of the consideration received or receivable, net
of returns, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of
ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and
possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and
the amount of revenue can be measured reliably. Interest income is recognized as it accrues in Statement of Profit and
Loss using the effective interest method.
Profit on trading of mutual fund units is recognized only on redemption of units.
L. Impairment of non-financial assets
The carrying amount of the Company's non-financial assets, other than deferred tax assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risk specific to the asset.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest
group of assets that generates cash inflows from the continuing use that are largely independent of cash inflows of other
assets or group of assets (the cash generating unit).
An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its estimated
recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss. Impairment losses are
recognized in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated
to the units and then to reduce the carrying amount of the other assets in the unit or group of units on a pro rata basis.
Reversal of impairment loss
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized
directly in other comprehensive income and presented within equity.
M. Earnings per share (EPS)
Basic earnings per share are computed using the weighted average number of equity shares outstanding during the
period.
Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity
shares considered for deriving basic EPS and also weighted average number of equity shares that could have been
issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of
the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently
for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for bonus
shares, as appropriate.
N. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash on hand, cash at banks, demand deposits, short-term
deposits with balance maturity of three months or less as at the balance sheet date, which are subject to an insignificant
risk of changes in value.
For the purpose of Statement of Cash Flows, cash and cash equivalents comprise cash on hand, cash at banks,
demand deposits, short-term deposits with balance maturity of three months or less from the balance sheet date
and other short term investments, that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
A. Employee Benefits
i. Short Term Benefits
Employee benefits (other than post employment benefits) which fall due wholly within twelve months after the end of the
year in which the employees render the related service are recognized at the amount expected to be paid for it.
ii. Post Employment Benefits
The Company participates in various employee benefit plans. Post-employment benefits are classified as either defined
contribution plans or defined benefit plans. Under a defined contribution plan, the Company's only obligation is to pay a
fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee
benefits. The related actuarial risks fall on the employee. The expenditure for defined contribution plans is recognized
as expense during the period when the employee provides service. Under a defined benefit plan, it is the Company's
obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company.
The present value of the defined benefit obligations is calculated using the projected unit credit method.
The Company has the following post-employment benefit plans:
Gratuity
In accordance with the Payment of Gratuity Act, 1972, the Company provides for a lump sum payment to eligible
employees, at retirement or termination of employment based on the last drawn salary and years of employment with
the Company. The Company's obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for
based on actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized in other
comprehensive income and are not reclassified to profit or loss in subsequent periods.
I. Other long term employee benefits
Leave Encashment
The employees of the Company are entitled to leave encashment. The employees can carry forward a portion of the
unutilized accumulating leaves and utilize it in future periods or receive cash at retirement or termination of employment.
The Company records an obligation for leave encashment in the period in which the employee renders the services that
increases this entitlement. The Company measures the expected cost of leave encashment as the additional amount
that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting
period. The Company recognizes accumulated leave encashment based on actuarial valuation. Non-accumulating
leave encashment are recognized in the period in which the absences occur. The Company recognizes actuarial gains
and losses immediately in the statement of profit and loss.
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