2. Material Accounting Policies
a. Statement of Compliance:
The Standalone Financial Statements are prepared
in accordance with Indian Accounting Standards
("Ind AS") as per the Companies (Indian Accounting
Standards) Rules, 2015 notified under the section 133
of the Companies Act, 2013 ("the Act") and the relevant
provisions and amendments, as applicable.
Accounting policies have been consistently applied
except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.
b. Basis of Preparation of Standalone Financial
Statements:
The Standalone Financial Statements have been
prepared on the going concern basis under historical
cost method and accrual basis of accounting except for
certain financial instruments that are measured at fair
values at the end of each reporting period, as explained
in the accounting policies below.
Historical cost is generally based on the fair value
of the considerations 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 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
in to account when pricing the asset or liability at the
measurement date. Fair value for measurement and/
or disclosure purposes in these Standalone Financial
Statements is determined on such a basis, except for
share-based payment transactions that are within the
scope of Ind AS 102, leasing transactions that are within
the scope of Ind AS 116, and measurements that have
some similarities to fair value but are not fair value, such
as net realizable value in Ind AS 2 or value in use in Ind
AS 36.
c. Use of Estimates
The preparation of Standalone Financial Statements
in conformity with Ind AS requires the management
of the Company to make judgement, estimates and
assumptions to be made that affect the reported
amounts of assets and liabilities on the date of
Standalone Financial Statements, disclosure of
contingent liabilities as at the date of the Standalone
Financial Statements, and the reported amounts of
income and expenses during the reported period.
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 future periods are affected.
d. Fair value measurement
The Company's accounting policies and disclosures
require the measurement of fair values for financial and
non-financial assets and liabilities.
The Company has an established control framework
with respect to the measurement of fair values.
The management regularly reviews significant un¬
observable inputs and valuation adjustments for
financial reporting purposes, fair value measurements
are categorized into Level 1,2 or 3 based on the degree
to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair
value measurement in its entirety, which are described
as follows:
- 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.
e. Current versus Non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. The Company classifies an asset as
current asset when:
- it expects to realize the asset, or intends to sell or
consume it, in its normal operating cycle;
- it holds the asset primarily for the purpose of
trading;
- it expects to realize the asset within twelve months
after the reporting period; or
- the asset is cash or a cash equivalent unless the
asset is 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 classified as current when -
- it expects to settle the liability, or intends to buy it,
in its normal operating cycle;
- it holds the liability primarily for the purpose of
trading;
- the liability is due to be settled within twelve
months after the reporting period; or
- it does not have an unconditional right to defer
settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that
could, at the option of the counterparty, result in
its settlement by the issue of equity instruments do
not affect its 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.
The Company's normal operating cycle in respect of
operations relating to the construction of real estate
projects may vary from project to project depending
upon the size of the project, type of development,
project complexities and related approvals. Operating
cycle for all completed projects business is based on
12-month period. Assets and liabilities have been
classified into current and non-current based on their
respective operating cycle.
f. Inventories
Inventory is valued at cost or net realizable value
whichever is lower. Inventory comprises of stock
of raw material, completed properties for sale and
properties under construction (Work in Progress). Work
in Progress comprises cost of land, development rights,
construction and development cost, cost of material,
services and other overheads related to projects under
construction.
Finished Stock is valued at cost or net realizable value
whichever is lower.
Net realizable Value is the estimated selling price in the
ordinary course of business less its estimated cost of
completion and the estimated cost necessary to make
the sale.
g. Cash & Cash Equivalent
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.
h. Property, Plant & Equipment and Intangible assets
and Depreciation
Property, plant and equipment at their initial recognition
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). The cost comprises
purchase price, borrowing cost, if capitalization criteria
are met and directly attributable cost of bringing the
asset to its working condition for the intended use. Any
trade discount and rebates are deducted in arriving at
the purchase price. Subsequent costs are included in
the asset's carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that
incremental future economic benefits associated with
the item will flow to the Company.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement
if the recognition criteria are satisfied. Any remaining
carrying amount of the cost of the previous inspection
is derecognised. All other repair and maintenance
costs are recognised in statement of profit and loss as
incurred. The Company identifies and determines cost
of each component/ part of the asset separately, if the
component/ part have a cost which is significant to the
total cost of the asset and has useful life that is materially
different from that of the remaining asset.
