2 Summary of Material Accounting Policies
2.1 Statement of Compliance
The Standalone Financial Statements of the Company
have been prepared and presented in accordance with
the Generally Accepted Accounting Principles ("GAAP").
GAAP comprises of Indian Accounting Standards ("Ind
AS") as specified in Section 133 of the Act read together
with Rule 3 of the Companies (Indian Accounting
Standards) Rules, 2015 ("the Rules") and the relevant
amendment rules issued thereafter, pronouncements of
regulatory bodies applicable to the Company and other
provisions of the Act.
2.2 Basis of Preparation and Presentation
(a) Accounting Conventions and Assumptions
These Standalone Financial Statements have been
prepared and presented under the historical cost
convention, on the accrual basis of accounting
except for certain financial assets and financial
liabilities that are measured at fair value at the end
of each reporting period, as stated in the accounting
policies set out below.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the asset or liability if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date.
Going Concern
The directors have, at the time of approving the
Standalone Financial Statements, a reasonable
expectation that the Company has adequate
resources to continue in operational existence for
the foreseeable future. Thus, they continue to adopt
the going concern basis of accounting in preparing
the Standalone Financial Statements.
(b) Basis of Presentation
The Standalone Balance sheet, the Standalone
Statement of Profit and Loss, and the Standalone
Statement of Changes in Equity, are presented in the
format prescribed under Division II of Schedule III of the
Act, as amended from time to time read along with the
Guidance Note on Division II - Ind AS Schedule III to the
Act issued by the Institute of Chartered Accountants of
India (ICAI) ["the Guidance Note"], for Companies that
are required to comply with Ind AS. The Standalone
Statement of Cash Flows has been presented as per
the requirements of Ind AS 7 - Statement of Cash Flows.
The Standalone Financial Statements are presented
in Indian rupees (INR), the functional currency of
the Company. Items included in the Standalone
Financial Statements of the Company are recorded
using the currency of the primary economic
environment in which the Company operates (the
'functional currency').
Transactions and balances with values below the
rounding off norm adopted by the Company have
been reflected as "0" in the relevant notes in these
Standalone Financial Statements.
(c) Current / Non-Current Classification
All assets and liabilities have been classified as current
or non-current in accordance with the operating
cycle criteria set out in Ind AS - 1 Presentation of
Financial Statements and Schedule III to the Act
Any asset or liability is classified as current if it
satisfies any of the following conditions:
i. the asset / liability is expected to be realized /
settled in the Company's normal operating cycle;
ii. the asset is intended for sale or consumption;
iii. the asset / liability is held primarily for the
purpose of trading;
iv. the asset / liability is expected to be realized
/ settled within twelve months after the
reporting period;
v. the asset is cash or cash equivalent unless it
is restricted from being exchanged or used to
settle a liability for at least twelve months after
the reporting date;
vi. in the case of a liability, the Company does not
have an unconditional right to defer settlement
of the liability for at least twelve months after
the reporting date.
Any asset/liability not conforming to the above
is classified as non-current.
Based on the nature of products / activities of
the Company and the normal time between
acquisition of assets and their realization in
cash or cash equivalents, the Company has
determined its operating cycle as 12 months for
the purpose of classification of its assets and
liabilities as current and non-current.
(d) Subsequent events
Events after the reporting period that provide
evidence of conditions that existed as at end of
reporting period are treated as adjusting events and
the amounts recognised in the financial statements
are adjusted appropriately to reflect the impact of
adjusting events.
Amounts recognised in financial statements are not
adjusted for Non-adjusting events that are indicative
of conditions that arose after the end of reporting
period. Material non adjusting events which could
be reasonably be expected to influence decisions
of primary users of financial statements are
disclosed in the Notes.
2.3 Property, plant and equipment
Measurement at recognition
An item of property, plant and equipment (PPE) that
qualifies as an asset is measured on initial recognition at
cost. Following initial recognition, items of property, plant
and equipment are carried at its cost less accumulated
depreciation and accumulated impairment losses.
