| 2 | Material accounting policy information
This note provides a list of the material accounting policy information adopted in the preparation of these standalone
financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Basis of preparation
The Company has prepared its standalone financial statements to comply in all material aspects with the provisions
of the Companies Act, 2013 ("the Act”) and rules framed thereunder. In accordance with the notification issued
by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified
under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Act.
The standalone financial statements have been prepared on a historical cost convention and accrual basis,
except for the certain financial assets and liabilities that are measured at fair value.
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.
The Company's normal operating cycle in respect of operations relating to under construction real estate
projects may vary from project to project depending upon the size and duration (from launch till occupation
certificate period) of the project, type of development, project complexities and related approvals. Operating
cycle for all completed projects and other business are based on 12 months period. Assets and liabilities have
been classified into current and non-current based on the operating cycle of respective businesses.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
These standalone financial statements are presented in Indian rupee ('), which is the functional currency of the
Company. All financial information is presented in Indian rupees.
b) Revenue recognition
(i) Revenue from real estate development/sale, maintenance services, construction and project
management services
Revenue from contracts with customers
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised
products (residential or commercial completed units) or services to customers in an amount that reflects
the consideration the Company expects to receive in exchange for those products or services. Revenue and
trade receivables are recorded at transaction price, which is the consideration, adjusted for discounts and
other credits, if any, as specified in the contract with customers.
The Company satisfies the performance obligation and recognizes revenue over time, if one of the following
criteria is met:
• The customer simultaneously receives and consumes the benefits provided by the Company's
performance as the Company performs; or
• The Company's performance creates or enhances an asset that the customer controls as the asset is
created or enhanced; or
• The Company's performance does not create an asset with an alternative use to the Company and an
entity has an enforceable right to payment for performance completed to date.
For performance obligations where any one of the above conditions are not met, revenue is recognized at
the point in time (completed contract basis) at which the performance obligation is satisfied.
In case, revenue is recognized over the time, it is being recognized from the financial year in which the
agreement to sell or any other binding documents containing salient terms of agreement to sell is executed.
In respect of 'over the period of time', the revenue is recognized based on the percentage-of-completion
method ('POC method') of accounting with cost of project incurred (input method) for the respective
projects determining the degree of completion of the performance obligation.
The period over which revenue is recognized is based on entity's right to payment for performance
completed. In determining whether an entity has right to payment, the entity shall consider whether it
would have an enforceable right to demand or retain payment for performance completed to date, if the
contract were to be terminated before completion for reasons other than entity's failure to perform as per
the terms of the contract.
The Company bills to customers for construction contracts as per agreed terms. The Company adjusts the
transaction price for the effects of the significant financing component included in the contract price in the
case of contracts involving the sale of property under development, where the Company offers deferred
payment schemes to its customers.
Revenue from construction services being cost plus contracts is recognised over time and is determined
with reference to the extent performance obligations have been satisfied. The amount of transaction price
allocated to the performance obligations satisfied represents the recoverable costs incurred during the
period plus the margin as agreed with the customer.
The revenue recognition from sales of residential and commercial units and construction services requires
forecasts to be made of total budgeted costs with the outcomes of underlying construction contracts, which
further require assessments and judgments to be made on changes in work scopes and other payments
to the extent they are probable and they are capable of being reliably measured. In case, where the total
project cost is estimated to exceed total revenues from the project, the loss is recognized immediately in
the statement of profit and loss.
Revenue recognized in excess of invoicing is classified as contract asset while invoicing in excess of revenue
recognized (billing in excess of contract revenue), deferred revenue i.e. where revenue is being recognized
post completion of the project and advance from customers are classified as contract liabilities.
(ii) Revenue from Joint Development Agreement (JDA)
For projects executed through joint development arrangements (JDA) not being jointly controlled
operations, wherein the landowner provides rights to develop the land and the Company undertakes to
develop properties on such land and in lieu of landowner providing land, whereas the Company agrees
to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. Basis
the terms and conditions of the JDA, the revenue from the development and transfer of constructed area/
revenue sharing arrangement and the corresponding land/ development rights received under JDA is
measured at either fair value of development rights or the fair value of the estimated construction service
rendered to the landowner and the same is accounted on launch of the project. The fair value is estimated
with reference to the terms of the JDA (whether revenue share or area share) and the related cost that
is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction
is considered to be the representative fair value of the revenue transaction and land so obtained. The
management is of the view that the fair value method and estimates are reflective of the current market
condition. In case of JDA, wherein the Company agrees to transfer certain percentage of constructed area,
revenue from construction services is recognised over time, on the basis of the inputs to the satisfaction
of a performance obligation relative to the total expected inputs to the satisfaction of that performance
obligation.
