NOTE 2: SUMMARY OF MATERIAL ACCOUNTING
POLICIES

A. Basis of preparation of financial statements

i. Statement of Compliance

These financial statements have been prepared in
accordance with Indian Accounting Standards ("Ind-
AS") under the historical cost convention on the
accrual basis except for certain financial instruments
which are measured at fair values, the provisions
of the Companies Act , 2013 ( Act') (to the extent
notified) and guidelines issued by the Securities
and Exchange Board of India (SEBI). The Ind-AS are
prescribed under Section 133 of the Act read with
the Companies (Indian Accounting Standards) Rules,
2015 and Companies (Indian Accounting Standards)
Amendment Rules, 2016.

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.

ii. Basis of measurement

The financial statements have been prepared on
historical cost basis except the following:

• certain financial assets and liabilities are measured
at fair value;

• assets held for sale- measured at fair value less
cost to sell;

• defined benefit plans- plan assets measured at
fair value; and

The functional currency of the Company is the Indian
Rupee. These financial statements are presented
in Indian Rupees and all values are rounded to the
nearest lakhs, except when otherwise stated.

iii. Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it
is expected to be realised or intended to be sold or
consumed in normal operating cycle, held primarily
for the purpose of trading, expected to be realised
within twelve months after the reporting period and
cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period. All other
assets are classified as non-current.

A liability is current when it is expected to be settled
in normal operating cycle, it is held primarily for
the purpose of trading, it is due to be settled within
twelve months after the reporting period and there is
no unconditional right to defer the settlement of the
liability for at least twelve months after the reporting
period. The Company classifies all other liabilities as
non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents. The Company has identified
twelve months as its operating cycle.

, Use of estimates

The preparation of the financial statements in conformity
with Ind-AS requires management to make estimates,
judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the
date of the financial statements and reported amounts
of revenues and expenses during the period. Application

of accounting policies that require critical accounting
estimates involving complex and subjective judgments
and the use of assumptions in these financial statements
have been disclosed in note C below. Accounting
estimates could change from period to period. Actual
results could differ from those estimates. Appropriate
changes in estimates are made as management becomes
aware of changes in circumstances surrounding the
estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are
made and, if material, their effects are disclosed in the
notes to the financial statements.

C. Critical accounting estimates

i. Income taxes

The Company's major tax jurisdiction is India.
Significant judgements are involved in determining
the provision for income taxes, including amount
expected to be paid/ recovered for uncertain tax
positions. Also refer to note 28.

ii. Property, plant and equipment

Property, plant and equipment represent a significant
proportion of the asset base of the Company. The
charge in respect of periodic depreciation is derived
after determining an estimate of an asset's expected
useful life and the expected residual value at the
end of its life. The useful lives and residual values of
Company's assets are determined by management
at the time the asset is acquired and reviewed
periodically, including at each financial year end. The
lives are based on historical experience with similar
assets as well as anticipation of future events, which
may impact their life, such as changes in technology.

iii. Defined benefit plans

The cost of the defined benefit gratuity plan and
other post-employment benefits and the present
value of the gratuity obligation are determined
using actuarial valuations. 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 increases 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.

The parameter most subject to change is the discount
rate. In determining the appropriate discount
rate for plans operated in India, the management
considers the interest rates of government bonds

in currencies consistent with the currencies of the
post-employment benefit obligation.

The mortality rate is based on publicly available
mortality tables. Those mortality tables tend to change
only at interval in response to demographic changes.
Future salary increases and gratuity increases are
based on expected future inflation rates.

Further details about gratuity obligations are given
in Note 42.

iv. Fair value measurement of financial instruments

When the fair values of financial assets and financial
liabilities recorded in the balance sheet cannot
be measured based on quoted prices in active
markets, their fair value is measured using valuation
techniques. The inputs to these models are taken
from observable markets where possible, but where
this is not feasible, a degree of judgement is required
in establishing fair values. Judgements include
considerations of inputs such as liquidity risk, credit
risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of
financial instruments. See Note 37-38 for further
disclosures.

D. Property, Plant and Equipment

Land (including Land Developments) is carried at historical
cost. All other items of property, plant and equipment
are stated in the balance sheet at cost historical less
accumulated depreciation and accumulated impairment
losses, if any. Such cost includes the cost of replacing
part of the plant and equipment and borrowing costs for
long-term construction projects if the recognition criteria
are met. All other repair and maintenance costs are
recognised in profit or loss as incurred.

Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognized impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing
costs capitalized in accordance with the Company's
accounting policy. Such properties are classified to
the appropriate categories of property, plant and
equipment when completed and ready for intended use.
Depreciation of these assets, on the same basis as other
property assets, commences when the assets are ready
for their intended use.

Subsequent to recognition, property, plant and equipment
(excluding freehold land) are measured at cost less
accumulated depreciation and accumulated impairment
losses. When significant parts of property, plant and
equipment are required to be replaced in intervals, the
Company recognizes such parts as individual assets

with specific useful lives and depreciation respectively.
Likewise, when a major inspection is performed, its cost
is recognized in the carrying amount of the plant and
equipment as a replacement cost only if the recognition
criteria are satisfied. All other repair and maintenance
costs are recognized in the Statement of Profit and Loss
as incurred.

Depreciation is recognised so as to write off the cost of
assets (other than freehold land and land developments)
over the remaining useful lives, using the straight- line
method ("SLM"). Management believes that the useful
lives of the assets reflect the periods over which these
assets are expected to be used, which are as follows:

Depreciation on additions/ deletions to fixed assets is
calculated pro-rata from/ up to the date of such additions/
deletions.

Assets individually costing less than Rs. 5,000 are fully
depreciated in the year of acquisition.

The carrying values of property, plant and equipment
are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may
not be recoverable. The residual values, useful life and
depreciation method are reviewed at each financial year-
end to ensure that the amount, method and period of
depreciation are consistent with previous estimates
and the expected pattern of consumption of the future
economic benefits embodied in the items of property,
plant and equipment.

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on disposal or retirement of an
item of property, plant and equipment is determined as
the difference between sale proceeds and the carrying
amount of the asset and is recognised in profit or loss.

E. Investment properties

Investment properties are properties that is held for long¬

term rentals yields or for capital appreciation (including
property under construction for such purposes) or both,
and that is not occupied by the Company, is classified as
investment property.

Investment properties are measured initially at cost,
including transaction costs. Subsequent to initial
recognition, investment properties are stated at cost less
accumulated impairment loss, if any.

Though the Company measures investment property
using cost based measurement. Fair values are
determined based on an annual evaluation performed by
an accredited external independent valuer.

Investment properties are derecognised 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 recognised in profit or loss in the period of
derecognition.

F. Intangible Assets

Intangible asset including intangible assets under
development are stated at cost, net of accumulated
amortisation and accumulated impairment losses, if any.
Intangible assets acquired separately are measured on
initial recognition at cost.

Intangible assets in case of computer software are
amortised on straight-line basis over a period of 5 years,
based on management estimate. The amortization period
and the amortisation method are reviewed at the end of
each financial year.

The useful lives of intangible assets are assessed as either
finite or indefinite. Intangible assets with finite lives are
amortised over the useful economic life and assessed
for impairment whenever there is an indication that
the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the
end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are
considered to modify the amortisation period or method,
as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets
with infinite lives is recognised in the statement of profit
and loss unless such expenditure forms part of carrying
value of another asset.

G. Impairment of Non-Financial Assets

Assessment is done at each Balance Sheet date as to
whether there is any indication that an asset (tangible and
intangible) may be impaired. For the purpose of assessing

impairment, the smallest identifiable group of assets that
generates cash inflows from continuing use that are largely
independent of the cash inflows from other assets or
groups of assets, is considered as a cash generating unit. If
any such indication exists, an estimate of the recoverable
amount of the asset/ cash generating unit is made. Assets
whose carrying value exceeds their recoverable amount are
written down to the recoverable amount. An impairment
loss is recognized in the profit or loss. Recoverable amount
is higher of an asset's or cash generating unit's net selling
price and its value in use. Value in use is the present value
of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end
of its useful life. Assessment is also done at each Balance
Sheet date as to whether there is any indication that an
impairment loss recognised for an asset in prior accounting
periods may no longer exist or may have decreased. A
reversal of an impairment loss is recognised immediately
in profit or loss.