The Company identifies and determines cost of each part
of an item of property, plant and equipment separately,
if the part has a cost which is significant to the total
cost of that item of property, plant and equipment and
has useful life that is materially different from that of the
remaining item.
The cost of an item of property, plant and equipment
comprises of its purchase price including import duties and
other non-refundable purchase taxes or levies, 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.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.
Costs in nature of repairs and maintenance are recognized
in the Statement of Profit and Loss as and when incurred.
Capital work in progress, Capital advances &
Capital Creditors:
Cost of assets not ready for intended use, as on
the Balance Sheet date, is shown as capital work in
progress. Advances given towards acquisition of PPE
and intangible assets outstanding at each Balance Sheet
date are disclosed as Capital Advance under Other Non¬
current assets. Payables which are outstanding towards
acquisition of PPE & intangible assets at each Balance
Sheet date are disclosed as Capital Creditors under Other
Financial Liabilities (Current).
Depreciation
Depreciable amount for assets is the cost of an asset,
or other amount substituted for cost, less its estimated
residual value.
Depreciation on tangible PPE has been provided on the
straight-line method pro-rata to the period of use of the
assets. The management estimates the useful life of
certain asset categories as follows, which is as per the
useful life prescribed in Schedule II to the Act.
The management believes that these estimated useful
lives are realistic and reflect fair approximation of the
period over which the assets are likely to be used.
Depreciation on additions/ (disposals) is provided on a
pro-rata basis i.e. from / (upto) the date on which asset is
ready for use/ (disposed of).
The useful lives, residual values of each part of an item
of property, plant and equipment and the depreciation
methods are reviewed at the end of each financial
year. If any of these expectations differ from previous
estimates, such change is accounted for as a change in
an accounting estimate.
Derecognition
The carrying amount of an item of property, plant and
equipment is derecognised on disposal or when no
future economic benefits are expected from its use or
disposal. The gain or loss arising from the derecognition
of an item of property, plant and equipment is measured
as the difference between the net disposal proceeds
and the carrying amount of the item and is recognized
in the Statement of Profit and Loss when the item
is derecognised.
2.4 Intangible assets
Intangible assets with finite useful lives are carried at cost
less accumulated amortisation and impairment losses, if
any. The cost of an intangible asset comprises its purchase
price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing
authorities), and any directly attributable expenditure on
making the asset ready for its intended use and net of any
trade discounts and rebates.
The intangible assets are amortised over their respective
individual estimated useful lives on a straight-line basis,
commencing from the date the asset is available to the
Company for its use. The amortisation period is reviewed
at the end of each financial year and the amortisation
method is revised to reflect the changed pattern.
Subsequent expenditure
Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when
incurred unless it is probable that such expenditure will
enable the asset to generate future economic benefits in
excess of its originally assessed standards of performance
and such expenditure can be measured and attributed
to the asset reliably, in which case such expenditure is
added to the cost of the asset.
Intangible assets under development
Cost of intangible assets not ready for intended use, as
on the Balance Sheet date, is shown as Intangible assets
under development.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of
an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the
asset, are recognised in the Statement of Profit and Loss
when the asset is derecognised.
Useful lives of intangible assets
Estimated useful lives of the intangible assets
are as follows:
- Computer Software - 3 Years
2.5 Impairment of PPE & Intangible assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of
the impairment loss (if any). When it is not possible to
estimate the recoverable amount of an individual asset,
the Company estimates the recoverable amount of the
cash-generating unit to which the asset belongs. When
a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated
to the smallest Company of cash-generating units for
which a reasonable and consistent allocation basis
can be identified.
Recoverable amount is the higher of fair value less costs
of disposal and value in use. 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 for which the estimates
of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit)
is reduced to its recoverable amount. An impairment
loss is recognized immediately in the Statement of
Profit and Loss.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognized
for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognized immediately
in the Statement of profit and loss.
