2. Material Accounting Policies
2A.1 Basis of Preparation
(i) Statement of Compliance
These financial statements are the separate financial
statements of the Company prepared in accordance
with Indian Accounting Standards (‘Ind AS') notified
under Section 133 of the Companies Act, 2013, read
together with the Companies (Indian Accounting
Standards) Rules, 2015.
For all periods up to and including the year ended 31st
March, 2024, the Company had prepared its financial
statements in accordance with Accounting Standards
notified under the Section 133 of the Companies Act,
2013, read together with Rule 7 of the Companies
(Accounts) Rules, 2021 (‘Previous GAAP'). Detailed
explanation on how the transition from previous
GAAP to Ind AS has affected the Company's Balance
Sheet, financial performance and cash flows is given
under Note 2C.
(ii) Basis of measurement
The Standalone Financial Statements have been
prepared on a historical cost convention on accrual
basis, except for the following material items that
have been measured at fair value as required by
relevant Ind AS:¬
- Certain financial assets and liabilities measured
at fair value (refer accounting policy on financial
instruments)
- Net defined benefit obligation.
(iii) Current versus non-current classification
The Company, as required by Ind AS 1, presents assets
and liabilities in the Balance Sheet based on current/
non-current classification. Deferred tax assets and
liabilities are classified as non-current assets and
liabilities. Based on the nature of business conducted,
the Company has ascertained its operating cycle
from Commencement of the Project till Completion
of Project for the purpose of current and non-current
classification of assets and liabilities. Assets and
liabilities have been classified into current and non¬
current based on their respective operating cycle.
(iv) Presentation currency and rounding off
All amounts disclosed in financial statements are
reported in millions of Indian Rupees and have
been rounded off to the nearest millions up to two
decimals, except per share data and unless otherwise
stated. Transactions and balances with values below
the rounding off, have been reflected as “0” in the
relevant notes to these financial statements
(v) Going Concern
The Company has prepared the financial statements
on the basis that it will continue to operate as a
going concern.
(vi) Use of Estimates
The preparation of the financial information requires
management to make judgements, 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 those estimates.
Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimates
are revised and in any future periods affected.
(vii) Critical Accounting estimates
a) Useful lives of property, plant and equipment
(Property, plant and equipment, and investment
property)
The Company reviews the useful life of
property, plant and equipment at the end of
each reporting period. This reassessment may
result in changes in depreciation expense in
future periods.
b) Defined benefit obligations
The present value of the defined benefit
obligation is based on actuarial valuation using
the projected unit credit method. An actuarial
valuation involves making various assumptions
that may differ from actual developments in
the future. These include the determination of
the discount rate, future salary increase and
mortality rates. Due to the complexities involved
in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to
changes in these assumptions. All assumptions
are reviewed at each reporting date.
c) Leases
The Company evaluates if an arrangement qualifies
to be a lease as per the requirements of Ind AS
116. Identification of a lease requires significant
judgement. The Company uses significant judgement
in assessing the lease term (including anticipated
renewals) and the applicable discount rate.
The Company determines the lease term as the non¬
cancellable period of a lease, together with both
periods converted by an option to extend the lease
if the Company is reasonably certain to exercise that
option; and periods covered by on option to terminate
the lease if the Company is reasonably certain not
to exercise that option. In assessing whether the
Company is reasonably certain to exercise an option
to extend a lease, or not to exercise an option to
terminate a lease, it considers all relevant facts and
circumstances that create an economic Incentive for
the Company to exercise the option to extend the
lease, or not to exercise the option to terminate the
lease. The Company reviews the lease term if there
is a change in the non-cancellable period of a lease.
The discount rate is generally based on the
incremental borrowing rate.
2.2 Property, plant and equipment (PPE)
(i) Recognition and initial measurement
Property, plant and equipment are stated at costless
accumulated depreciation and impairment losses,
if any.
Cost comprises the purchase price and any
attributable/allocable cost of bringing the asset
to its working condition for its intended use. The
cost also includes direct cost and other related
incidental expenses.