Property, Plant & Equipment and Intangible assets
are measured at actual cost net of accumulated
depreciation/ amortization and net of accumulated
impairment.
The estimated useful lives and residual values of the
Property, Plant & Equipment and Intangible assets are
reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a
prospective basis.
i. Intangible Assets
Intangible assets acquired separately are measured on
initial recognition at cost. Intangible assets are carried at
cost less any accumulated amortization and impairment
losses.
The useful lives of intangible assets are assessed as
either finite or indefinite. Currently the company has
not identified any Intangible assets other than goodwill
to have indefinite life.
Intangible assets with finite lives are amortized over
the useful economic life. The useful economic life and
the amortization method for an intangible asset with
a finite useful life are reviewed at least at the end of
each reporting period. The amortization expense on
intangible assets with finite lives is recognized in the
Standalone Statement of Profit and Loss.
Gains or losses arising from de recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognized in the
Standalone Statement of Profit and Loss when the asset
is derecognized.
j. Revenue Recognition
• Revenue from Contracts with Customers
Revenue is recognized either at point of time or
over a period of time based on the conditions
in the contracts with customers. The Company
determines the performance obligations associated
with the contract with the customers at contract
inception and also determine whether they satisfy
the performance obligation over time or at a point
in time.
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.
Revenue from real estate projects is recognized on
the Point in Time Method of accounting as per Ind
AS 115, when:
- The seller has transferred to the buyer all
significant risks and rewards of ownership and
the seller retains no effective control of the real
estate unit to a degree usually associated with
ownership.
- The seller has effectively handed over the
possession of the real estate unit to the buyer
forming part of the transaction.
- No significant uncertainty exists regarding the
amount of consideration that will be derived
from real estate unit sales; and
- It is not unreasonable to expect ultimate
collection of revenue from buyers.
The Company recognizes revenue for performance
obligation satisfied over time or point in time on the
basis of reasonably measurement of 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 recognizes revenue in proportion to the
actual project cost incurred as against the total
estimated project cost.
In respect of contract with customers which do not
meet the criteria to recognize revenue over a period
of time, revenue is recognized at point in time with
respect to such contracts for sale of residential
and commercial units as and when the control is
passed on to the customers which is linked to the
application and receipt of occupancy certificate
Further, for projects executed through joint
development arrangements not being jointly
controlled operations, where in the land-owner/
possessor provides land and the Company
undertakes to develop properties on such land
and in lieu of land owner providing land, the
Company has agreed to transfer certain percentage
of constructed area or certain percentage of
the revenue proceeds, the revenue from the
development and transfer of constructed area/
revenue sharing arrangement in exchange of such
development rights/ land is being accounted on
gross basis on launch of the project.
The revenue is measured at the fair value of the
land received, adjusted by the amount of any cash
or cash equivalents transferred. When the fair value
of the land received cannot be measured reliably,
the revenue is measured at the fair value of the
estimated construction service rendered to the land
owner, adjusted by the amount of any cash or cash
equivalents transferred. The fair value so estimated
is considered as the cost of land in the computation
for the purpose of revenue recognition.
• Revenue from maintenance and other services
Facility charges, management charges, project
management fees, rental, hire charges, sub lease
and maintenance income are recognized on
accrual basis as per the terms and conditions of
relevant agreements.
• Revenue from sale of materials & services
Revenue is recognized at point in time with respect
to contracts for sale of Materials and services as and
when the control is passed on to the customers and
after satisfaction of [performance obligations.
• Rental Income
Rental income arising from leases is accounted
over the lease terms on straight line basis unless
there is another systematic basis which is more
representative of the time pattern of the lease.
Revenue from lease rentals is disclosed net of
indirect taxes, if any.
• Revenue from sale of Land
Revenue from sale of land and development rights
is recognized upon transfer of all significant risks
and rewards of ownership of such real estate/
property, as per the terms of the contracts entered
into with buyers, which generally coincides with
the firming of the sales contracts/agreements.
Revenue from sale of land and development rights
is only recognized when transfer of legal title to the
buyer is not a condition precedent for transfer of
significant risks and rewards of ownership to the
buyer.
• Other Income
Interest income is accounted on an accrual basis on
a time proportion basis.
