Accounting Policies of Asian Hotels (North) Ltd. Company
Mar 31, 2018
1. CORPORATE INFORMATION
Asian Hotels (North) Limited (âthe Companyâ) is a public limited company domiciled in India and is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Company is operating a Five Star Deluxe Hotel, namely Hyatt Regency in Delhi since 1982.
2. BASIS OF PREPARATION
For the year ended 31st March 2018, the Company has prepared its financial statements in accordance with the Indian Accounting Standards notified under Section 133 of the Companies Act 2013, read together with Companies (Accounts) Rules 2014 (In AS). The financial statements have been prepared on historical cost basis, except certain financial assets and liabilities which have been measured at fair value, defined benefits plans and contingent consideration. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purposes of current / non-current classification of assets and liabilities.
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:
a. Expected to be realized or intended to be sold or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realized within twelve months after the reporting period, or
d. 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:
a. It is expected to be settled in normal operating cycle
b. It is held primarily for the purpose of trading
c. It is due to be settled within twelve months after the reporting period, or
d. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2A. USE OF ESTIMATES
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the groupâs accounting policies. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be adjusted due to estimates and assumptions turning out to be different from those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical estimates and judgments
The areas involving critical estimates or judgments are:
a) Estimation of current tax expense and payable - Refer accounting policies - 3.9
b) Estimated useful life of property, plant & equipment and intangible assets - Refer accounting policies - 3.1
c) Estimation of defined benefit obligation - Refer accounting policies - 3.8
d) Estimation of fair values of contingent liabilities - Refer accounting policies - 3.12
e) Recognition of revenue - Refer accounting policies - 3.4
f) Recognition of deferred tax assets for carried forward tax losses - Refer accounting policies - 3.9
g) Impairment of financial assets - Refer accounting policies - 3.2 & 3.5
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Property, plant and equipment:
Property, plant and equipment are stated at original cost (including any revalued amount) net of tax / duty credit availed, less accumulated depreciation and accumulated and accumulated impairment losses, if any. Costs include financing costs of borrowed funds attributable to acquisition or construction of fixed assets, up to the date the assets are put-to-use. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company derecognizes the replaced part, and recognizes the new part with its own associated useful life and it is depreciated accordingly. Where components of an asset are significant in value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognized separately as independent items and are depreciated over their estimated economic useful lives. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred unless they meet the recognition criteria for capitalization under Property, Plant and Equipment
Tangible Fixed Assets:
(a) Depreciation is charged using straight line method on the basis of the expected useful life as specified in Schedule II to the Act. A residual value of 5% (as prescribed in Schedule II to the Act) of the cost of the assets is used for the purpose of calculating the depreciation charge. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognized prospectively in current and future periods.
(b) Depreciation on leasehold improvements is being charged equally over the period of the lease.
(c) Depreciation on the increased amount of assets due to revaluation is computed on the basis of residual life of the assets as estimated by the value on straight line method and charged to Revaluation Reserve and credited to the Other Comprehensive Income based on guidance provided by ââApplication Guide on the Provisions of Schedule II to the Companies Act, 2013â issued by the Institute of Chartered Accountants of India read with In AS notified under the Companies (Indian Accounting Standards) Rules, 2016 as amended by the Companies (Indian Accounting standards) (Amendment) Rules, 2016.
(d) No depreciation is charged on the assets sold/ discarded during the year.
(e) On transition to In AS, the Company had elected to measure its Property, Plant and Equipment at cost as per In AS. Further, as per the requirement of paragraph 11 of In AS 101, outstanding amount in the revaluation reserve is transferred to retained earning account. This is because after transition, the Company is no longer applying the revaluation model of In AS 16, instead it has elected to apply the cost model approach.
Intangible Assets:
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
An item of intangible asset initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset [calculated as the difference between the net disposal proceeds and the carrying amount of the asset] is included in the income statement when the asset is derecognized. Intangible fixed assets are amortized on straight line basis over their estimated useful economic life.
Capital Work- in- progress
Capital work- in- progress represents directly attributable costs of construction to be capitalized. All other expenses including interest incurred during construction period are capitalized as a part of the construction cost to the extent to which these expenditures are attributable to the construction as per In AS-23 âBorrowing Costsâ. Interest income earned on temporary investment of funds brought in for the project during construction period are set off from the interest expense accounted for as expenditure during the construction period.
3.2 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs net selling price and value in use. In assessing value in use, the Company measures it on the basis of discounted cash flows of next five yearsâ projections estimated based on current prices. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
In respect of the subsidiaries assets at each balance sheet date, the impairment testing is based on the realizable value of underlying assets as tested by the Board of Directors of the subsidiary.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
3. SIGNIFICANT ACCOUNTING POLICIES ...contd.
Impairment losses of continuing operations, including impairment on inventories, are recognized in profit and loss section of the statement of profit and loss, except for properties previously revalued with the revaluation taken to other comprehensive Income (the âOCIâ). For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation.
3.3 Foreign Currency Transactions
The Companyâs financial statements are presented in INR, which is also the Companyâs functional currency.
Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are measured in terms of historical costs denominated in foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting Companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements including receivables and payables which are likely to be settled in foreseeable future, are recognized as income or as expenses in the year in which they arise. All other exchange differences are recognized as income or as expenses in the period in which they arise.
The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item that give rise to the translation difference (i.e. translation difference on items whose gain or loss is recognized in other comprehensive income or the statement of profit and loss is also recognized in other comprehensive income or the statement of profit and loss respectively).
3.4 Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically,
(i) Revenue from rendering of hospitality services is recognized when the related services are performed and billed to the customer or the agreed milestones are achieved and are net of service tax and Goods and Service Tax (GST), wherever applicable.
(ii) For all debt instruments measured either at amortized cost or at fair value through other comprehensive income [OCI], interest income is recorded using the effective interest rate [EIR]. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When 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.
(iii) Dividend income from investments is recognized when the Companyâs right to receive payment is established which is generally when shareholders approve the dividend.
(iv) Income from generation of electricity is recognized when the actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on the basis of agreed rate.
(vi) Excise duty (up to 30th June, 2017) is a liability of the Company, which forms part of the cost of production, irrespective of whether the goods are sold or not. Therefore, the recovery of excise duty flows to the Company on its own account and hence revenue includes excise duty.
