3 SIGNIFICANT ACCOUTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these
financial statements.
3.1 Current and non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
i. It is expected to be realized in, or is intended for sale or consumption in, the Company's
normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is expected to be realized within 12 months after the reporting date; or
iv. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified
as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
i. It is expected to be settled in the Company's normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is due to be settled within 12 months after the reporting date; or
iv. There is no an unconditional right to defer settlement of the liability for at least 12 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.
Current liabilities include the current portion of financial liabilities some part of which may be non¬
current. All other liabilities are classified as non-current.
Deferred tax assets are classified as non-current assets.
Operating cycle
The operating cycle is the time between the acquisition of assets for processing and their realization in
cash or cash equivalents. Based on the nature of operations and the time between the acquisition of
assets for processing and their realization in cash and cash equivalents, the Company has ascertained its
operating cycle being a period of 12 months for the purpose of classification of assets and liabilities as
current and non-current.
3.2 Property, Plant &Equipment
Recognition and Measurement
Items of property, plant and equipment are measured at cost, less accumulated depreciation and
accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation
allocated incidental expenditure during construction / acquisition, borrowing cost and necessary
adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the
present value of obligations arising, if any, from decommissioning, restoration and similar liabilities
related to the same. The present value of those costs (decommission and/or restoration costs) is
capitalized as an asset and depreciated over the useful life of the asset.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and
direct labor, any other costs directly attributable to bringing the item to working condition for its
intended use, and estimated costs of dismantling and removing the item and restoring the site on which
it is located.
If significant parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Capital Work-in-Progress
Capital work-in-progress includes assets under construction and cost attributable to construction of
assets not ready for use before the year end.
Subsequent Expenditure
Subsequent expenditure is 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.
Depreciation
Depreciation is provided on the cost of the property, plant and equipment less their estimated residual
values over their estimated useful lives, and is recognized in the Statement of Profit and Loss. The
company depreciates property, plant and equipment as per guidance set out in Schedule II of the
Companies Act, 2013 on written down value (WDV) method except in respect of the assets mentioned
(II) below. Items of Property, Plant and Equipment are depreciated over the useful life as provided below:
• Assets costing up to INR 5,000 are depreciated fully in the Year of Purchase
• In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis,
• for the period the asset is available for use
• * Represents temporary structure written off over a period of 3 years
3.3 Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes exchange differences in respect of long-term foreign
currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing
costs.
Borrowing costs (net of interest earned on temporary investments) directly attributable to the
acquisition, construction or production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized as part of the cost of the asset. Interest is computed
on weighted average cost of funds deployed.
All other borrowing costs are expensed in the year in which they occur
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
3.4 Inventories
Land and building held as Stock-in-Trade for Property Development is stated at lower of cost and net
realizable value.
3.5 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.
Initial Recognition and Measurement
All financial assets are initially recognized when the Company becomes a party to the contractual
provisions of the instrument. All financial assets are initially measured at fair value plus or minus, in the
case of financial assets not recorded at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset.
Classification
The company classifies its financial assets in the following categories
i. Financial Assets at amortized cost
ii. Financial Assets measured subsequently at fair value (either through other comprehensive income,
or through profit or loss)
Debt Instruments
A financial asset being 'debt instrument' is measured at the amortised cost if both of the following
conditions are met:
1. The financial asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
2. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
A financial asset is measured at Fair Value through Other Comprehensive Income (FVTOCI), if both of
the following conditions are met:
i. the financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets; and
ii. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Assets that do not meet the criteria for amortised cost or Fair Value through Other Comprehensive
Income (FVTOCI) are measured at Fair Value through Profit or Loss (FVTPL).
Equity Instruments
The Company subsequently measures all investments in equity (except of the subsidiaries/associate) at
fair value. 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.
Subsequent Measurement
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment losses, if any. Interest income
and impairment are recognised in the statement of profit and loss.
Financial assets at FVTOCI or FVTPL: These assets are subsequently measured at fair value. Net gains
and losses, including any interest income, are recognised in OCI or the statement of profit and loss as
the case may be. 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/Interest Income from such investments are recognised
in profit or loss as other income when the Company's right to receive payments is established.
Impairment
The Company recognizes loss allowances using the Expected Credit Loss (ECL) model for the financial
assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount
equal to lifetime ECL.
For all other financial assets, expected credit losses are measured at an amount equal to the 12-month
ECL, unless there has been a significant increase in credit risk from initial recognition, in which case
those financial assets are measured at lifetime ECL. The changes (incremental or reversal) in loss
allowance computed using ECL model, is recognised as an impairment gain or loss in the statement of
profit and loss.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are
not reported separately. Where the Company elects to measure FVTPL, changes in the fair value of such
financial assets are recognised in the statement of profit and loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset. Any gain or loss on derecognition is recognised in
the statement of profit and loss.
