NOTE 2 :Statement on Significant Accounting Policies
The material accounting policies applied by the company in the preparation of its financial statements are
listed below. Such accounting policies have been applied consistently to all the periods presented in these
financial statements, unless otherwise indicated.
1. Statement of compliance
These financial statements have been prepared in accordance with the Indian Accounting Standards
(referred to as "Ind AS") as prescribed under Section 133 of the Companies Act, 2013 read with Companies
(Indian Accounting Standards) Rules as amended from time to time.
2. Basis of Presentation :
These financial statements have been prepared in Indian Rupee (Rs.) which is the functional currency of the
Company.
The financial statements have been prepared under the historical cost convention with the exception of
certain assets and liabilities that are required to be carried at fair values by Ind AS and inventories at Cost or
NRV whichever is lower. Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in orderly transaction between market participants at the measurement date.
3. Use of Estimates :
In preparation of the financial statements, the Company makes judgments, estimates and assumptions
about the carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and the associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
Significant judgments and estimates relating to the carrying values of assets and liabilities include useful
lives of property, plant and equipment and intangible assets, impairment of property, plant and
equipment, intangible assets and investments, provision for employee benefits and other provisions,
recoverability of deferred tax assets, commitments and contingencies.
4. 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. The specific recognition criteria described below must also
be met before revenue is recognized.
i) Recognition of revenue from real estate projects
Revenue is recognized upon transfer of control of units to customers, in an amount that reflects the
consideration the Company expects to receive in exchange for those units. The Company shall determine
the performance obligations associated with the contract with customers at contract inception and also
determine whether they satisfy the performance obligation over time or at a point in time. In case of
residential units, the company satisfies the performance obligation and recognizes revenue at a point in
time i.e., upon handover of the residential units.
ii) Recognition of revenue from Infrastructure projects
Revenue is recognized upon satisfaction of stipulated milestones specified in the contract with customers.
The amount of revenue recognized reflects the consideration expected to be received in exchange of
satisfaction of performance obligations. The company determines the performance obligations
associated with the contract at the beginning and decides whether they are satisfied over time or at a
specific point in time. For turnkey projects, revenue is recognized at a specific point in time, which is the
satisfaction of stipulated milestones specified in the contract with customers.
iii) Dividend income
Dividend income is accounted in the period in which the right to receive the same is established.
iv) Interest income
Interest income, including income arising from other financial instruments, is recognized using the
effective interest rate method on time proportionate basis.
v) Rental Income
Rental income is accounted for on accrual basis except in cases where ultimate collection is considered
doubtful. Income earned through rental of company's properties invoiced for fixed monthly charges or
time proportionate basis.
5. Property, Plant and Equipment :
All the items of Property, Plant and Equipment are carried at its cost less any accumulated depreciation and any
accumulated impairment losses under Cost Model. The cost of an item of property, plant and equipment
comprises:
(a) Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade
discounts and rebates.
(b) Any costs directly attributable to bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management.
(c) The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is
located, the obligation for which a company incurs, either when the item is acquired or as a consequence
of having used the item during a particular period for purposes other than to produce inventories during
that period.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total
cost of the item depreciated separately. However, significant part(s) of an item of PPE having same useful
life and depreciation method are grouped together in determining the depreciation charge.
Costs of the day-to-day servicing described as for the 'repairs and maintenance' are recognized in the
statement of profit and loss in the period in which the same are incurred.
Subsequent cost of replacing parts significant in relation to the total cost of an item of property, plant and
equipment are recognized in the carrying amount of the item, if it is probable that future economic
benefits associated with the item will flow to the company; and the cost of the item can be measured
reliably. The carrying amount of those parts that are replaced is de-recognized in accordance with the de¬
recognition policy mentioned below.
When major inspection is performed, its cost is recognized in the carrying amount of the item of property,
plant and equipment as a replacement if it is probable that future economic benefits associated with the
item will flow to the company; and the cost of the item can be measured reliably. Any remaining carrying
amount of the cost of the previous inspection (as distinct from physical parts) is de-recognized.
An item of Property, plant or equipment is de-recognized upon disposal or when no future economic
benefits are expected from the continued use of assets. Any gain or loss arising on such de-recognition of
an item of property plant and equipment is recognized in Profit and Loss.
Depreciation on property, plant and equipment, except freehold land, is provided as per cost model on
written down value over the estimated useful lives of the asset as follows:
Building : 60 Years
Plant and Machinery : 15 years
Furniture and Fixtures : 10 years
Computers : 3 years
Office equipment : 5 years
Electrical Installation : 10 Years
Lab Equipment : 10 Years
Based on technical evaluation, the management believes that the useful lives given above best represents
the period over which the management expects to use the asset. Hence the useful lives of the assets are
same as prescribed under Part C of schedule II of Companies Act, 2013.