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.
A. Financial Assets
a. Initial recognition and measurement:
All financial assets are recognized 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 recognized on the settlement date, trade date, i.e., the date that the Company settle commits to purchase or sell the asset.
3. SIGNIFICANT ACCOUNTING POLICIES ...contd.
b. Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in four categories:
i. Debt instruments at amortized cost:
A âdebt instrumentâ is measured at the amortized cost if both the following conditions are met:
- The asset is held with an objective of collecting contractual cash flows
- 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate [EIR] method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
ii. Debt instruments at fair value through other comprehensive income [FVTOCI]:
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
- The asset is held with objective of both - for collecting contractual cash flows and selling the financial assets
- The assetâs contractual cash flows represent SPPI.
Debt 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 & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
iii. Debt instruments, derivatives and equity instruments at fair value through profit or loss [FVTPL]:
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
iv. Equity instruments measured at fair value through other comprehensive income [FVTOCI]:
All equity investments in scope of In AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which In AS103 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 has made such election on an instrument by- 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 Statement of Profit and Loss, 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. Derecognition:
A financial asset is primarily derecognized when:
i. 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 âpass-throughâ 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.
ii. 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.
d. Impairment of financial assets:
In accordance with In 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:
a. Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, deposits, trade receivables and bank balance
3. SIGNIFICANT ACCOUNTING POLICIES ...contd.
b. Trade receivables or any contractual right to receive cash
c. Financial assets that are debt instruments and are measured as at FVTOCI
d. Lease receivables under Ind AS 17
e. Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Point c and d provided above. The application of simplified approach requires the company to recognize the 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 entity reverts to recognizing 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.
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 analyzed.
ECL impairment loss allowance [or reversal] recognized during the period is recognized as income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
a. Financial assets measured as at amortized cost, contractual revenue receivables and lease receivables: ECL is presented as an allowance which reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
b. 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 âaccumulated impairment amountâ in the OCI.
B. Financial liabilities:
a. Initial recognition and measurement:
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. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
b. Subsequent measurement:
The measurement of financial liabilities depends on their classification, as described below:
i. 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. 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 In 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 recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are 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 risk are recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss.
ii. Loans and borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using
3. SIGNIFICANT ACCOUNTING POLICIES ...contd.
the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
iii. 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 recognized 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 In AS 109 and the amount recognized less cumulative amortization.
c. Derecognition:
A financial liability is derecognized 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 derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
C. Reclassification of financial assets:
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses [including impairment gains or losses] or interest.
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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
3.6 Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a. In the principal market for the asset or liability, or
b. In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted [unadjusted] market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
3.7 Inventories
Inventories are valued at the lower of cost or net realizable value. The cost is determined by weighted average method. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Operating equipment in circulation is valued at weighted average cost less estimated diminution in value on account of usage.
3.8 Retirement benefits
Retirement benefit costs for the year are determined on the following basis:
(i) All employees are covered under contributory provident fund benefit of a contribution of 12% of salary. There is no obligation other than the contribution payable to the respective fund.
(ii) The Company also provides for retirement benefits in the form of gratuity and compensated absences/ Leave encashment in pursuance of the Company leave rules. The Companyâs liability towards such defined benefit plans are determined based on valuations as at the Balance Sheet date made by independent actuaries. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not classified to the statement of profit and loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset
3.9 Taxes on Income
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 and tax laws prevailing in the respective tax jurisdictions where the Company operates. Current tax items are recognized in correlation to the underlying transaction either in P&L, OCI or directly in equity.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized on the basis of reasonable certainty that the company will be having sufficient future taxable profits and based on the same the DTA has been recognized in the books.
The carrying amount of deferred 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 tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates [and tax laws] that have been enacted or substantively enacted at the reporting date. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlementâ. The Company reviews the âMAT Credit Entitlementâ asset at each reporting date and writes it down to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period and utilize the MAT Credit Entitlement.
3.10 Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs 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 respective asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs which are not sp
specifically attributable to the acquisition, construction or production of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a weighted average capitalization rate. The weighted average rate is taken of the borrowing costs applicable to the outstanding borrowings of the company during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized cannot exceed the amount of borrowing costs incurred during that period.
3.11 Earnings per equity share
Basic earnings per share is calculated by dividing the net profit or loss from continuing operation and total profit, both attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
3.12 Provisions, Contingent Liabilities and Contingent Assets:
Provision is recognized when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made.
A disclosure for contingent liability is made when there is a possible obligation, that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognized in the financial statements. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the correct management estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are renewed at each balance sheet date.
3.13 Cash and Cash Equivalents
Cash and cash equivalent comprise cash on hand and demand deposits with banks which are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
3.14 Leases
The determination of whether an arrangement is [or contains] a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
- A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
- Lease other than finance lease are operating lease and these leased assets are not recognized in the company''s statement of financial position but are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lesser are classified as operating leases. The Company is both a lessee and a lesser under such arrangements. Payments and receipts under such leases are charged or credited to the Statement of Profit and Loss on a straight-line basis over the primary period of the lease unless another systematic basis is more representative of the time pattern of the userâs benefit.
3.15 Exceptional items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
# The change in value is solely on account of change in exchange rate on the stated foreign currency amount invested.
* Pursuant to the Power Purchase Agreement (PPA), investment has been made which will entitle the company to consume power, equivalent to a maximum capacity of 1.97 MW
Notes:
(a) The Company presently holds 100% interest in Finalize Hospitality & Consultancy Pet Ltd. (FHCPL), which in turn holds 80% stake in Leon Hotels Venture Ltd., Mauritius (Leon); and Leon in turn holds 99.76% interest in Leading Hotels Limited (Leading). Leading is developing an all Villa Hotel Complex at Goa and an 18 hole, 72 par Championship Golf Course. The said project will be under the management of Four Seasons, a world famed hotel chain and hospitality management company.
(b) The auditors of the subsidiary company, Leading Hotels Limited, in their report had drawn attention to the fact that there were some ongoing legal disputes on its project, and had also indicated that the financial implication of such disputes cannot be ascertained. However, there is an existing overall provision for impairment of Rs. 5,119.60 Lakhs against the investment in the same project, created in earlier years.