(ii) Subsequent measurement (depreciation and
useful lives)
Depreciation is provided from the date the assets are
ready to use, on written down value method as per
the useful life of the assets as prescribed under Part
C of Schedule II of the Companies Act, 2013.
Depreciation method, useful life and residual value
are reviewed periodically.
The carrying amount of PPE is reviewed periodically
for impairment based on internal/external factors.
An impairment loss is recognized wherever the
carrying amount of assets exceeds its recoverable
amount. The recoverable amount is the greater of
the asset's net selling price and value in use.
(iii) De-recognition
PPE are derecognized 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 the Statement of Profit and
Loss in the period of de-recognition.
2.3 Revenue Recognition
The Company earns revenue through the sale of under
construction residential/commercial as well as completed
units which are recognized in the financials as inventories.
Revenue is recognized as follows:
(a) Revenue from real estate projects
The Company recognizes revenue, on execution of
agreement and when control of the goods or services
are transferred to the customer, at an amount that
reflects the consideration (i.e. the transaction price)
to which the Company is expected to be entitled in
exchange for those goods or services excluding any
amount received on behalf of third party (such as
indirect taxes). An asset created by the Company's
performance does not have an alternate use and
as per the terms of the contract, the Company has
an enforceable right to payment for performance
completed till date. Hence the Company transfers
control of a good or service over time and, therefore,
satisfies a performance obligation and recognises
revenue over time. The Company recognises revenue
at the transaction price which is determined on the
basis of the sale agreement entered into with the
customer. The Company recognises revenue for
performance obligation satisfied over time only
if it can reasonably measure its progress towards
complete satisfaction of the performance obligation.
The Company uses cost-based input method for
measuring progress for performance obligation
satisfied over time. Under this method, the Company
recognises revenue in proportion to the actual
project cost incurred as against the total estimated
project cost.
In a Joint development arrangement (JDA) wherein
the landowner (s) (including Unit holders of existing
premises) provides development rights and in lieu of
such rights the Company transfers certain percentage
of constructed area, the revenue is recognized over
time using cost-based input method of percentage
of completion. Project costs include fair value of
such development rights received and this fair value
is accounted for on the date of handover to the
Company by the landowner(s).
The management reviews and revises its measure
of progress periodically and consider changes in
estimates and accordingly, the effect of such changes
in estimates is recognized prospectively in the period
in which such changes are determined.
The management reviews and revises its measure of
progress periodically and are considered as change in
estimates and accordingly, the effect of such changes
in estimates is recognized prospectively in the period
in which such changes are determined.
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs by transferring
goods or services to a customer before the
customer pays consideration or before payment is
due, a contract asset is recognized for the earned
consideration that is conditional.
A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received consideration (or an amount
of consideration is due) from the customer. If a
customer pays consideration before the Company
transfers goods or services to the customer, a
contract liability is recognized when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognized as revenue when
the Company performs under the contract.
A receivable represents the Company's right to an
amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment of
the consideration is due). Refer to accounting policies
of financial assets in note 1.2.6 Financial instruments
- initial recognition and subsequent measurement.
(b) Sales of Services
(c) Other income
Other incomes are accounted on accrual basis.
2.4 Leases
The determination of whether a contract is (or contains)
a lease arrangement is based on the substance of the
contract at the inception of the arrangement. The contract
is, or contains, a lease if the contract provide lessee, the
right to control the use of an identified asset for a period
of time in exchange for consideration. A lessee does not
have the right to use an identified asset if, at inception of
the contract, a lessor has a substantive right to substitute
the asset throughout the period of use.
The Company accounts for the lease arrangement
as follows:
(i) Where the Company is the lessee
The Company applies single recognition and
measurement approach for all leases, except for
short term leases and leases of low value assets. On
the commencement of the lease, the Company, in its
Balance Sheet, recognises the right of use asset at
cost and lease liability at present value of the non¬
cancellable lease payments to be made over the
lease term.
Subsequently, the right of use asset are measured
at cost less accumulated depreciation and any
accumulated impairment loss. Lease liabilities are
measured at amortised cost using the effective
interest method. The lease payment made, are
apportioned between the finance charge and the
reduction of lease liability, and are recognised as
expense in the Statement of Profit and Loss.
