1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(i) Basis of preparation:
The financial statements of the Company have been prepared in accordance with the Indian
Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (“the Act”)
[Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the
Act. The financial statements have been prepared on the historical cost basis except for certain
financial assets and liabilities and land and building, which are measured at fair value.
Current Assets do not include elements which are not expected to be realised within 1 year and
Current Liabilities do not include items which are due after 1 year, the period of 1 year being
reckoned from the reporting date.
(ii) Fair value measurement
The Company's accounting policies and disclosures require the measurement of fair values for
financial assets and liabilities.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
• Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2- Valuation techniques for which the lowest level input that is significant to the fair
value measurement is directly or indirectly observable.
• Level 3- Valuation techniques for which the lowest level input that is significant to the fair
value measurement is unobservable.
(iii) Revenue Recognition:
Revenue is measured at the fair value of the consideration received or receivable. Revenue
comprises sale of rooms, food and beverages and allied services relating to hotel operations.
Revenue is recognized upon rendering of the service, provided pervasive evidence of an
arrangement exists, tariff / rates are fixed or are determinable and collectability is reasonably
certain. Revenue from rendering of services is net of Indirect taxes, returns and discounts.
Non-refundable deposits received under a time-share scheme are stated at fair value and
recognized as revenue over the tenure of the scheme.
Interest income is recognized on accrual basis on time proportion basis using effective interest
rate.
Dividend income is accounted when right to receive is established.
(iv) Property, Plant and Equipment:
Recognition and measurement:
Items of property, plant and equipment other than Land and Building are measured at cost less
accumulated depreciation and impairment, if any. Land and Building are revalued and are carried
as per revaluation model. The cost of property, plant and equipment includes purchase price,
including freight, duties, taxes and expenses incidental to acquisition and installation. If significant
parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment. Property,
plant and equipment are derecognized from financial statements, either on disposal or when no
economic benefits are expected from its use or disposal. The gain or losses arising from disposal
of property, plant and equipment are recognized in the Statement of Profit and Loss in the year of
occurrence.
Subsequent expenditures:
Subsequent expenditures related to an item of property, plant and equipment are added to its
carrying value only when it is probable that the future economic benefits from the asset will flow
to the Company and cost can be reliably measured. All other repair and maintenance costs are
recognized in the Statement of Profit and Loss during the year in which they are incurred.
Capital-Work-In-Progress
Capital work-in progress comprises outstanding advances paid to aquire fixed assets, and the cost
of fixed assets that are not ready for their intended use at the balance sheet date.
Depreciation:
Depreciation is provided on all property, plant and equipment on straight-line method in the
manner and useful life prescribed in Schedule II of the Companies Act, 2013. Depreciation on
additions/deletion is provided on pro-rata basis with reference to the date of addition/deletion as
the case may be.
Depreciation on revaluation amount of building is provided against Revaluation Reserve.
Company has adopted cost model for all class of items of Property Plant and Equipment except
for Land and Building, for which company has adopted Revaluation Model.
(v) Impairment of Non-Financial Assets:
The Company assesses at each Balance Sheet date whether there is any indication that an asset
may be impaired. If any such indication exists, the Company estimates the recoverable amount of
the asset. The recoverable amount is the higher of an asset's or cash generating unit's (CGU) fair
value less costs of disposal and its value in use. Value in use is the present value of estimated
future cash flows expected to arise from the continuing use of an asset and from its disposal at
the end of its useful life. If such recoverable amount of the asset or cash generating unit is less
than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction
is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the
Balance Sheet date there is any indication that any impairment loss recognized for an asset in
prior years may no longer exist or may have decreased, the recoverable amount is reassessed
and such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the
extent the amount was previously charged to the Statement of Profit and Loss.
(vi) Assets taken on Lease:
Operating Lease
A Lease in which a significant portion of the risks and rewards of ownership are not transferred to
the Company is classified as operating lease. Payments made under operating lease are charged
to the Statement of Profit and Loss on a straight-line basis over the period of the lease unless the
payments are structured to increase in line with the expected general inflation to compensate for
the lessor’s expected inflationary cost increases.
Lease deposits given are financial instruments (financial assets) and need to be measured at
fair value on initial recognition. The difference between the fair value and the value of deposits
is considered as prepaid rental expenses and recognized over the lease term on a straight line
basis. Unwinding of discount is treated as interest income for deposit given and is accrued as per
the effective interest rate method.
(vii) Financial Instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. Financial assets and financial liabilities are
recognized when the Company becomes a party to the contractual provisions of the instruments.
Financial Assets
Initial recognition and measurement
The Company recognizes financial assets when it becomes a party to the contractual provisions of
the instrument. All financial assets are recognized initially at fair value plus transaction costs that
are directly attributable to the acquisition of the financial asset.
Subsequent measurement
For the purpose of subsequent measurement, the financial assets are classified as under:
i) Financial assets at amortised cost
A financial asset is measured at the amortised cost, if both the following conditions are met:
• The asset is held within a business model whose objective is to hold assets for
collecting contractual cash flows, and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised
cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking
into account any discount or premium and fees or costs that are an integral part of the EIR.