19. NON - CURRENT FINANCIAL LIABILITIES - BORROWINGS ...contd.
Company''s investment in foreign subsidiary company. External commercial borrowings are repayable as under: (i) USD 148.97 Lakhs is payable in 18 unequal half yearly installments till March, 2030; (ii) USD 160.83 Lakhs is payable in 11 unequal half yearly installments till March, 2030.
(b) Axis Bank Limited - Rupee Term loan (carried interest @ 11.70% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi; first pair passé charge on movable fixed assets (Excluding vehicles, windmills and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The loan is repayable in unequal 40 quarterly installments till March, 2030. The loan has been repaid during the year through re-financing by Punjab National Bank (PNB).
(c) Kotak Mahindra Bank Limited - Rupee loan (carried interest @ 11.00% per annum) is secured by exclusive charge mortgage on 3000 sq. ft. of sixth floor of New Tower Block A in Hyatt Regency Delhi and personal guarantee of Chairman and Managing Director, repayable in 38 unequal monthly installments, up to May 2020. The loan has been repaid in full during the year.
(d) Yes Bank Limited - Rupee loan of Rs. 4,651.36 Lakhs (carried interest @ 10.50% - 10.55% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair passé charge on movable fixed assets (Excluding vehicles and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The loan is repayable in 34 unequal quarterly installments till July, 2030.
(e) Yes Bank Limited - Rupee loan of Rs. 10,972.78 Lakhs (carried interest @ 10.95% - 11.50% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair passé charge on movable fixed assets (Excluding vehicles and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The loan is repayable in 36 unequal quarterly installments till December, 2030.
(f) Bank of Maharashtra (Term Loan I) of Rs. 19,775 Lakhs (carried interest @ 10.85% - 10.95% per annum) - is secured by 1st pair passé charge on land and building of Hotel Hyatt Regency and personal guarantee of the Chairman & Managing Director. The loan is payable in 48 unequal quarterly installments commencing October, 2018.
(g) Bank of Maharashtra (Term Loan II) of Rs. 4,366 Lakhs (carried interest @ 10.85% - 10.95% per annum) - is secured by 1st pair passé charge on land and building of Hotel Hyatt Regency and personal guarantee of the Chairman & Managing Director. The loan is payable in 48 unequal quarterly installments commencing October, 2018.
(h) Inducing Bank Limited - Rupee loan of Rs. 10,000 Lakhs (carried interest @ 9.50% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair passé charge on movable fixed assets (Excluding vehicles and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The loan is repayable in 18 unequal half yearly installments till March, 2030.
(i) Punjab National Bank - Rupee loan of Rs. 14,619.91 Lakhs (carried interest @ 9.25% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair passé charge on movable fixed assets (Excluding vehicles and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The loan is repayable in 36 structured quarterly installments till March, 2030.
(j) Genesis Finance Company Limited - Rupee loan for business of generation of electricity (carried interest @ 12.00% per annum) is secured by first charge on plant & machinery pertaining to the windmill situated at Sinner in Maharashtra and personal guarantee of Chairman & Managing Director. The loan is repayable in 99 unequal monthly installments up to October 2027.
(k) ICICI Bank-Rupee loan (carried interest @ 9.84% per annum) is secured against hypothecation of 8 vehicles. Balance repayable in monthly installments up to December, 2020.
(l) ICICI Bank-Rupee loan (carried interest @ 9.35% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to June, 2021.
(m) ICICI Bank-Rupee loan (carried interest @ 8.51% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to September, 2021.
(n) ICICI Bank-Rupee loan (carried interest @ 8.02% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to September, 2022.
(o) ICICI Bank-Rupee loan (carried interest @ 8.25% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to September, 2022.
19. NON - CURRENT FINANCIAL LIABILITIES - BORROWINGS ...contd.
(p) ICICI Bank-Rupee loan (carried interest @ 8.01% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to September, 2022.
The aggregate values of the vehicle loans from ICICI Bank aggregate to Rs. 196.61 Lakhs.
(q) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carried interest @ 10.25% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to December 2018.
(r) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 10.25% per annum) is secured against hypothecation of certain vehicles. Balance repayable in monthly installments up to May 2020.
(s) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 10.25% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to February 2021.
(t) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 10.48% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to February 2020.
(u) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 10.25% per annum) is secured against hypothecation of a vehicle. Balance repayable in monthly installments up to October 2019.
(v) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 11.89% per annum) is secured against hypothecation of certain vehicles. Balance repayable in monthly installments up to November, 2019.
(w) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 8.60% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to March 2022.
(x) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 10.33% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to May 2022.
(y) Kotak Mahindra Prime Limited -Rupee loan for acquisition of vehicles (carries interest @ 7.78% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to November 2022.
The aggregate values of the vehicle loans outstanding from Kotak Mahindra Prime Ltd aggregates to Rs. 472.35 Lakhs
(z) BMW Financial Services - Rupee loan of Rs. 2.57 Lakhs for acquisition of vehicles (carried interest @ 12.21% per annum) was secured against hypothecation of certain vehicles. The loan has been fully repaid during the year.
(aa) SREI Equipment Finance Ltd - Rupee Loan of Rs. 96.92 Lakhs for acquisition of equipment (carried interest @ 14.25% per annum) is secured against the power saving equipment acquired from the loan. Balance is payable in equal monthly installments up to October, 2020 starting from December, 2015.
(ab) HDFC Bank Ltd - Rupee loan of Rs. 48.80 Lakhs for acquisition of a vehicle (carried interest @ 11.00% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to May 2021.
(ac) Toyota Financial Services India Ltd - Rupee loan for acquisition of a vehicle (carried interest @ 9.05% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to June 2021.
(ad) Toyota Financial Services India Ltd - Rupee loan for acquisition of a vehicle (carried interest @ 7.74% per annum) is secured against hypothecation of the vehicle financed by the loan. Balance repayable in monthly installments up to October 2022.
The above includes Rs. 178.22 Lakhs (Previous Year Rs. 177.33 Lakhs) received as refundable interest free security deposits against leave and license agreements relating to the shops in Hotel Hyatt Regency and Rs. 1,500 Lakhs (Previous Year Rs. 1,500 Lakhs) received as refundable interest free security deposit for parking space in Serviced Apartment Tower.