The estimated useful life of the assets is reviewed at the end of each financial year. The residual value of
Property, plant and equipment considered as 5% of the original cost of the asset. Depreciation on the
assets added / disposed of during the year is provided on pro-rata basis with reference to the month of
addition / disposal.
Transition to Ind/4S
The company elected to continue with the carrying value as per cost model for all of its property, plant and
equipment as recognized in the financial statements as at the date of transition to Ind ASs, measured as
per the previous GAAP.
6. Depreciation:
Depreciation on Tangible Assets is provided on WDV basis in the manner and at the rates prescribed in Schedule II to
the companies Act, 2013.The carrying cost of assets is reviewed at each balance sheet date to determine if there is
any indication of impairment thereof based on external/ internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds their recoverable amounts, which represent the greater of the net selling
price of assets and their 'value in use'. The estimated future cash flows are discounted to their present value at
appropriate rate arrived at after considering the prevailing interest rate and weighted average cost of capital.
7. Impairment (Other than Financial Assets):
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and
intangible assets to determine whether there is any indication that the carrying value of those assets may not be
recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in
order to determine the extent of impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Company estimates the
recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell 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. An impairment loss is recognized in the statement of profit and loss as and when
the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the
carrying value that would have been determined had no impairment loss been recognized for the asset (or cash
generating unit) in prior years. The remaining reversal of an impairment loss is recognized in the statement of profit
and loss immediately.
8. 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 instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value
measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to
the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately
recognized in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial instrument and of
allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly
discounts future cash receipts or payments through the expected life of the financial instrument, or where
appropriate, a shorter period.
(a) Financial assets:
Cash and Bank Balances:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short
term deposits which have maturities of less than one year from the date of such deposits.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal
and usage.
Financial assets at amortized cost:
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business
model whose objective is to hold these 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 payments of principal and
interest on the principal amount outstanding.
Financial assets at Fair Value:
Financial assets are measured at fair value through other comprehensive income if these financial assets are
held within a business model whose objective is to hold these assets in order to collect contractual cash flows or
to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which
are not held for trading has made an irrevocable election to presentation other comprehensive income
subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on
an instrument by instrument basis at the time of initial recognition of such equity investments.
Financial asset not measured at amortized cost or at fair value through other comprehensive income is carried
at fair value through the statement of profit and loss.
Impairment of financial assets
Loss allowance for expected credit losses is recognized for financial assets measured at amortized cost and fair
value through other comprehensive income. The Company recognizes life time expected credit losses for all
trade receivables that do not constitute a financing transaction.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance
equal to twelve months expected credit losses is recognized. Loss allowance equal to the lifetime expected
credit losses is recognized if the credit risk on the financial instruments has significantly increased since initial
recognition.
De-recognition of financial assets
The Company de-recognizes a financial asset only when the contractual rights to the cash flows from the asset
expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to
another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues
to control the transferred asset, the Company recognizes its retained interest in the assets and an associated
liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the
proceeds received.
(b) Financial Liabilities and Equity Instruments:
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of
the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently
measured at amortized cost, using the effective interest rate method where the time value of money is
significant. Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are
subsequently measured at amortized cost using the effective interest rate method. Any difference between the
proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the
term of the borrowings in the statement of profit and loss.
De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company's obligations are
discharged, cancelled or they expire.
Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After initial
recognition of financial assets and financial liabilities, 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
company's senior management determines change in the business model as a result of external or internal
changes which are significant to the company's operations.
Such changes are evident to external parties. 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 group reclassifies financial
assets, it applies the reclassification prospectively from the reclassification date which is the first day of the
immediately next reporting period following the change in business model. The company does not restate any
previously recognized gains, losses (including impairment gains or losses) or interest.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a
currently enforceable legal 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.
9. Inventories :
Inventories are stated at the lower of cost and net realizable value. Costs comprise direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their
present location and condition. Net realizable value is the price at which the inventories can be realized in the
normal course of business after allowing for the cost of conversion from their existing state to a finished condition
and for the cost of marketing, selling and distribution.
10. Cash and cash equivalents :
Cash and cash equivalents comprise cash at bank and in hand and short-term investments with a balance maturity
of three months or less.
11. Income Taxes :
A. Current Tax
Provision for current income tax is made in accordance with the Income Tax Act, 1961. As book profit is in excess
of profit as per income tax act, provision for taxation has been created for taking into consideration MAT
provisions as laid down in Section 115 JB of the Income Tax Act,1961 and MAT credit receivable has been
disclosed under current assets.
B. Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences. In contrast, deferred tax
assets are only recognized to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilized. Current and deferred tax are recognized as an expense or
income in the statement of profit and loss, except when they relate to items credited or debited either in other
comprehensive income or directly in equity, in which case the tax is also recognized in other comprehensive
income or directly in equity.
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