2 MATERIAL ACCOUNTING POLICIES
'lliis note provides a list of the Material accounting policies adopted in the preparation of these financial statements. Iliese policies have been consistently
applied to all the years presented, unless otherwise stated
2.1 BASIS OF PREPARATION OF FINANCIAL STATEMENT
(i) COMPLIANCE WITH Ind AS
These financial statements arc prepared in accordance with Indian Accounting Standards (“Ind AS”), the provisions of the Companies Act, 2013 ( the
Companies Act”), as applicable and guidelines issued by the Securities and Exchange Board of India (“SEBI”). Hie Ind AS are presenbed under Section 133
of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules,
2016.
The financial statements correspond to the classification provisions contained m Ind AS 1, “Presentation of Financial Statements . For clarity, various items
are aggregated in the statements of profit and loss and balance sheet. These items arc disaggregated separately in the notes to the financial statements, where
applicable.
These financial statements are presented in Indian Rupees (INR), which is also the functional currency. All the amounts have been rounded off to tile
nearest lakhs, unless otherwise indicated.
The financial statements were authorized for issue by the Company's Board of Directors on .
(ii) HISTORICAL COST CONVENTION
The Company follows the mercantile system of accounting and recognizes income and expenditure on an acctual basis, lhc financial statements are
prepared under the historical cost convention, except in case of significant uncertainties and except for the following:
(a) Certain financial assets and liabilities (Including Derivative Instruments) that arc measured at fair value;
(b) Defined benefit plans, if any where plan assets arc measured at fair value.
(c) Investments, if any arc measured at fair value.
(iii) CURRENT AND NON CURRENT CLASSIFICATION
All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in the Schedule III to
the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current — non-current classification of assets and
liabilities.
2.2 USE OF ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make judgments, estimates and assumptions in the application of accounting policies that
affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the
estimation and judgments based on historical experience and other (actors, including expectations of future events that ate believed to be reasonable.
Revisions to accounting estimates arc recognised prospectively,
2.3 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 ot another entity.
(I) FINANCIAL ASSETS
(i) Classification
'lire Company classifies its financial assets in the following measurement categories:
(a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss); and
(b) those measured at amortised cost.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.
(a) For assets measured at fair value, gains and losses will either be recorded ui profit or lass or other comprehensive income.
(b) For investments in debt instruments, this will depend on the business model in which the investment is held.
(r) For investments ui equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition lo
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 at its fair value plus, in the case of a financial asset not at fair value through profit or loss,
transaction costs that arc 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. ^—~r*~r _
(a) Debt instruments (/Ý£/ v, \
Subsequent measurement of debt instruments depends on the Company’s businessAnoiijd for managmghhe.aJjtV\:iiul the cash flow
asset. There are three measurement categories into which the Company classifies it| jtlybj instruments: j po ] j ((^ f
- — ---- -----zrz-H—n r—: ' rrh ll«T mi ixjoai 1 —II
Amortised cost: Assets that arc held for collection of contractual cash (lows where those cash flows represent solely payments of principal and interest are
measured at amortised cost. A gain or loss on a debt investment that is subsequently* measured at amortised cost and is not part of a hedging relationship is
recognised m profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in other income using the
effective interest rate method.
I;air value through other comprehensive income (i’VOCI): 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 o: impairment gains or losses, interest income and foreign exchange
gams and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to profit or loss and recognised in other income or other expenses (as applicable). Interest income from these financial assets is
included in other income using the effective interest rate method.
l air value through profit or loss (FVTPL): Assets that do not meet the entena for amortised cost or FVOC1 arc measured at fair value through profit or lost
A gam 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 recognised
in profit or loss and presented net in the statement of profit and loss within other mcome or other expenses (as applicable) in the period in which it arises.
Interest income from these financial assets is included in other income or odicr expenses, as applicable.
(b) Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Company’s management has selected to present fair value gains and
losses on equity mvestments in other comprehensive incomeand 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 arc recognised in other income or other expenses, as applicable in the
statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOC1 are not reported separately
from other changes in fair value.
(iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets cairicd at amortised cost and 1A OCI debt
instruments. Tile impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime
credit losses (ECI.) to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on
the portfolio of trade receivables. At every reporting date these historical default rates arc reviewed and changes in the forward looking estimates are
analysed.
For other assets, the Company uses 12 month ECI. to provide for impairment loss where there is no significant increase in credit risk. If there is significant
increase in credit rtsk full lifetime ECI. is used.
(iv) Dctccognition of financial assets
A financial asset is derecognised only when -
(a) The Company has transferred the rights to receive cash flows from the financial asset or
(b) 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 lias transferred substantially all risks and rewards of ownership of the financial
asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial
asset, the financial asset is not derecognised.
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 derecognised if the Company has not retained control of the financial asset. Where the Company retains control of flic financial asset, the asset is
continued to be recognised to the extent of continuing involvement in the financial asset.