In case of joint development arrangements being jointly controlled operations, wherein the landowner
and the Company jointly control the arrangement to develop the project and decisions about the relevant
activities require the unanimous consent of both the parties sharing control, are accounted in accordance
with Ind AS 111. Since both the parties have separate rights and obligation, the Company recognizes
revenue proportionately to the extent of its share in the transaction price for its performance obligation.
c) Cost of construction and development
Cost of construction and development, includes cost of land (cost of development rights/ land under agreements
to purchase) liaisoning costs, estimated internal development costs, external development charges, overheads,
construction costs and development/ construction materials, which is charged to the statement of profit and
loss based on the revenue recognized as explained in policy under revenue recognition, in consonance with the
concept of matching costs and revenue. Final adjustment is made on completion of the specific project.
"Costs to obtain contracts” such as brokerage fees paid for obtaining sales contracts, are recognized as assets
when incurred and amortized over the period of time or at the point in time depending upon recognition of
revenue from the corresponding property sale contract.
d) Income tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based
on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to
deductible temporary differences (in case of deferred tax assets) and taxable temporary differences (in case of
deferred tax liabilities).
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities in accordance with the Income-tax Act. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted, at the reporting date where the Company operates
and generates taxable income.
Deferred tax
Deferred income tax is provided using the balance sheet approach on deductible and taxable temporary
differences between the carrying amounts of assets and liabilities in the standalone financial statements and
the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are not
recognized for:
• temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss at the time of the
transaction;
• The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered. Unrecognized deferred tax assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and carry forward
unused tax credits only if it is probable that future taxable amounts will be available to utilize those temporary
differences and losses.
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 (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle
on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in statement of profit and loss, except to the extent that it relates to items
recognized in other comprehensive income (OCI) or directly in equity. In this case, the tax is also recognized in
OCI or directly in equity, respectively.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which
is likely to give future economic benefit in the form of availability of setoff against future income tax liability.
Accordingly, MAT is recognized as deferred tax assets in the balance sheet when the assets can be measured
reliably and it is probable that the future economic benefit associated with the asset will be realized.
e) Leases
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
of the consideration.
Company as a lessee
At the date of the commencement of the lease, the Company recognizes a right-of-use asset representing its right
to use the underlying asset for the lease term and a corresponding lease liability for all the lease arrangements in
which it is a lease, except for leases with a term of twelve months or less (short-term leases) and low value leases.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset
are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over
the non-cancellable period of the relevant lease in the Statement of Profit and Loss. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and
recognised over the non-cancellable period on the same basis as rental income.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from
the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the
Company's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect
a constant periodic rate of return on the net investment outstanding in respect of the lease.
Lease deposits received are financial instruments (financial liability) and are measured at fair value on initial
recognition. The difference between the fair value and the nominal value of deposits is considered as rent in
advance and recognized over the lease terms on straight line basis. Unwinding of discount is treated as interest
expense (finance cost) for deposit received and is accrued as per the EIR method.
f) Inventories
Inventories comprise of land and development rights, construction materials, work-in-progress, completed
unsold flats/units. These are valued at lower of the cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of
completion (wherever applicable) and estimated costs necessary to make the sale.
g) Financial instruments
(i) Classification
Financial assets, other than equity instruments, are subsequently measured at amortized cost, fair value
through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of
both:
(a) the entity's business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model
in which the investment is held. For investments in equity instruments, this will depend on whether the
Company has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those
assets changes.
(ii) Measurement
At initial recognition, the Company measures a financial asset other than trade receivables at its fair value, in
the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
Measurement of loan instruments
Subsequent measurement of debt instruments depends on the Company's business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into which
the Company classifies its debt instruments:
• Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortized cost. A gain or loss
on a debt investment that is subsequently measured at amortized cost and is not part of a hedging
relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income
from these financial assets is included in finance income using the effective interest rate method.