Nature of security and terms of repayment for secured current financial liabilities-borrowings:
(a) DBS Bank Limited -Overdraft facilities (carried interest @ 12.00% per annum) and was secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pari passu charge on movable fixed assets (Excluding vehicles, windmills and power saving equipment), first pair passé charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company. The overdraft facility has been withdrawn during the year.
(b) Yes Bank Limited -Overdraft facilities (carried interest @ 11.50% - 11.75% per annum) is secured by first pair passé charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair passé charge on movable fixed assets (Excluding vehicles and power saving equipment), first pair pass charge on current assets, personal guarantee of Chairman & Managing Director and pledge of shares representing Company''s investment in foreign subsidiary company.
(c) Axis Bank Limited - Overdraft facilities (carried interest @ 11.40% per annum) and is secured by first pair pass charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair pass
22. CURRENT FINANCIAL LIABILITIES - BORROWINGS ...contd.
charge on movable fixed assets (Excluding vehicles, windmills and power saving equipment), first pair pass charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director, pledge of shares representing Company''s investment in foreign subsidiary company.
(d) Inducing Bank Limited - Overdraft facilities (carried interest @ 9.50% per annum) and is secured by first pair pass charge of land & building of Hotel Hyatt Regency Delhi and unsold area of New Tower Block A in Hyatt Regency Delhi, first pair pass charge on movable fixed assets (Excluding vehicles, windmills and power saving equipment), first pair pass charge on current assets (Present and Future), personal guarantee of Chairman & Managing Director, pledge of shares representing Company''s investment in foreign subsidiary company.
Mar 31, 2017
1. CORPORATE INFORMATION
Asian Hotels (North) Limited (âthe Companyâ) is a public limited company domiciled in India and is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Company is operating a Five Star Deluxe Hotel, namely Hyatt Regency in Delhi since 1982.
2. BASIS OF PREPARATION
Ministry of Corporate Affairs notified roadmap to implement Indian Accounting Standards (''Ind ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2016 as amended by the Companies (Indian Accounting standards) (Amendment) Rules,2016. As per the said roadmap, the company is required to apply Ind AS starting from financial year beginning on or after 1st April 2016.
For all period, up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with the Accounting Standards notified under Section 133 of the companies Act 2013, read together with Companies (Accounts) Rules 2014 (Indian GAAP). These Financial statements for the year ended 31st March 2017 are the first, the Company has prepared in accordance with Ind AS (Refer Note 44 for information on how the company has adopted Ind AS).
The financial statements have been prepared on historical cost basis, except certain financial assets and liabilities which have been measured at fair value, defined benefits plans and contingent consideration. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purposes of current / non-current classification of assets and liabilities.
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:
a. Expected to be realized or intended to be sold or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realized within twelve months after the reporting period, or
d. 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:
a. It is expected to be settled in normal operating cycle
b. It is held primarily for the purpose of trading
c. It is due to be settled within twelve months after the reporting period, or
d. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
2A. USE OF ESTIMATES
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgment in applying the groupâs accounting policies. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be adjusted due to estimates and assumptions turning out to be different from those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
Critical estimates and judgments
The areas involving critical estimates or judgments are:
a) Estimation of current tax expense and payable - Refer accounting policies - 3.9
b) Estimated useful life of property, plant & equipment and intangible assets - Refer accounting policies - 3.1
c) Estimation of defined benefit obligation - Refer accounting policies - 3.8
d) Estimation of fair values of contingent liabilities - Refer accounting policies - 3.12
e) Recognition of revenue - Refer accounting policies - 3.4
f) Recognition of deferred tax assets for carried forward tax losses - Refer accounting policies - 3.9
g) Impairment of financial assets - Refer accounting policies - 3.2 & 3.5
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Property, plant and equipment:
Property, plant and equipment are stated at original cost net of tax / duty credit availed, less accumulated depreciation and accumulated impairment losses, if any. Costs include financing costs of borrowed funds attributable to acquisition or construction of fixed assets, up to the date the assets are put-to-use. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company derecognizes the replaced part, and recognizes the new part with its own associated useful life and it is depreciated accordingly. Where components of an asset are significant in value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognized separately as independent items and are depreciated over their estimated economic useful lives. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred unless they meet the recognition criteria for capitalization under Property, Plant and Equipment
Tangible Fixed Assets:
(a) Depreciation is charged using straight line method on the basis of the expected useful life as specified in Schedule II to the Act. A residual value of 5% (as prescribed in Schedule II to the Act) of the cost of the assets is used for the purpose of calculating the depreciation charge. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at each reporting period end and any revision to these is recognized prospectively in current and future periods.
(b) Depreciation on leasehold improvements is being charged equally over the period of the lease.
(c) Depreciation on the increased amount of assets due to revaluation is computed on the basis of residual life of the assets as estimated by the valuer on straight line method and charged to Revaluation Reserve and credited to the Other Comprehensive Income based on guidance provided by ââApplication Guide on the Provisions of Schedule II to the Companies Act, 2013â issued by the Institute of Chartered Accountants of India read with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2016 as amended by the Companies (Indian Accounting standards) (Amendment) Rules, 2016.
(d) No depreciation is charged on the assets sold/ discarded during the year.
Intangible Assets:
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.
An item of intangible asset initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset [calculated as the difference between the net disposal proceeds and the carrying amount of the asset] is included in the income statement when the asset is derecognized. Intangible fixed assets are amortized on straight line basis over their estimated useful economic life.
Capital Work- in- progress
Capital work- in- progress represents directly attributable costs of construction to be capitalized. All other expenses including interest incurred during construction period are capitalized as a part of the construction cost to the extent to which these expenditures are attributable to the construction as per Ind AS-23 âBorrowing Costsâ. Interest income earned on temporary investment of funds brought in for the project during construction period are set off from the interest expense accounted for as expenditure during the construction period.
3.2 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs net selling price and value in use. In assessing value in use, the Company measures it on the basis of discounted cash flows of next five yearsâ projections estimated based on current prices. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
3. SIGNIFICANT ACCOUNTING POLICIES ...contd.
In respect of the subsidiaries assets at each balance sheet date, the impairment testing is based on the realizable value of underlying assets as tested by the Board of Directors of the subsidiary.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
Impairment losses of continuing operations, including impairment on inventories, are recognized in profit and loss section of the statement of profit and loss, except for properties previously revalued with the revaluation taken to other comprehensive Income (the âOCIâ). For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation.