Interest income from these financial assets is included in other income using the EIR in
the Statement of Profit and Loss. The losses arising from impairment are recognized in the
Statement of Profit and Loss.
ii) Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI, if both of the following criteria are met:
• These assets are held within a business model whose objective is achieved both by
collecting contractual cash flows and selling the financial assets; and
• Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
Fair value movements are recognised in the other comprehensive income (OCI), except for
the recognition of impairment gains or losses, interest income and foreign exchange gains or
losses which are recognised in profit and loss. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI is reclassified from equity to Profit or
Loss and recognised in other income/(loss).
iii) Financial assets at fair value through profit or loss (FVTPL)
Financial assets that do not meet the criteria for amortized cost or FVTOCI are measured
at fair value through profit or loss. A gain or loss on a debt investment that is subsequently
measured at fair value through profit or loss and is recognized in profit or loss and presented
net in the Statement of Profit and Loss within other income in the period in which it arises.
iv) Equity instruments
All equity instruments are measured at fair value. Equity instruments which are for trading
are classified as FVTPL. All other equity instruments are measured at fair value through
other comprehensive income (FVTOCI). The classification is made on initial recognition and
is irrevocable.
Where the Company's management has elected to present fair value gains and losses on
equity instruments in other comprehensive income, there is no subsequent reclassification of
fair value gains and losses to profit or loss. Dividends from such investments are recognized
in profit and loss when the Company’s right to receive payments is established.
Equity instruments included within the FVTPL category are measured at fair value with all
changes recognized in the Statement of Profit and Loss.
Impairment of financial assets
The Company applies ‘simplified approach’ for recognition of impairment loss on financial
assets for loans, deposits and trade receivables.
The application of simplified approach does not require the company to track changes in
credit risk. Rather, it recognizes impairment loss allowance based on lifetime Expected Credit
Loss at each reporting date, right from its initial recognition.
De-recognition
A financial asset is derecognized when:
• the rights to receive cash flows from the assets have expired or
• the Company has transferred substantially all the risk and rewards of the asset, or
• the Company has neither transferred nor retained substantially all the risk and rewards
of the asset, but has transferred control of the asset.
Financial Liabilities
• Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction cost.
• Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective
interest rate method. For trade and other payables maturing within operating cycle, the
carrying amounts approximate the fair value due to short maturity of these instruments.
• Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently
measured at amortised cost using Effective Interest Rate (EIR) method. Gain and
losses are recognized in the Statement of Profit and Loss when the liabilities are
derecognized.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and transaction costs. The EIR amortization is included as finance costs in
the Statement of Profit and Loss.
• Derecognition
The Company derecognizes financial liabilities when, and only when, the Company’s
obligations are discharged, cancelled or have expired. When an existing financial
liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying amounts is recognized in the
Statement of Profit and Loss.
• Offseting financial instruments
Financial assets and financial liabilities are offset and the net amount is reflected in
the balance sheet when there is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a net basis, to realize the assets and
settle the liabilities simultaneously.
(viii) Inventories:
Stock of food and beverages and stores and operating supplies are carried at the lower of cost
(computed on a Weighted Average basis) or net realisable value. Cost includes the fair value of
consideration paid including duties and taxes (other than those refundable), inward freight, and
other expenditure directly attributable to the purchase. Trade discounts and rebates are deducted
in determining the cost of purchase.
(ix) Taxes:
The tax expense comprises current and deferred tax. Tax is recognized in the Statement of Profit
and Loss except to the extent that it relates to items recognized directly in equity or in OCI.
i. Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss
for the year and any adjustment to the tax payable or receivable in respect of previous years.
It is measured using tax rates enacted or substantially enacted at the reporting date.
Current tax assets and current tax liabilities are offset when there is a legally enforceable
right to set off the recognized amounts and there is an intention to settle the asset and the
liability on a net basis.
ii. Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets
and liabilities for financial reporting purpose and the amount used for taxation purposes.
Deferred tax liabilities are generally recognized for all taxable temporary differences.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible
temporary differences to the extent that it is probable that future taxable profits will be
available against which those deductible temporary differences can be utilised. The carrying
amount of deferred tax asset is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realized, based on tax rates that have
been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable
right to set off assets against liabilities representing current tax and where the deferred tax
assets and the deferred tax liabilities relate to taxes on income levied by the same governing
taxation laws.
(x) Employee benefits:
Short term employee benefits:
The undiscounted amount of short term employee benefits expected to be paid in exchange for
the services rendered by employees are recognized as an expense during the period when the
employees render the services.
Defined contribution plans:
The Company's contribution to Provident Fund, Pension, Superannuation and Employees State
Insurance Contribution are considered as defined contribution plans, as the Company does not
carry any further obligations apart from the contribution made to the respective fund/scheme and
are charged as an expense based on the amount of contribution required to be made.
Defined benefit plans:
The liability recognized in the balance sheet in respect of defined benefit plans is the present
value of the defined benefit obligation at the end of the reporting period. The defined benefits
obligation is calculated annually by actuaries using the projected unit credit method.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Remeasurement gain and losses arising from experience adjustments, changes in actuarial
assumptions are recognized in the period in which they occur, directly in other comprehensive
income (OCI). They are included in retained earnings in the statement of change in equity and in
the balance sheet.
(xi) Borrowing Costs:
Borrowing costs attributable to the acquisition or construction of qualifying assets are captialised
as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use.
All other borrowing costs are recognized as expense in the period in which these are incurred.
(xii) Cash and Cash Equivalents:
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand, demand
deposit and short-term deposits with an original maturity of three months or less, which are subject
to an insignificant risk of changes in value.
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