2 Significant accounting policies
2.1 Basis of Preparation
The standalone financial statements ('financial statements') of the Company have been prepared in
accordance with the Indian Accounting Standards (Ind AS) notified under Companies (Indian
Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of
Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the
standalone financial statements
The standalone financial statements have been prepared on a going concern basis in accordance with
accounting principles generally accepted in India. Further, the standalone financial statements have
been prepared on historical cost basis except for certain financial assets and financial liabilities which
are measured at fair values as explained in relevant accounting policies.
The financial statements are presented in Rupees, except when otherwise indicated.
2.2 Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification. An asset is treated as current when it is:
> Expected to be realised or intended to be sold or consumed in normal operating cycle,
> Held primarily for the purpose of trading,
> Expected to be realised within twelve months after the reporting period, or
> Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
> It is expected to be settled in normal operating cycle.
> It is held primarily for the purpose of trading.
> It is due to be settled within twelve months after the reporting period, or
> There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in
cash and cash equivalents.
2.3 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires the management to
make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities
(including contingent liabilities), income and expenses and accompanying disclosures at the reporting
date. The Management believes that the estimates used in preparation of the financial statements are
prudent and reasonable. However, uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of the asset or liability affected in
future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting
estimates and assumptions are recognised prospectively i.e. recognised in the period in which the
estimate is revised and future periods affected.
Significant accounting judgements, estimates and assumptions used by management are as below:
i) Useful lives Property Plant and Equipment.
ii) Computation of percentage completion for projects in progress, project cost, revenue and saleable
area estimates.
iii) Fair value measurements.
2.4 Fair value measurements
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. Normally at initial recognition, the
transaction price is the best evidence of fair value.
However, when the company determines that transaction price does not represent the fair value, it uses
inter-alia valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximising the use of relevant observable inputs and minimising
the use of unobservable inputs.
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy. This categorisation is based on the lowest
level input that is significant to the fair value measurement as a whole:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
Financial assets and financial liabilities that are recognised at fair value on a recurring basis, the
company determines whether transfers have occurred between levels in the hierarchy by re- assessing
categorisation at the end of each reporting period.
2.5 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. The Company
recognises revenue when the amount of revenue can be reliably measured and it is reasonably certain
that the ultimate collection will be made and no significant uncertainty exist regarding the amount of
considerations. The revenue recognition policy is as under:
i) Revenue from real estate development:
Revenue is recognised upon transfer of control of real estate units to customers, in an amount that
reflects the consideration the Company expects to receive in exchange for those real estate units. The
Company determins 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. the company recognise revenue over time if one of the following criteria is met:
a) The customer simultaneously receives and consumes the benefits provided by the Company's
performance as the Company performs; or
b) The Company's performance creates or enhances an asset that the customer controls as the asset
is created or enhanced; or
c) The Company's performance does not create an asset with an alternative use to the Company and
the entity has an enforceable right to payment for performance completed to date.
The company fulfill above third (c) criteria of performance obligation over time in the case of revenue
from real estate units and accordingly recognises revenue over time.
ii) Share in profit/ loss of partnership firms
Share of profit / loss from partnership firm is recognised based on the financial information provided
and confirmed by the respective firms.
iii) Dividend Income
Revenue is recognised when the shareholders' or unit holders' right to receive payment is established,
which is generally when shareholders approve the dividend.
iv) Interest Income
Interest income is recognised using the effective interest rate method.
v) Other Income
Other Income is accounted on accrual basis except where the receipt of income is uncertain.
2.6 Property, plant and equipment
Property, plant and equipment are stated at their cost of acquisition on transition to Ind AS, the
Company had elected to measure all of its property, plant and equipment at the previous GAAP
carrying value (deemed cost).
Property, plant and equipment held for use in the construction or supply of goods or services, or for
administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and
accumulated impairment loss. Cost includes all expenses directly incidental to acquisition, bringing the
asset to the location and installation including site restoration up to the time when the asset is ready for
intended use. Such Costs also include Borrowing Cost if the recognition criteria are met.
The residual values, useful lives and method of depreciation of property, plant and equipment is
reviewed at each financial year end and adjusted prospectively.