3.3 Foreign Currency Transactions
The Companyâs financial statements are presented in INR, which is also the Companyâs functional currency.
Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are measured in terms of historical costs denominated in foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting Companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements including receivables and payables which are likely to be settled in foreseeable future, are recognized as income or as expenses in the year in which they arise. All other exchange differences are recognized as income or as expenses in the period in which they arise.
The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item that give rise to the translation difference (i.e. translation difference on items whose gain or loss is recognized in other comprehensive income or the statement of profit and loss is also recognized in other comprehensive income or the statement of profit and loss respectively).
3.4 Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically,
(i) Revenue from rendering of hospitality services is recognized when the related services are performed and billed to the customer or the agreed milestones are achieved and are net of service tax, wherever applicable.
(ii) For all debt instruments measured either at amortized cost or at fair value through other comprehensive income [OCI], interest income is recorded using the effective interest rate [EIR]. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When 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.
(iii) Dividend income from investments is recognized when the Companyâs right to receive payment is established which is generally when shareholders approve the dividend.
(iv) Income from generation of electricity is recognized when the actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on the basis of agreed rate.
(vi) Excise duty is a liability of the Company, which forms part of the cost of production, irrespective of whether the goods are sold or not. Therefore, the recovery of excise duty flows to the Company on its own account and hence revenue includes excise duty.
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.
A. Financial Assets
a. Initial recognition and measurement:
All financial assets are recognized 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 recognized on the settlement date, trade date, i.e., the date that the Company settle commits to purchase or sell the asset.
b. Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in four categories:
i. Debt instruments at amortized cost:
A âdebt instrumentâ is measured at the amortized cost if both the following conditions are met:
- The asset is held with an objective of collecting contractual cash flows
- 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate [EIR] method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
ii. Debt instruments at fair value through other comprehensive income [FVTOCI]:
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
- The asset is held with objective of both - for collecting contractual cash flows and selling the financial assets
- The assetâs contractual cash flows represent SPPI.
Debt 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 & 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 recognized in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
iii. Debt instruments, derivatives and equity instruments at fair value through profit or loss [FVTPL]:
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
iv. Equity instruments measured at fair value through other comprehensive income [FVTOCI]:
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination to which Ind AS103 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 has made such election on an instrument by- 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 Statement of Profit and Loss, 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 is primarily derecognized when:
i. 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 âpass-throughâ 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.
ii. 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.
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:
a. Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, deposits, trade receivables and bank balance
b. Trade receivables or any contractual right to receive cash
c. Financial assets that are debt instruments and are measured as at FVTOCI
d. Lease receivables under Ind AS 17
e. Financial guarantee contracts which are not measured as at FVTPL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Point c and d provided above. The application of simplified approach requires the company to recognize the 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 entity reverts to recognizing 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.
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 analyzed.
ECL impairment loss allowance [or reversal] recognized during the period is recognized as income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
a. Financial assets measured as at amortized cost, contractual revenue receivables and lease receivables: ECL is presented as an allowance which reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
b. 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 âaccumulated impairment amountâ in the OCI.
B. Financial liabilities:
a. Initial recognition and measurement:
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. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
b. Subsequent measurement:
The measurement of financial liabilities depends on their classification, as described below:
i. 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. 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 recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are 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 risk are recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the statement of profit or loss. The Company has not designated any financial liability as at fair value through profit and loss.
ii. Loans and borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
iii. 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 recognized 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 recognized less cumulative amortization.
c. De-recognition:
A financial liability is derecognized 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 recognized in the statement of profit or loss.
C. Reclassification of financial assets:
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses [including impairment gains or losses] or interest.
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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
3.6 Fair Value Measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a. In the principal market for the asset or liability, or
b. In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted [unadjusted] market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
3.7 Inventories
Inventories are valued at the lower of cost or net realizable value. The cost is determined by weighted average method. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Operating equipment in circulation is valued at weighted average cost less estimated diminution in value on account of usage.
3.8 Retirement benefits
Retirement benefit costs for the year are determined on the following basis:
(i) All employees are covered under contributory provident fund benefit of a contribution of 12% of salary. There is no obligation other than the contribution payable to the respective fund.
(ii) The Company also provides for retirement benefits in the form of gratuity and compensated absences/ Leave encashment in pursuance of the Company leave rules. The Companyâs liability towards such defined benefit plans are determined based on valuations as at the Balance Sheet date made by independent actuaries. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not classified to the statement of profit and loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset
3.9 Taxes on Income
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 and tax laws prevailing in the respective tax jurisdictions where the Company operates. Current tax items are recognized in correlation to the underlying transaction either in P&L, OCI or directly in equity.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized on the basis of reasonable certainty that the company will be having sufficient future taxable profits and based on the same the DTA has been recognized in the books.
The carrying amount of deferred 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 tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is "realized or the liability is settled, based on tax rates [and tax laws] that have been enacted or substantively enacted at the" reporting date.
Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlementâ. The Company reviews the âMAT Credit Entitlementâ asset at each reporting date and writes it down to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period and utilize the MAT Credit Entitlement.
3.10 Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs 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 respective asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs which are not specifically attributable to the acquisition, construction or production of a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a weighted average capitalization rate. The weighted average rate is taken of the borrowing costs applicable to the outstanding borrowings of the company during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount of borrowing costs capitalized cannot exceed the amount of borrowing costs incurred during that period.
3.11 Earnings per equity share
Basic earnings per share is calculated by dividing the net profit or loss from continuing operation and total profit, both attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
3.12 Provisions, Contingent Liabilities and Contingent Assets:
Provision is recognized when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made.
A disclosure for contingent liability is made when there is a possible obligation, that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are not recognized in the financial statements. Provisions and contingencies are reviewed at each balance sheet date and adjusted to reflect the correct management estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are renewed at each balance sheet date.
3.13 Cash and Cash Equivalents
Cash and cash equivalent comprise cash on hand and demand deposits with banks which are short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
3.14 Leases
The determination of whether an arrangement is [or contains] a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
- A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
- Lease other than finance lease are operating lease and these leased assets are not recognized in the company''s statement of financial position but are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The Company is both a lessee and a lessor under such arrangements. Payments and receipts under such leases are charged or credited to the Statement of Profit and Loss on a straight-line basis over the primary period of the lease unless another systematic basis is more representative of the time pattern of the userâs benefit.