• Fair value through other comprehensive income (FVOCI): Assets that are held for collection of
contractual cash flows and for selling the financial assets, where the assets' cash flows represent
solely payments of principal and interest, are measured at fair value through other comprehensive
income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition
of impairment gains or losses, interest revenue and foreign exchange gains and losses which are
recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/
(losses). Interest income from these financial assets is included in other income using the effective
interest rate method.
• Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI 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 not part of a hedging relationship is recognized in
profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the
period in which it arises. Interest income from these financial assets is included in other income.
Measurement of equity instruments
The Company subsequently measures all equity investments at fair value except investment in subsidiary
and joint venture. Where the Company's management has elected to present fair value gains and losses
on equity investments in other comprehensive income, there is no subsequent reclassification of fair value
gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other
income when the Company's right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement
of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL”) model for measurement
and recognition of impairment loss on financial assets and credit risk exposures. The Company follows
'simplified approach' for recognition of impairment loss allowance on trade receivables. Simplified
approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment
loss allowance based on lifetime 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
entity reverts recognizing impairment loss allowance based on 12-month ECL.
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. 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 impairment loss allowance (or reversal) recognized during the period is recognized as income /expense
in the statement of profit and loss.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
• The Company has transferred the rights to receive cash flows from the financial asset or
• The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes
a contractual obligation to pay the cash flows to one or more recipients.
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 derecognized.
Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset,
the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of
ownership of the financial asset, the financial asset is derecognized if the Company has not retained control
of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be
recognized to the extent of continuing involvement in the financial asset.
h) Classification and subsequent measurement of financial liabilities
All financial liabilities are recognized initially at its fair value adjusted by directly attributable transaction costs.
The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss, financial liabilities are classified
as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on
liabilities held for trading are recognized in the statement of profit and loss.
The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities measured at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost
using the EIR method. Gains and losses are recognized in the statement of profit and loss when the liabilities are
derecognized.
Amortized 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 amortization is included as finance costs in the statement of profit and loss.
i) Borrowing costs
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised
as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the
assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of
funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Pursuant to a clarification issued by the International Accounting Standards Board ('IASB') in relation to borrowing
costs on real-estate projects where revenue is recognised on percentage of completion basis, the Company has
with effect from 1 April 2019 excluded such borrowing costs relating to the post-launch period from its estimates
of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
j) Property, plant and equipment (including capital work in progress)
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Borrowing costs relating to acquisition of property,
plant and equipment which takes substantial period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes
expenditure incurred till the assets are put into intended use.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate,
only when 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 any component accounted for as a separate
asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
Items of property, plant and equipment that have been retired from active use and are held for disposal are
stated at the lower of their net book value and net realizable value and are shown separately in the financial
statements. Any expected loss is recognized immediately in the statement of profit and loss.
Losses arising from the retirement of, and gains or losses arising from disposal of property, plant and equipment
which are carried at cost are recognized in the statement of profit and loss.
k) Depreciation and amortisation
(i) Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties
under construction) less their residual values over their useful lives, using the straight-line method. Freehold
land is not depreciated.
(ii) Depreciation on property, plant and equipment and investment property has been provided on pro¬
rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies
Act, 2013, except for furniture and fixtures and air conditioner wherein based on technical assessment of
management, useful life has been estimated to be different from that prescribed in Schedule II to the Act.
Residual value is considered as 5% of the original acquisition cost of the assets.
(iii) Amortisation is recognised on a straight-line basis over their estimated useful lives. The Company amortises
computer software using the straight-line method over the period of 5 years.
The estimated useful life, residual values and depreciation/amortisation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
l) Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by
the Company, is classified as investment property. Investment property is measured initially at its cost, including
related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the
asset's carrying amount only when it is probable that future economic benefits associated with the expenditure
will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance
costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the
replaced part is derecognized.
Though the company measures investment property using cost based measurement, the fair value of investment
property is disclosed in the notes.
Reclassification from/to investment property- Transfers to (or from) investment property are made only when
there is a change in use. Transfers between investment property, owner-occupied property and inventories do
not change the carrying amount of the property transferred and they do not change the cost of that property for
measurement or disclosure purposes.
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