Lease deposits given are a financial asset and are
measured at amortised cost under Ind AS 109 since
it satisfies Solely Payment of Principal and Interest
(SPPI) condition. The difference between the
present value and the nominal value of deposit is
considered as prepaid rent and recognised over the
non-cancellable lease term. Unwinding of discount
is treated as finance income and recognised in the
Statement of Profit and Loss.
2.5 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. EIR is the rate that exactly
discounts the estimated future cash receipts or payments
over the expected life of the financial instruments or a
shorter period, where appropriate, to the net carrying
amount of the financial asset or liability.
(i) Financial assets
(a) Initial measurement
Financial assets are recognised when the
Company becomes a party to the contractual
provisions of the instrument. Financial assets
are initially measured at fair value Trade
receivables are initially recorded at transaction
value. Transaction costs that are directly
attributable to the acquisition or issue of
financial assets (other than financial assets at
fair value through profit or loss) are added to or
deducted from the fair value measured on initial
recognition of financial asset.
(b) Subsequent measurement
i. Financial assets at amortised cost
Financial assets are measured at the
amortised cost, if both of the following
criteria are met:
a. These assets are held within a
business model whose objective is to
hold assets for collecting contractual
cash flows; and
b. Contractual terms of the asset
give rise on specified dates to cash
flows that are SPPI on the principal
amount outstanding.
After initial measurement, such financial
assets are subsequently measured at
amortised cost using the EIR method.
The EIR amortisation is included in other
income in the Statement of Profit and
Loss. The losses arising from impairment
are recognised 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:
a. These assets are held within a
business model whose objective
is achieved both by collecting
contractual cash flows and selling the
financial assets; and
b. Contractual terms of the asset
give rise on specified dates to cash
flows that are SPPI on the principal
amount outstanding.
Fair value movements are recognised in
the Other Comprehensive Income (OCI).
On derecognition of the asset, cumulative
gain or loss previously recognised in
OCI is reclassified from the equity to the
Statement of Profit and Loss
iii. Financial assets at fair value through
profit or loss (FVTPL)
Any financial assets, which do not meet the
criteria for categorisation as at amortised
cost or as FVTOCI, are classified as FVTPL.
Gain or losses are recognised in the
Statement of Profit and Loss.
iv. Equity instruments
Equity instruments which are held for
trading and contingent consideration
recognised by an acquirer in a business
combination are classified as FVTPL, and
measured at fair value with all changes
recognised in the Statement of Profit
and Loss.
(c) De-recognition
The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire or it transfers
the financial asset and the transfer qualifies for
de-recognition.
When the Company has transferred its rights to
receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates
if and to what extent it has retained the risks
and rewards of ownership. When it has neither
transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred
control of the asset, the Company continues to
recognise the transferred asset to the extent
of the Company's continuing involvement. In
that case, the Company also recognises an
associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
Company has retained.
(d) Impairment of financial assets
The Company follows ‘simplified approach' for
recognition of impairment loss allowance on:
i. Trade receivables
The application of simplified approach
does not require the Company to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on
lifetime Expected Credit Loss (ECL)
at each reporting date, right from its
initial recognition.
For recognition of impairment loss on
other financial assets and risk exposure,
the Company determines 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 used. If, in a
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 Company
reverts to recognising impairment loss
allowance based on 12-month ECL.
Lifetime ECL are the expected credit
losses resulting from all possible default
events over the expected life of a financial
instrument. The 12-month ECL is a portion
of the lifetime ECL which results from
default events that are possible within 12
months after the reporting date.
ECL is the difference between all
contractual cash flows that are due to the
Company in accordance with the contract
and all the cash flows that the entity
expects to receive (i.e. all cash shortfalls),
discounted at the original EIR.
(ii) Financial liabilities
(a) Initial measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings,
payables, or as derivatives designated as
hedging instruments in an effective hedge,
as appropriate.