3.15 Exceptional items
Certain occasions, the size, type or incidence of an item of income or expense, pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expense is classified as an exceptional item and accordingly, disclosed in the notes accompanying to the financial statements.
Mar 31, 2016
1. CORPORATE INFORMATION
Asian Hotels (North) Limited (âthe Companyâ) is a public limited company domiciled in India and is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Company is operating a Five Star Deluxe Hotel, namely Hyatt Regency in Delhi since 1982.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
These financial statements have been prepared to comply in all material aspects with the Accounting Standards specified under Section 133 of the Companies Act, 2013 (âthe Actâ), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and other accounting principles generally accepted in India, to the extent applicable. These financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purposes of current / non-current classification of assets and liabilities.
b) Use of Estimates
The preparation of these financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
c) Fixed assets, depreciation / amortization and Capital Work-in-Progress
(i) Fixed assets are stated at cost of acquisition or construction or at revalued amounts, net of impairment loss, if any, less depreciation/ amortization. Costs include financing costs of borrowed funds attributable to acquisition or construction of fixed assets, up to the date the assets are put to use. Assessment of indication of impairment of an asset is made at the year end and impairment loss, if any, recognized. The Company adjusts exchange differences arising on translation/ settlement of long-term foreign currency monetary items pertaining to the acquisition of depreciable assets to the cost of the asset and depreciates the same over the remaining life of the asset.
(ii) Depreciation on Tangible Fixed Assets:
(a) Depreciation is charged using straight line method on the basis of the expected useful life as specified in Schedule II to the Act. A residual value of 5% (as prescribed in Schedule II to the Act) of the cost of the assets is used for the purpose of calculating the depreciation charge.
(b) Depreciation on leasehold improvements is being charged equally over the period of the lease.
(c) Depreciation on the increased amount of assets due to revaluation is computed on the basis of residual life of the assets as estimated by the value on straight line method and charged to Revaluation Reserve and credited to the General Reserve based on guidance provided by "Application Guide on the Provisions of Schedule II to the Companies Act, 2013" issued by the Institute of Chartered Accountants of India.
(d) No depreciation is charged on the assets sold/ discarded during the year.
(iii) Amortization of Intangible Fixed Assets:
Intangible fixed assets are amortized on straight line basis over their estimated useful economic life.
(iv) Capital Work-in-Progress:
Tangible assets not ready for intended use on the date of Balance Sheet are disclosed as âCapital Work-in-Progressâ. Capital Work-in-Progress represents directly attributable costs of construction to be capitalized. All other expenses including interest incurred during construction period are capitalized as a part of the construction cost to the extent to which these expenditures are attributable to the construction as per AS - 16 âBorrowing Costsâ. Interest income earned on temporary investment of funds brought in for the project during construction period has been set off from the interest expense accounted for as expenditure during the construction period.
d) Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs net selling price and value in use. In assessing value in use, the
2. SIGNIFICANT ACCOUNTING POLICIES ...contd.
Company measures it on the basis of discounted cash flows of next five yearsâ projections estimated based on current prices. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
In respect of the subsidiaries assets at each balance sheet date, the impairment testing is based on the realizable value of underlying assets as tested by the Board of Directors of the subsidiary.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
e) Foreign Currency Transactions Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are measured in terms of historical costs denominated in foreign currency, are reported using the exchange rate at the date of the transaction. Nonmonetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting Companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements including receivables and payables which are likely to be settled in foreseeable future, are recognized as income or as expenses in the year in which they arise.
For exchange differences arising on certain long-term foreign currency monetary items, refer to note 2(c) above on tangible fixed assets.
All other exchange differences are recognized as income or as expenses in the period in which they arise.
f) Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Specifically,
(i) Revenue from rendering of hospitality services is recognized when the related services are performed and billed to the customer.
(ii) Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.
(iii) Dividend income from investments is recognized when the Companyâs right to receive payment is established.
(iv) Income from generation of electricity is recognized when the actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on the basis of agreed rate.
g) Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments. Current investments are valued at lower of cost and fair value determined on an individual investment basis. Changes in the carrying amount of current investments are recognized in the statement of profit and loss. Non-current investments are valued at cost. However, provision for diminution in value is made to recognize a decline that is other than temporary in the value of investments, wherever considered necessary. Cost comprises cost of acquisition and related expenses such as brokerage and stamp duties.
h) Inventories
Inventories are valued at the lower of cost or net realizable value. The cost is determined by weighted average method. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Operating equipment in circulation is valued at weighted average cost less estimated diminution in value on account of usage.
i) Retirement benefits
Retirement benefit costs for the year are determined on the following basis
Mar 31, 2014
A) Basis of preparation of financial statements
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified under the Companies
Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th
September, 2013 of the Ministry of Corporate Affairs in respect of
Section 133 of the Companies Act, 2013 and the relevant provisions of
the Act. The financial statements have been prepared under the
historical cost convention on accrual basis. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year.
b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed assets, depreciation/amortisation and Capital Work-in-progress
(i) Fixed assets are stated at cost of acquisition or construction or
at revalued amounts, net of impairment loss, if any, less depreciation/
amortisation. Costs include financing costs of borrowed funds
attributable to acquisition or construction of fixed assets, up to the
date the assets are put to use. Assessment of indication of impairment
of an asset is made at the year end and impairment loss, if any,
recognised. The Company adjusts exchange differences arising on
translation/ settlement of long-term foreign currency monetary items
pertaining to the acquisition of depreciable assets to the cost of the
asset and depreciates the same over the remaining life of the asset.
(ii) Depreciation on Tangible Fixed Assets:
(a) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(b) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV to the Companies Act, 1956, pro-rata from
the month of purchase. If purchased on or before 15th of the month,
depreciation is charged from the month of purchase, otherwise
depreciation is charged from the month following the month of purchase.
(c) Depreciation is provided from the date of installation/acquisition
on a pro-rata basis. Depreciation on assets is provided as per the
rates specified in Schedule XIV to the Companies Act, 1956. Assets
individually costing Rs. 5,000/- or less are depreciated fully in the
year when they are put to use.
(d) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specified by the Income Tax Act, 1961 and the rules made there under in
terms of Section 205(2) (b) of the Companies Act, 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs.244.16 Lakhs.