2.6 Leases
(a) At inception of a Lease Contract, the Company
assesses whether a Lease Contract is, or contains, a
lease. A Lease Contract is, or contains, a lease if the
Lease 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 Lease
Contract conveys the right to control the use of an
identified asset, the Company assesses whether:
- the Lease Contract involves the use of an
identified asset - this may be specified explicitly
or implicitly, and should be physically distinct or
represent substantially all of the capacity of a
physically distinct asset. If the supplier has a
substantive substitution right, then the asset is
not identified;
- the Company has the right to obtain substantially
all of the economic benefits from use of the
asset throughout the period of use; and
- the Company has the right to direct the use
of the asset. The Company has this right
when it has the decision-making rights that
are most relevant to changing how and for
what purpose the asset is used. In rare cases
where the decision about how and for what
purpose the asset is used is predetermined, the
Company has the right to direct the use of the
asset if either:
a) the Company has the right to
operate the asset; or
b) the Company designed the asset in a
way that predetermines how and for what
purpose it will be used.
At inception or on reassessment of a Lease Contract
that contains a lease component, the Company
allocates the consideration in the Lease Contract to
each lease component on the basis of their relative
stand-alone prices. However, for the leases of land
and buildings in which it is a lessee, the Company has
elected not to separate non-lease components and
account for the lease and non-lease components as
a single lease component.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be
readily determined, the Company's incremental
borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the
lease liability comprise the following:
- fixed payments, including in-substance
fixed payments;
- variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date;
- amounts expected to be payable under a
residual value guarantee; and
- the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.
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
costs incurred and an estimate of costs 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
using the straight-line method from the
commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the
lease term. The estimated useful lives of right-of-use
assets are determined on the same basis as those of
property and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the
lease liability.
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 cashflows 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 these leases. Lease
liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the
Company changes its assessment if whether it
will exercise an 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.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in
Statement of profit and loss if the carrying amount
of the right-of-use asset has been reduced to zero.
The same is considered as adjustments to right-of-
use assets and lease liabilities.
(b) Short-term leases 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 12 months. The Company
recognises the lease payments associated with
these leases as an expense over the lease term.
2.7 Inventories
Inventory of the Company constitutes land and its related
development activities, which are valued at Cost or Net
Realizable Value whichever is lower. Cost comprises of all
expenses incurred for the purpose of acquisition of land,
development of the land and other related direct expenses.
2.8 Cash & Cash Equivalents
(a) Cash and cash equivalents (for purposes of Cash
Flow Statement)
Cash comprises cash on hand and demand
deposits with banks. Cash equivalents are short¬
term balances (with an original maturity of three
months or less from the date of acquisition), highly
liquid investments that are readily convertible into
known amounts of cash and which are subject to
insignificant risk of changes in value.
(b) Cash flow statement
Cash flows are reported using the indirect method,
whereby profit / (loss) before tax is adjusted for the
effects of transactions of non-cash nature and any
deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating,
investing and financing activities of the Company are
segregated based on the available information.
2.9 Revenue recognition
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Company
and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received
or receivable, taking into account contractually defined
terms of payment and excluding taxes or duties collected
on behalf of the government.
Nature of Arrangements - Joint Development
Agreements
Projects are executed through Joint Development
Agreements (JDAs), not being jointly controlled operations,
wherein the Company provides land to the developer and
the developer undertakes to develop properties on such
land. Since the Company is the landowner, revenue from
such real estate projects is recognized at a point in time
when the Company completes its performance obligation.
Revenue Sharing Arrangements
Under JDAs, the Company contributes land or
development rights to a developer , who undertakes to
develop the property on such land. In return, the Company
is entitled to receive either:
a. revenue proceeds from the sale of property
constructed on a specified area (Area
sharing model) or
b. a specified percentage of the revenue proceeds from
the sale of each property (Revenue sharing model)
Timing of Revenue Recognition
Revenue is recognised at a point in time when Company
completes its performace obligation - This generally
coincides with the occurrence of either of the following
events, whichever is earlier:
a. Transfer of legal title of the residential unit to
the customer; or
b. Transfer of physical possession of the residential
unit to the customer.