H. 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. Financial Instruments
are further divided in two parts viz. Financial Assets and
Financial Liabilities.

Part I - Financial Assets

a) Initial recognition and measurement

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell
the asset.

b) Subsequent measurement

For purposes of subsequent measurement, financial
assets are classified in four categories:

Financial Assets at amortised cost:

A Financial Assets is measured at the amortised cost if
both the following conditions are met:

• The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

• Contractual terms of the asset give rise on

specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.

This category is the most relevant to the Company.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method.

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 in finance income in the
profit or loss. The losses arising from impairment are
recognised in the profit or loss.

Financial Assets at FVTOCI (Fair Value through Other
Comprehensive Income)

A Financial Assets is classified as at the FVTOCI if
following criteria are met:

• The objective of the business model is achieved
both by collecting contractual cash flows (i.e.
SPPI) and selling the financial assets

Financial instruments included within the FVTOCI
category are measured initially as well as at each
reporting date at fair value. Fair value movements are
recognized in the other comprehensive income (OCI).
However, the Company recognizes interest income,
impairment losses and reversals and foreign exchange
gain or loss in the statement of profit and loss. On
de-recognition of the asset, cumulative gain or loss
previously recognised in OCI is reclassified from the
equity to the statement of profit and loss. Interest
earned whilst holding FVTOCI debt instrument is
reported as interest income using the EIR method.

Financial Assets at FVTPL (Fair Value through Profit
or Loss)

FVTPL is a residual category for financial instruments.
Any financial instrument, which does not meet the
criteria for categorization as at amortized cost or as
FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to designate
a financial instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so
reduces or eliminates a measurement or recognition
inconsistency (referred to as 'accounting mismatch').

Financial instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the Statement of Profit and Loss.

Equity investments

All equity investments in scope of Ind-AS 109 are
measured at fair value. Equity instruments which
are held for trading and contingent consideration
recognised by an acquirer in a business combination
to which Ind-AS 103 applies are classified as at FVTPL.
For all other equity instruments, the Company may
make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such election on an
instrument by instrument basis. The classification is
made on initial recognition and is irrevocable. If the
Company decides to classify an equity instrument
as at FVTOCI, then all fair value changes on the
instrument, excluding dividends, are recognized in
the OCI. There is no recycling of the amounts from
OCI to P&L, even on sale of investment. However,
the Company may transfer the cumulative gain or
loss within equity. Equity instruments included within
the FVTPL category are measured at fair value with
all changes recognized in the Statement of Profit and
Loss.

c) De-recognition

A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily de-recognised (i.e. removed from
the Company's balance sheet) when:

• The rights to receive cash flows from the asset
have expired, or

• The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
'pass-through' arrangement; and either (a) the
Company has transferred substantially all the
risks and rewards of the asset, or (b) the Company
has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.

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.

Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset
and the maximum amount of consideration that the
Company could be required to repay.

d) Impairment of financial assets

In accordance with Ind-AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following
financial assets and credit risk exposure:

• Financial assets that are debt instruments, and are
measured at amortised cost e.g., loans, deposits,
trade receivables and bank balance;

• Financial assets that are debt instruments and are
measured as at FVTOCI

• Lease receivables under Ind-AS 116

• Trade receivables or any contractual right to
receive cash or another financial asset that result
from transactions that are within the scope of
Ind-AS 115 (referred to as 'revenue from contract
with customers' in these financial statements)

• Loan commitments which are not measured as at
FVTPL

• Financial guarantee contracts which are not
measured as at FVTPL

The Company follows 'simplified approach' for
recognition of impairment loss allowance on trade
receivables or contract revenue 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 ECLs at each reporting date, right from its
initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
that 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. When estimating the cash flows,
the Company considers:

• All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the
expected life of the financial instrument cannot
be estimated reliably, then the Company uses
the remaining contractual term of the financial
instrument; and

• Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms

As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix
is based on its historically observed default rates
over the expected life of the trade receivables and
is adjusted for forward-looking estimates. At every
reporting date, the historical observed default rates
are updated and changes in the forward-looking
estimates are analysed. On that basis, the Company
estimates the following provision matrix at 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. This
amount is grouped under the head 'other expenses'.
The balance sheet presentation for various financial
instruments is described below:

• Financial assets measured as at amortised
cost, contractual revenue receivables and lease
receivables: ECL is presented as an allowance,
i.e., as an integral part of the measurement of
those assets in the balance sheet. The allowance
reduces the net carrying amount. Until the asset
meets write-off criteria, the Company does not
reduce impairment allowance from the gross
carrying amount.