Financial Liability
Recognition and initial measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual
provisions of the instrument. All financial liabilities are initially measured at fair value minus, in the case
of financial liabilities not recorded at fair value through profit or loss, transaction costs that are
attributable to the liability.
Classification and subsequent measurement
Financial liabilities are classified as measured at amortised cost. Financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expenses are recognised in the
statement of profit and loss.
Derecognition
The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in the statement of profit
and loss.
Any gain or loss on derecognition is also recognised in the statement of profit and loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet
when, and only when, the Company currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the assets and settle the liabilities
simultaneously.
3.6 Investment in subsidiaries / associates:
Investment in subsidiaries / associates is measured at cost less provision for impairment.
3.7 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/(loss) before tax is adjusted for the
effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating, financing and investing activities of the Company are
segregated.
3.8 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand, short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in
value.
3.9 Impairment of non-financial assets
The carrying amounts of the Company's non-financial assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, the Company
estimates the asset's recoverable amount. Impairment losses are provided for Cash Generating Units
(CGU) and also for individual assets.
When 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 and is recognised in the Statement of Profit &
Loss.
"On review of impairment loss at the end of each reporting period, if the carrying value of an individual
asset increases, reversal of impairment loss is made to the extent that it does not exceed the carrying
amount of such asset. In case of a CGU, reversal of impairment loss, if any, is allocated pro rata to the
individual assets of the CGU."
3.10 Prior period items, accounting estimates and effect of change in Accounting Policy
Prior period errors of material nature, are corrected retrospectively by restating the comparative
amounts for the prior period(s) presented in which the error occurred or if the error occurred before
the earliest prior period presented, restating the opening balances of assets, liabilities and equity for
the earliest prior period presented.
The effect of change in accounting estimate is recognised prospectively in the Statement of Profit and
Loss except where they relate to assets and liabilities, the same is recognised by adjusting the carrying
amount of related assets/liability/equity in the period of change.
Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific
transitional provisions, if any in the Ind AS. In other cases, the changes in accounting policy are
recognised retrospectively, the application of such change is limited to the earliest period practicable.
3.11 Events occurring after the balance sheet date
Events occurring after the balance sheet date are those events that occur between the end of the
reporting period and the date when the financial statements are approved by the Board of Directors.
Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.
3.12 Revenue
Revenue is recognized to the extent that it is probable that economic benefits will flow to the company
and the revenue can be reliably measured. Revenue should be recognized initially at transaction price
when the entity satisfies the performance obligation.
Revenue from cancellation of contracts
Revenue from cancellation of contracts in the usual course of real estate business is recognized when
the compensation/interest/fee payable to the company is determined and agreed between the parties.
Revenue from Rentals
Revenue includes revenue earned through rental of company's properties invoiced for fixed monthly
charges or on time proportionate basis.
Interest Income
Interest income from debt instruments is recognized using the effective interest rate method. The
effective interest rate is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to the gross carrying value of a financial asset. While calculating the
effective interest rate, the Company estimates the expected cash flows by considering all the
contractual terms of the financial instrument (for example, prepayment, extension, call and similar
options), but does not consider the expected credit losses.
Dividend
Dividend income is recognized in the Profit and Loss account when the right to receive the same is
established, it is probable that the economic benefits associated with the dividend will flow to the
Company, and the amount of dividend can be reliably measured.
Others
Sale proceeds of scrap are taken to other non-operating income in the year of disposal.
3.13 Income Taxes
Income tax expense comprises current and deferred tax. It is recognized in profit and loss except to the
extent that it relates to a business combination, or items recognized directly in equity or in OCI.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax is the best estimate of the tax amount expected to be paid or received that reflects uncertainty
related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the
reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set
off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis
or simultaneously.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognized for:
i. temporary differences 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 and loss;
ii. temporary differences related to investments in subsidiaries to the extent that the Company is able
to control the timing of the reversal of the temporary differences and it is probable that they will not
reverse in the foreseeable future; and
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which
they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized; such reductions are reversed
when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent
that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets
and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Minimum Alternate Tax
Minimum Alternative Tax ('MAT') expense under the provisions of the Income-tax Act, 1961 is
recognized as an asset when it is probable that future economic benefit associated with it in the form
of adjustment of future income tax liability, will flow to the Company and the asset can be measured
reliably. MAT credit entitlement is set off to the extent allowed in the year in which the Company
becomes liable to pay income taxes at the enacted tax rates. MAT credit entitlement is reviewed at each
reporting date and is written down to reflect the amount that is reasonably certain to be set off in future
years against the future income tax liability.
3.14 Earnings per Share
The Company presents basic and diluted earnings/ (loss) per share (EPS) data for its equity shares. Basic
EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the
weighted average number of equity shares outstanding during the year.
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