(e) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(f) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(g) No depreciation is charged on the assets sold/ discarded during the
year.
(iii) Amortization of Intangible Fixed Assets:
Intangible fixed assets are amortized on straight line basis over their
estimated useful economic life.
(iv) Capital Work-in-progress:
Capital work-in-progress represents directly attributable costs of
construction to be capitalized. All other expenses including interest
incurred during construction period to be capitalized as part of
construction cost to the extent to which these expenditures are
specifically attributable to the construction. Interest income earned
on temporary investment of funds brought in for the project during
construction period has been set off from the interest expense
accounted for as expenditure during the construction period.
d) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the Company measures it on the basis of
discounted cash flows of next five years projections estimated based on
current prices. In respect of the assets at the subsidiary at each
balance sheet date the impairment testing is based on the realizable
value of underlying assets as tested by the Board of Directors of the
subsidiary.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
e) Foreign Currency Transactions Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are measured in terms of historical costs
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Nonmonetary items, which are measured
at fair value or other similar valuation denominated in a foreign
currency, are translated using the exchange rate at the date when such
value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements including receivables and payables which
are likely to be settled in foreseeable future, are recognized as
income or as expenses in the year in which they arise.
For exchange differences arising on certain long-term foreign currency
monetary items, refer to note 2d above on tangible fixed assets.
All other exchange differences are recognized as income or as expenses
in the period in which they arise.
f) Revenue recognition
Revenue is recognized to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured. Specifically,
(i) Revenue from rendering of hospitality services is recognized when
the related services are performed and billed to the customer.
(ii) Interest income is recognized on time proportion basis taking into
account the amount outstanding and the rate applicable.
(iii) Dividend income from investments is recognized when the Company''s
right to receive payment is established.
(iv) Income from generation of electricity is recognized when the
actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on
the basis of agreed rate.
g) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments or short-term
investments. All other investments are classified as non-current
investment or long-term investments. Current investments are valued at
lower of cost and fair value determined on an individual investment
basis. Changes in the carrying amount of current investments are
recognized in the statement of profit and loss. Non-current investments
are valued at cost. However, provision for diminution in value is made
to recognize a decline that is other than temporary in the value of
investments, wherever considered necessary. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
h) Inventories
Inventory is valued at cost or net realizable value whichever is lower.
The cost is determined by weighted average method. Operating equipment
in circulation is valued at weighted average cost less estimated
diminution in value on account of usage.
i) Retirement benefits
Retirement benefit costs for the year are determined on the following
basis:
(i) All employees are covered under contributory provident fund benefit
of a contribution of 12% of salary. It is a defined contribution scheme
and the contribution is charged to the statement of profit and loss of
the year when the contribution to the respective fund is due. There is
no obligation other than the contribution payable to the respective
fund.
(ii) Provision for Employees'' Gratuity is based on actuarial valuation
as on the date of balance sheet. All actuarial gains/losses arising
during the accounting year are recognized immediately in the statement
of profit and loss as income or expense.
(iii) Accrual for leave encashment benefit is based on actuarial
valuation as on the date of balance sheet in pursuance of the Company''s
leave rules.
j) Income and Deferred Taxes
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 and tax laws prevailing in the
respective tax jurisdictions where the Company operates.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantially enacted at the
balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Deferred tax asset on unabsorbed
depreciation and carry forward losses is recognized only to the extent
that there is virtual certainty supported by convincing evidence that
they can be realized against future taxable profits.
At each balance sheet date, the Company reassesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e. the period for which MAT credit is allowed to be
carried forward. In the year in which the Company recognizes MAT credit
as an asset, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
Company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes it down to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period and utilize the MAT Credit Entitlement. k) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs 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 respective asset. All other borrowing costs are
expensed in the period they occur. l) Earnings per equity share
Basic earnings per equity share is calculated by dividing the net
profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event, it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reasonable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. n) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is probable that an outflow of resources will be required to
settle the obligations. A contingent liability also arises in extremely
rare cases where there is a liability that cannot be recognized because
it cannot be measured reliably. The Company does not recognize a
contingent liability but discloses its existence in the financial
statements. o) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and cash/cheques on
hand and short term deposits with banks with an original maturity of
not more than three months.
p) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
(a) Rights, preferences and restrictions attached to Equity Shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting. For the year
ended 31st March, 2014, the amount of per share dividend proposed as
distribution to equity shareholders is Rs. 1.00 (31st March, 2013: Rs.
1.00).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Mar 31, 2013
A) Basis of preparation of fnancial statements
The fnancial statements have been prepared to comply in all material
respects with the Notifed Accounting Standards by Companies Accounting
Standards Rules'' 2006 and the relevant provisions of the Companies Act''
1956. The fnancial statements have been prepared under the historical
cost convention on accrual basis. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
b) Use of estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
fnancial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions'' actual results could differ
from these estimates.
c) Fixed assets'' depreciation/amortisation and Capital Work-in-progress
(i) Fixed assets are stated at cost of acquisition or construction or
at revalued amounts'' net of impairment loss'' if any'' less depreciation/
amortisation. Costs include fnancing costs of borrowed funds
attributable to acquisition or construction of fxed assets'' up to the
date the assets are put to use. Assessment of indication of impairment
of an asset is made at the year end and impairment loss'' if any''
recognised. The Company adjusts exchange differences arising on
translation/ settlement of long term foreign currency monetary items
pertaining to the acquisition of depreciable assets to the cost of the
asset and depreciates the same over the remaining life of the asset.
(ii) Depreciation on Tangible Fixed Assets:
(a) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(b) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV to the Companies Act'' 1956'' pro-rata from
the month of purchase. If purchased on or before 15th of the month''
depreciation is charged from the month of purchase'' otherwise
depreciation is charged from the month following the month of purchase.
(c) Depreciation is provided from the date of installation/acquisition
on a pro-rata basis. Depreciation on assets is provided as per the
rates specifed in Schedule XIV to the Companies Act'' 1956. Assets
individually costing Rs. 5''000/- or less are depreciated fully in the
year when they are put to use.
(d) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specifed by the Income Tax Act'' 1961 and the rules made there under in
terms of Section 205(2) (b) of the Companies Act'' 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs.244.16 Lakhs.