Dividend income is recognized when the right to
receive is established.
k. Cost of Construction / Development
Cost of constructed/ developed properties and projects,
includes cost of land (including cost of development
rights/ land under agreements to purchase), estimated
internal development costs, external development
charges, borrowing costs, 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 accounting
policy for revenue from real estate projects above,
inconsonance with the concept of matching costs and
revenue.
l. Advance Paid towards Land Procurement
Advances paid by the Company to the seller/
intermediary towards outright purchase of land is
recognized as land advance under other assets during
the course of obtaining clear and marketable title, free
from all encumbrances and transfer of legal title to the
Company, whereupon it is transferred to land stock
under inventories. Management is of the view that
these advances are given under normal trade practices
and are neither in the nature of loans nor advance in the
nature of loans.
m. Employee Benefits
Employee benefits include provident fund, gratuity and
compensated absences.
• Short-term employee benefits:
Employee benefits payable wholly within twelve
months of rendering the service are classified as
short-term employee benefits. The undiscounted
amount of short-term employee benefits expected
to be paid in exchange for the services rendered by
employees is recognized during the year.
• Post-employment benefits:
- Defined contribution plans:
Contributions to the provident fund, which is
defined contribution scheme, are recognized
as an employee benefit expense in the
statement of profit and loss in the period in
which the contribution is due. Contributions
are made in accordance with the rules of the
statute and are recognized as expenses when
employees render service entitling them to
the contributions.
- Defined benefit plans:
Gratuity:
The Company accounts its liability for future
gratuity benefits based on actuarial valuation,
as at the balance sheet date, determined
every year by an independent actuarial using
the projected unit credit method. Obligation
under the defined benefit plan is measured at
the present value of the estimated future cash
flows using a discount rate that is determined
by reference to the prevailing market yields at
the balance sheet date on government bonds.
For defined benefit retirement benefit plans,
the cost of providing benefits is determined
using the projected unit credit method,
with actuarial valuations being carried out
at the end of each annual reporting period.
Remeasurement, comprising actuarial gains
and losses, the effect of the changes to the
asset ceiling (if applicable) and the return
on plan assets (excluding net interest), is
reflected immediately in the balance sheet
with a charge or credit recognized in other
comprehensive income in the period in which
they occur. Remeasurement recognized in
other comprehensive income is reflected
immediately in retained earnings and is not
reclassified to profit or loss. Past service cost is
recognized in the Statement of profit or loss in
the period of a plan amendment. Net interest
is calculated by applying the discount rate at
the beginning of the period to the net defined
benefit liability or asset. Defined benefit costs
are categorized as follows:
- Service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);
- Net interest expense or income; and
- Remeasurement
The Company presents the first two
components of defined benefit costs in
statement of profit or loss in the line item
'Employee benefits expense'. Curtailment
gains and losses are accounted for as past
service costs. The retirement benefit obligation
recognized in the balance sheet represents
the actual deficit or surplus in the Company's
defined benefit plans. Any surplus resulting
from this calculation is limited to the present
value of any economic benefits available in the
form of refunds from the plans or reductions in
future contributions to the plans.
A liability for a termination benefit is recognized
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit
and when the entity recognizes any related
restructuring costs.
n. Borrowing Cost
Borrowing costs that are directly attributable to real
estate project development activities are inventorized
/ capitalized as part of project cost.
Borrowing costs are inventorised / capitalized as part
of project cost when the activities that are necessary to
prepare the inventory / asset for its intended use or sale
are in progress. Borrowing costs are suspended from
inventorization / capitalization when development
work on the project is interrupted for extended periods
and there is no imminent certainty of recommencement
of work.
All other borrowing costs are expensed in the period
in which they occur. Borrowing costs consist of interest
and other costs that the Company incurs in connection
with the borrowing of funds.
o. Leases
The Company assesses at contract inception whether a
contract is, or contains, a lease. 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 for
consideration.
• The Company as lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases.
Rental income arising is accounted for on a straight¬
line basis over the lease terms. Contingent rents are
recognized as revenue in the period in which they are
earned.
• The Company as lessee
The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognizes right-of-use assets and lease liabilities at
the lease commencement date. The right-of-use assets
is initially measured at cost which includes the initial
amount of lease liabilities recognized, initial direct costs
incurred, and lease payments made at or before the
commencement date less any lease incentives received.