Apart from above, the Company sells the land directly
to developer or sells the development right to the
developer against a fixed consideration. In such cases,
the Company recognizes revenue based upon the terms
of the agreement.
Accounting for Security Deposit and Advance from
Customers
The amount received from the developer as interest-
free security deposit has been recorded at cost, without
discounting to present value as there is no financing
component. Further, the amount received by the
developer from the customers, to the extent attributable to
the Company's share in the project, shall first be adjusted
towards the refundable security deposit provided by the
developer, and accounted as Advance from customer
until revenue recognition criteria under Ind AS 115 are not
met. Accordingly, the security deposit and the Advance
from customers has been classified under Non-current
liabilities in the financial statements.
W.r.t cases, where the Company, based on its assessment
believes that the revenue will be recognised within the
next twelve months based on its accounting policy stated
above, shall reclassify the security deposits and/or the
corresponding Advance from Customer from "Non¬
current" to "current" liabilities in the Financial Statements
as at the year end
Upon completion of the performance obligation of the
Company, the amount disclosed as part of advance from
customer shall be recognised as Revenue in the statement
of profit or loss to the extent the revenue recognition
criteria under Ind AS 115 are met.
2.10 Other Income
(a) Interest Income
Interest income from a financial asset is recognized
when it is probable that the economic benefit will
flow to the Company and the amount of income can
be measured reliably. Interest income is accrued on a
time basis, by reference to the principal outstanding
and the effective interest rate applicable, which is
the rate that exactly discounts estimated future
cash receipts through the expected life of the
financial assets to the asset's net carrying amount
on initial recognition.
(b) Dividend Income
Dividend income is recognized when the right to
receive the income is established.
2.11 Employee Benefits
(a) Short term employee benefits
Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised
for the amount expected to be paid e.g., under short¬
term cash bonus, if the Company has a present legal
or constructive obligation to pay this amount as a
result of past service provided by the employee, and
the amount of obligation can be estimated reliably.
(b) Defined contribution plans
Provident fund / Employee State Insurance
The Company makes specified contributions towards
Employees' Provident Fund and Employee State
Insurance maintained by the Central Government
and the Company's contribution are recognized as
an expense in the period in which the services are
rendered by the employees.
(c) Defined benefit plans
The Company operates a gratuity plan wherein every
employee is entitled to the benefit equivalent to 15
days basic salary last drawn for each completed year
of service as per the payment of Gratuity Act, 1972.
A defined benefit plan is a post-employment
benefit plan other than a defined contribution
plan. The Company's net obligation in respect of
defined benefit plans is calculated by estimating
the amount of future benefit that employees
have earned in the current and prior periods and
discounting that amount.
The calculation of defined benefit obligation is
performed annually by a qualified actuary using the
projected unit credit method.
Re-measurements of the net defined benefit liability,
which comprise actuarial gains and losses are
recognised in OCI. The Company determines the net
interest expense (income) on the net defined benefit
liability for the period by applying the discount rate
used to measure the defined benefit obligation
at the beginning of the annual period to the then-
net defined benefit liability, taking into account any
changes in the net defined benefit liability during
the period as a result of contributions and benefit
payments. Net interest expense and other expenses
related to defined benefit plans are recognised in the
statement of profit and loss.
When the benefits of a plan are changed or when a
plan is curtailed, the resulting change in benefit that
relates to past service ('past service cost' or 'past
service gain') or the gain or loss on curtailment is
recognised immediately in Statement of Profit and
Loss. The Company recognises gains and losses on
the settlement of a defined benefit plan when the
settlement occurs.
The obligation is measured at the present value of
estimated future cash flows. The discount rates
used for determining the present value of obligation
under defined benefit plans, are based on the market
yields on Government securities as at the Balance
Sheet date, having maturity periods approximating
to the terms of related obligations.
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