• Loan commitments and financial guarantee
contracts: ECL is presented as a provision in the
balance sheet, i.e. as a liability.

• Debt instruments measured at FVTOCI: Since
financial assets are already reflected at fair value,
impairment allowance is not further reduced
from its value. Rather, ECL amount is presented as
'accumulated impairment amount' in the OCI.

For assessing increase in credit risk and impairment
loss, the Company combines financial instruments on

the basis of shared credit risk characteristics with the
objective of facilitating an analysis that is designed
to enable significant increases in credit risk to be
identified on a timely basis.

The Company does not have any purchased or
originated credit-impaired (POCI) financial assets,
i.e., financial assets which are credit impaired on
purchase/ origination.

Part II - Financial Liabilities

a) Initial recognition and measurement

The Company's financial liabilities include trade
and other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and
derivative financial instruments.

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.

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.

b) Subsequent measurement

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. This category also includes derivative financial
instruments entered into by the Company that are
not designated as hedging instruments in hedge
relationships as defined by Ind-AS 109. Separated
embedded derivatives are also classified as held
for trading unless they are designated as effective
hedging instruments. Gains or losses on liabilities held
for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition
at fair value through profit or loss is designated as such
at the initial date of recognition, and only if the criteria
in Ind-AS 109 are satisfied. For liabilities designated as
FVTPL, fair value gains/ losses attributable to changes
in own credit risks are recognized in OCI. These gains/

loss are not subsequently transferred to statement of
profit and loss. However, the Company may transfer
the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognised
in the statement of profit or loss. The Company has
not designated any financial liability as at fair value
through profit and loss.

Loans and borrowings

This is the category most relevant to the Company.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are de¬
recognised 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 costs in the
statement of profit and loss. This category generally
applies to borrowings.

Preference shares, which are mandatorily redeemable
on a specific date, are classified as liabilities under
borrowings. The dividends on these preference
shares, if any are recognised in the profit or loss as
finance cost.

Financial guarantee contracts

Financial guarantee contracts issued by the Company
are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the
specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially
as a liability at fair value, adjusted for transaction
costs that are directly attributable to the issuance of
the guarantee. Subsequently, the liability is measured
at the higher of the amount of loss allowance
determined as per impairment requirements of Ind-
AS 109 and the amount recognised less cumulative
amortisation.

c) De-recognition

A financial liability is de-recognised when the
obligation under the liability 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 de¬
recognition 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 or loss.

d) Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount is reported in the balance sheet 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.

I. Inventories

Inventories are valued at lower of cost on First-In¬
First-Out (FIFO) or net realizable value after providing
for obsolescence and other losses, where considered
necessary. Cost of inventories comprises all costs of
purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost
of purchased inventory is determined after deducting
rebates and discounts. Net realizable value is the
estimated selling price in the ordinary course of business,
less estimated costs of completion and estimated costs
necessary to make the sale.

J. Recognition of Revenue

Revenue is recognized at an amount that reflects the
consideration to which the Company expects to be
entitled in exchange for transferring the goods or
rendering of services to a customer i.e. on transfer
of control of the goods or rendering of service to the
customer. Revenue recognised is net of indirect taxes,
returns and discounts.

Income from operations

Rooms, Food and Beverage & Banquets: Revenue is
measured at the fair value of the consideration received
or receivable. Revenue comprises sale of rooms, food,
beverages, smokes and allied services relating to hotel
operations. Revenue is recognised upon rendering of the
service, provided pervasive evidence of an arrangement
exists, tariff / rates are fixed or are determinable and
collectability is reasonably certain.

Other services: Income from ancillary services is
recognised as and when the service is rendered.

K. Other Income

Interest income from financial assets is recognized when
it is probable that economic benefits will flow to the
company and the amount of income can be measured
reliably. Interest income is accrued on a time basis,
by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that

exactly discounts estimated future cash receipts through
the expected life of the financial assets to that asset's net
carrying amount on initial recognition.