Right-of- use assets are depreciated on a straight-line
basis over the lease term.
The lease liabilities are initially measured at the present
value of lease payments to be made over the lease
term, discounted using the Company's incremental
borrowing rate. It is re-measured when there is a
change in future lease payments arising from a change
in an index or rate, if there is a change in the Company's
estimate of the amount expected to be payable under
a residual value guarantee, or if the Company changes
its assessment of whether it will exercise a purchase,
extension or termination option. When the lease liability
is re-measured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset
or is recorded in the Statement of Profit and Loss.
The Company applies the short-term lease recognition
exemption to its short-term leases of assets (i.e., those
leases that have a lease term of 12 months or less
from the commencement date and do not contain a
purchase option). Lease payments on short-term leases
are recognized as expense on a straight-line basis over
the lease term.
p. Earnings Per Share
The Company reports basic and diluted earnings per
share in accordance with Ind AS-33 on 'Earnings per
Share' Basic earnings per share is computed by dividing
the net profit or loss for the year by the weighted
average number of Equity shares outstanding during
the year.
Diluted earnings per share is computed by dividing the
net profit or loss for the year by the weighted average
number of equity shares outstanding during the year
as adjusted for the effects of all diluted potential equity
shares except where the results are anti-dilutive.
The weighted average number of equity shares
outstanding during the period is adjusted for events as
bonus issue, bonus element in a rights issue, share split,
and reverse share split (consolidation of shares) that
have changed the number of equity shares outstanding,
without a corresponding change in resources.
q. Current and Deferred Taxes
Current Tax
Tax expense comprises of current tax and deferred tax.
Current tax is measured at the amount expected to be
paid to/ recovered from the tax authorities, based on
estimated tax liability computed after taking credit for
allowances and exemption in accordance with the local
tax laws existing in the respective countries.
Deferred Tax
Deferred income tax is recognized using the balance
sheet approach. Deferred income tax assets and
liabilities are recognized for deductible and taxable
temporary differences arising between the tax base
of assets and liabilities and their carrying amount for
financial reporting purpose.
Deferred income tax assets are recognized 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 income 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 income tax asset to be utilised.
Deferred tax liabilities and assets 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 by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Company expects, at the end
of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
- The Company has a legally enforceable right to set
offcurrent 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 on the same taxable entity.
Current and deferred tax for the year:
Current and deferred tax are recognized in profit or loss,
except when they relate to items that are recognized
in other comprehensive income or directly in equity,
in which case, the current and deferred tax are also
recognized in other comprehensive income or directly
in equity respectively.
r. Impairment
• Financial assets (other than at fair value)
The Company assesses at each date of the balance
sheet whether a financial asset or a Company of
financial assets is impaired.
Ind AS 109 requires expected credit losses to
be measured through a loss allowance. The
Company recognizes life time expected losses for
all contract assets and / or all trade receivables that
do not constitute a financing transaction. For all
other financial assets, expected credit losses are
measured at an amount equal to the 12 month
expected credit losses or at an amount equal to the
lifetime expected credit losses if the credit risk on
the financial asset has increased significantly since
initial recognition.
• Non-financial assets
Property, Plant & Equipment and Intangible
assets (PPE&IA)
The Company assesses at each reporting date
whether there is an indication that an asset maybe
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset's recoverable amount.
An asset's recoverable amount is the higher of an
asset's or cash-generating unit's (CGU) net selling
price and its value in use. The recoverable amount
is determined for an individual asset, unless the
asset does not generate cash inflows that are
largely independent of those from other assets or
Company of assets. Where the carrying amount of
an asset or CGU exceeds its recoverable amount the
asset is considered impaired and is written down to
its recoverable amount. 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. In determining net selling price, recent
market transactions are taken into account, if
available. If no such transactions can be identified,
an appropriate valuation model is used.
Impairment losses are recognized in the statement
of profit and loss. After impairment, depreciation
is provided on the revised carrying amount of
the asset over its remaining useful life. Where
an impairment loss subsequently reverses, the
carrying amount of the asset (or a cash generating
unit) is increased to the revised estimate of its
recoverable amount, but so that the increased
carrying amount does not exceed the carrying
amount that would have been determined had no
impairment loss been recognized for the asset (or
cash-generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in
the statement of profit and loss, unless the relevant
asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a
revaluation increase.
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