All financial liabilities are recognised initially
at fair value and, in the case of loans and
borrowings and payables, net of directly
attributable transaction costs. The Company's
financial liabilities include trade and other
payables, loans and borrowings and financial
guarantee contracts.
(b) Loans and borrowings
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in the Statement of Profit
and Loss when the liabilities are derecognised
as well as through the EIR amortisation process.
Amortised cost is calculated by taking into
account any discount or premium on acquisition
and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance
cost in the Statement of Profit and Loss.
(c) De-recognition
A financial liability (or a part of a financial liability)
is derecognised from the Company's financial
statement when the obligation specified in
the contract is discharged or cancelled or
expires. 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 recognised
in the Statement of Profit and Loss.
(d) Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in the
financial statement if there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on
a net basis, to realise the assets and settle the
liabilities simultaneously.
(iii) Fair value measurement
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. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most
advantageous market for the asset or liability.
The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability, assuming
that market participants act in their economic
best interest.
A fair value measurement of a non-financial asset
takes into account a market participant's ability to
generate economic benefits by using the asset in its
highest and best use or by selling it to another market
participant that would use the asset in its highest and
best use.
The Company uses 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:
i. Level 1 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities.
ii. Level 2 - Valuation techniques for which
the lowest level input that is significant to
the fair value measurement is directly or
indirectly observable.
iii. Level 3 - Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable. For assets
and liabilities that are recognised in the financial
statements on a recurring basis, the Company
determines whether transfers have occurred
between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input
that is significant to the fair value measurement
as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on
the basis of the nature, characteristics and risks of
the asset or liability and the level of the fair value
hierarchy as explained above.
2.6 Cash and cash equivalents
Cash and cash equivalent in the financial statement
comprise cash at banks and on hand, demand deposit and
short-term deposits, 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.
2.7 Income taxes
(i) Current income tax
Current income tax assets and liabilities are measured
at the amount expected to be refunded from or paid
to the taxation authorities using the tax rates and tax
laws that are in force at the reporting date.
Current income tax relating to items recognised
outside the Statement of Profit and Loss is
recognised outside the Statement of Profit and Loss
(either in Other Comprehensive Income or in equity).
Current tax items are recognised in correlation to
the underlying transaction either in OCI or directly
in equity.
The Company offsets current tax assets and current
tax liabilities where it has a legally enforceable right
to set off the recognised amounts and where it
intends either to settle on a net basis, or to realise
the assets and settle the liabilities simultaneously.
Management periodically evaluates positions
taken in the tax returns with respect to situations
in which applicable tax regulations are subject
to interpretation and establishes provisions
where appropriate.
(ii) Deferred tax
Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
(a) When the deferred tax liability arises from the
initial recognition of goodwill or an asset or
liability in a transaction that is not a business
combination and, at the time of the transaction,
affects neither the accounting profit nor taxable
profit or loss.
(b) In respect of taxable temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, when
the timing of the reversal of the temporary
differences can be controlled and it is probable
that the temporary differences will not reverse
in the foreseeable future.
Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences
and the carry forward of unused tax credits and
unused tax losses can be utilised.
The carrying amount of deferred tax assets 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 deferred tax asset to be utilised.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the relevant entity intends
to settle its current tax assets and liabilities on a
net basis.
Deferred tax relating to items recognised outside the
Statement of Profit and Loss is recognised outside
the Statement of Profit and Loss. Such deferred tax
items are recognised in correlation to the underlying
transaction either in Other Comprehensive Income or
directly in equity. Deferred tax assets and liabilities
are measured using substantively enacted tax rates
expected to apply to taxable income in the years in
which the temporary differences are expected to be
received or settled.
2.8 Inventories
(i) Construction work in progress
The construction work in progress is valued at lower
of cost or net realisable value. Cost includes cost
of land, materials and consumables, development
rights, rates and taxes, construction costs, borrowing
costs, other direct expenditure, allocated overheads
and other incidental expenses.
(ii) Finished Properties
Finished stock of completed projects and stock
in trade of units is valued at lower of cost or net
realisable value.
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