(II) FINANCIAL LIABILITIES
(i) Measurement
Financial liabilities arc initially recognised at fair value, reduced by transaction costs(in case of financial liability not at fair value through profit or loss), that
are directly attributable to the issue of financial liability. After initial recognition, financial liabilities ate measured at amortised cost using effective interest
method. The effective interest rate is the rate that exactly discounts estimated future cash outflow (including all fees paid, transaction cost, and other
premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial
recognition. At the time of initial recognition, there is no financial liability irrevocably designated as measured at fair value through profit or loss.
(ii) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replace!
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 dc-rccognirion of the original liability and the recognition of a new liability. Die difference in the respective carrying amounts
recognised in the statement of profit or loss.
2.4 INVENTORIES VALUATION
TDR Stock are valued at lower of cost and net realisable value (NRV). Cost is arrived^nthc basis of jpe^fic identification method. 'Die NRV is
determined with reference to the estimated selling price in the ordinary course of b^ipess less the estimated costs of completion foijinjgojactimder
development and the estimated costs necessary to make the sale. (i k I
Ilola-,. - i yrv VAv
oe r*cu AMlirASURnillVAl RMTQ -74 It-*/ » I
Cash and cash equivalents includes cash in hand, deposits with banks, other short term highly liquid investments with original maturities of three months or
less rhnt are readily convertible? to known amounts of cash and which are subject to an insignificant risk of changes in value.
l or the purpose of presentation in the statement of cash flows, cash and cash equivalents includes outstanding bank overdraft shown within current
liabilities in statement of financial balance sheet and which are considered as integral part of company’s cash management policy.
2.6 INCOME TAX
1 he Income tax expense or credit for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate adjusted by
changes in deferred fax assets and liabilities attributable to temporary differences and to unused tax losses.
Current and deferred tax is recognised in the profit and loss except to the extent it relates to items recognised directly in equity or other comprehensive
income, in which case it is recognised in equity or other comprehensive income respectively.
(i) CURRENT INCOME TAX
Current lax charge is based on taxable profir for the year, 'llic tax rates and tax laws used to compute the amount are those that arc enacted or substantively
enacted, at the reporting date where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Current tax assets and tax liabilities arc offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and Company
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
(ii) DEFERRED TAX
Deferred rax is provided using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts
in the financial statements at the reporting date. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available
against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilised.
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax assets and liabilities are measured based on the tax rates that are expected to apply in the period when the asset is realised or the liability is
settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
Hie carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to reflect changes in probability that sufficient taxable profits will
be* available to allow all or part ot the asset to be recovered.
Deferred income tax assets and Labilities arc off-set against each other and the resultant net amount is presented in the Balance Sheet, if and only when, (a)
the Company has a legally enforceable right to set-off the current income tax assets and liabilities, and (b) the deferred income tax assets and liabilities relate
to income tax levied by the same taxation authority.
Minimum Alternate Tax credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the company will pay normal
income rax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MA I credit asset is written down to
tlie extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
2.7 REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed arc net of returns, trade discount taxes and amounts
collected on behalf of third parties. The Company recognises revenue as under:
(I) Sales
(a) Revenue from operation:
Income from sale of right to generate Transfer of Development Rights (TDK) is recognised when the project is handed over to the authority'. In case of sale
of such rights when the project is at work in progress stage, revenue is recognised on the date of such salc/transfcr.
Sale of Transfer of Development Rights is recognised on entering into an agreement with the Purchaser of the Transfer of Development Rights.
Revenue is recognized on satisfaction of performance obligation upon transfer of control of promised products or services to customers in an amount that
reflects the consideration the Company expects to receive in exchange for those products or services.
'Die Company does not expect to have any contracts where the period between the transfer of the promised goods to the customer and payment by the
customer exceeds one year. As a consequence, it docs not adjust any of the transaction prices for the rime value of money.
The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:
1. lTie customer simultaneously receives and consumes the benefits provided by the Company's performance as the Group performs; or
2 The Company’s performance creates or enhances an asset that the customer controls as the asscr is created or enhanced; or
3. I’lie 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 one of the above conditions arc not met, revenue j^^oj^iisbd1,attbeqipint in time at which the performance obligation
is satisfied. VV
2.8 COST OF REVENUE
Cost of Development Rights includes proportionate development rights cost, borrowing cost and other related costs.
2.9 OTHER INCOME
Interest income ts recorded on a time proportion basis taking in to account the amounts invested and the rate of interest.
2.10 BORROWING COSTS
(i) Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the
effective interest method. Fees piid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs, lo the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
(ii) Borrowings arc classified as current financial liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12
months after the repcjrting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting
period with the effect that the liability becomes payable on demand on the reporting date, the entity docs not classify the liability as current, if the lender
agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
2.11 EARNINGS PER SHARE
1 Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company; and
- by the weighted average number of equity shares outstanding during the financial year, adjusted fur bonus elements in equity shares issued during the year.
2 Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive potential equity shares; and
the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
|