Depreciation
Depreciation on Property, Plant & Equipment is provided on Straight Line Method based on estimated
useful life of the assets which is same as envisaged in schedule II of the Companies Act, 2013. The
residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at
each financial year end and adjusted prospectively, if appropriate
De-recognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss
2.7 Inventories
(i) Trading Stock:
Trading Stock represents Plots of land and Flats for resale. Trading stock are valued at lower of cost and
net realisable value. Cost includes cost of acquisition and other related cost on acquisition.
(ii) Work in progress:
Work in Progress (including land inventory) represents cost incurred in respect of unsold area of the real
estate development projects or cost incurred on projects where the revenue is yet to be recognised.
Work in Progress are valued at lower of cost and net realisable value. Cost includes cost of
land/development rights, materials, construction, services, borrowing costs and other overheads
relating to projects.
(iii) Finished Goods:
Finished Goods represents unsold units of completed projects. Finished Goods are valued at lower of
cost and net realisable value. Cost is determined by including cost of land/development rights,
materials, services and other related overheads.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs
of completion and estimated costs of necessary to make the sale.
2.8 Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset. Financial assets are classified, at initial recognition, as financial assets measured at fair
value or as financial assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in following broad categories:-
(i) Financial assets at amortized cost
(ii) Financial Assets at fair value through profit or loss
(iii) Financial Assets at fair value through other comprehensive income (OCI)
i) A financial asset that meets the following two conditions is measured at amortized cost:
Business Model Test: The objective of the company's business model is to hold the financial asset to
collect the contractual cash flows.
Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payment of principal and interest on the principal amount outstanding.
ii) All other financial assets are measured at fair value through profit and loss.
Where assets are measured at fair value through profit of loss, gains and losses are recognized in the
statement of profit and loss, or recognized in other comprehensive income.
Where assets are measured at fair value through other comprehensive income, gains and losses are
recognized in other comprehensive income.
iii) A financial asset that meets the following two conditions is measured at fair value through OCI:-
Business Model Test: The financial asset is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets.
Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payment of principal and interest on the principal amount outstanding.
All equity investments are measured at fair value in the balance sheet, with value changes recognized
in the statement of profit and loss, except for those equity investments for which the entity has elected
irrevocable option to present value changes in OCI.
Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets
carried at amortised cost. The impairment methodology applied depends on whether there has been a
significant increase in credit risk and if so, assess the need to provide for the same in the Statement of
Profit and Loss.
Derecognition of financial assets
A financial asset is derecognised only when Company has transferred the rights to receive cash flows
from the financial asset. Where the entity has transferred an asset, the Company evaluates whether it
has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the
financial asset is derecognised.
2.9 Financial Liabilities
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of
the instrument. Financial liabilities are initially measured at the amortised cost unless at initial
recognition, they are classified as fair value through profit and loss. In case of trade payables, they are
initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the
effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial
liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair
value recognised in the Statement of Profit and Loss.
Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged,
cancelled or expires.
2.10 Cash & Cash Equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short¬
term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral
part of the Company's cash management.
2.11 Employee benefits
Employee benefits include short term benefits like salaries and wages which are recognized as an
expense in the statement of Profit and Loss of the year in which the related service is rendered.
2.12 Segment reporting
The Company has only one reportable segment i.e. Real Estate Development Business on the basis of
nature of risks and returns and the internal organisation and management structure of the Company.
2.13 Earnings per share
"Basic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable
to equity shareholders and the weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares."
2.14 Borrowing Costs
Borrowing costs directly attributable to acquisition/ construction of qualifying assets (including real
estate projects) are capitalised until the time all substantial activities necessary to prepare the
qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use/ sale. All other borrowing costs not eligible
for inventorisation/ capitalisation are charged to statement of profit and loss.
2.15 Foreign Currency Transactions
All transactions in foreign currency are recorded on the basis of the exchange rate prevailing as on the
date of transaction. The difference, if any, on actual payment / realisation is recorded to the Statement
of Profit and Loss. Monetary assets and liabilities denominated in foreign currency are restated at rates
prevailing at the year-end. The net loss or gain arising out of such conversion is dealt with in the
Statement of Profit and Loss.
2.16 Income Taxes
Provision for tax is made for the current accounting period (reporting period) on the basis of the taxable
profits computed in accordance with the Income-tax Act, 1961 and the Income Computation and
Disclosure Standards prescribed therein.
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation
purposes.
A deferred tax liability is recognised based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end
of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be utilised. Deferred tax assets are
reviewed at each reporting date and reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off
the recognised amounts. Deferred tax assets and deferred tax liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets
and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
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