(e) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(f) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(g) No depreciation is charged on the assets sold/ discarded during the
year.
(iii) Amortization of Intangible Fixed Assets: Intangible fxed assets
are amortized on straight line basis over their estimated useful
economic life.
(iv) Capital Work-in-progress:
Capital work-in-progress represents directly attributable costs of
construction to be capitalized. All other expenses including interest
incurred during construction period to be capitalized as part of
construction cost to the extent to which these expenditures are
specifcally attributable to the construction. Interest income earned on
temporary investment of funds brought in for the project during
construction period has been set off from the interest expense
accounted for as expenditure during the construction period.
d) impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use'' the Company measures it on the basis of
discounted cash fows of next fve years projections estimated based on
current prices.
After impairment'' depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
e) Foreign Currency transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency''
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items'' which are measured in terms of historical costs
denominated in foreign currency'' are reported using the exchange rate
at the date of the transaction. Non- monetary items'' which are measured
at fair value or other similar valuation denominated in a foreign
currency'' are translated using the exchange rate at the date when such
value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting Company''s monetary items at rates different from those at
which they were initially recorded during the year'' or reported in
previous fnancial statements including receivables and payables which
are likely to be settled in foreseeable future'' are recognized as
income or as expenses in the year in which they arise.
For exchange differences arising on certain long-term foreign currency
monetary items'' refer to note 2d above on tangible fxed assets.
All other exchange differences are recognized as income or as expenses
in the period in which they arise.
f) revenue recognition
Revenue is recognized to the extent it is probable that the economic
benefts will fow to the Company and the revenue can be reliably
measured. Specifcally''
(i) Revenue from rendering of hospitality services is recognized when
the related services are performed and billed to the customer.
(ii) Interest income is recognized on time proportion basis taking into
account the amount outstanding and the rate applicable.
(iii) Dividend income from investments is recognized when the Company''s
right to receive payment is established.
(iv) Income from generation of electricity is recognized when the
actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on
the basis of agreed rate.
g) investments
Investments that are readily realizable and intended to be held for not
more than a year are classifed as current investments or short-term
investments. All other investments are classifed as non-current
investment or long-term investments. Current investments are valued at
lower of cost and fair value determined on an individual investment
basis. Changes in the carrying amount of current investments are
recognized in the statement of proft and loss. Non-current investments
are valued at cost. However'' provision for diminution in value is made
to recognize a decline that is other than temporary in the value of
investments'' wherever considered necessary. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
h) inventories
Inventory is valued at cost or net realizable value whichever is lower.
The cost is determined by weighted average method. Operating equipment
in circulation is valued at weighted average cost less estimated
diminution in value on account of usage.
i) Retirement benefts
Retirement beneft costs for the year are determined on the following
basis:
(i) All employees are covered under contributory provident fund beneft
of a contribution of 12% of salary. It is a defned contribution scheme
and the contribution is charged to the statement of proft and loss of
the year when the contribution to the respective fund is due. There is
no obligation other than the contribution payable to the respective
fund.
(ii) Provision for Employees'' Gratuity is based on actuarial valuation
as on the date of balance sheet. All actuarial gains/losses arising
during the accounting year are recognized immediately in the statement
of proft and loss as income or expense.
(iii) Accrual for leave encashment beneft is based on actuarial
valuation as on the date of balance sheet in pursuance of the Company''s
leave rules.
j) income and deferred taxes
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act'' 1961 and tax laws prevailing in the
respective tax jurisdictions where the Company operates.
Deferred income taxes refects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantially enacted at the
balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
suffcient future taxable income will be available against which such
deferred tax assets can be realized. Deferred tax asset on unabsorbed
depreciation and carry forward losses is recognized only to the extent
that there is virtual certainty supported by convincing evidence that
they can be realized against future taxable profts.
At each balance sheet date'' the Company reassesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain''
as the case may be'' that suffcient future taxable income will be
available against which such deferred tax assets can be realized.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of proft and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specifed period'' i.e. the period for which MAT credit is allowed to be
carried forward. In the year in which the Company recognizes MAT credit
as an asset'' the said asset is created by way of credit to the
statement of proft and loss and shown as "MAT Credit Entitlement". The
Company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes it down to the extent the Company does not have
convincing evidence that it will pay normal tax during the specifed
period and utilize the MAT Credit Entitlement.
k) Borrowing costs
Borrowing cost includes interest'' amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs 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 respective asset. All other borrowing costs are
expensed in the period they occur.
l) earnings per equity share
Basic earnings per equity share is calculated by dividing the net proft
or loss for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share'' the net
proft or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event'' it is probable that an outfow of resources
will be required to settle the obligation'' in respect of which a
reasonable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to refect the current best
estimates.
n) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confrmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is probable that an outfow of resources will be required to
settle the obligations. A contingent liability also arises in extremely
rare cases where there is a liability that cannot be recognized because
it cannot be measured reliably. The Company does not recognize a
contingent liability but discloses its existence in the fnancial
statements.
o) Cash and Cash equivalents
Cash and cash equivalents comprise cash at bank and cash/cheques on
hand and short term deposits with banks with an original maturity of
not more than three months.
p) measurement of eBitdA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act'' 1956'' the Company has elected to present earnings before
interest'' tax'' depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of proft and loss. In its
measurement'' the Company does not include depreciation and amortization
expense'' fnance costs and tax expense.
Mar 31, 2012
A) Basis of preparation of financial statements
The financial statements have been prepared to comply in all material
respects with the Notified Accounting Standards by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on accrual basis. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
b) Basis of presentation and disclosures of financial statements
During the year ended 31st March 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation and presentation of
financial statements. However, it has significant impact on
presentation and disclosures made in the financial statements. The
Company has also reclassified the previous year figures in accordance
with the requirements applicable in the current year.
c) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
d) Fixed assets, depreciation/amortisation and Capital Work-in-progress
(i) Fixed assets are stated at cost of acquisition or construction or
at revalued amounts, net of impairment loss, if any, less depreciation/
amortisation. Costs include financing costs of borrowed funds
attributable to acquisition or construction of fixed assets, up to the
date the assets are put to use. Assessment of indication of impairment
of an asset is made at the year end and impairment loss, if any,
recognised. The Company adjusts exchange differences arising on
translation/ settlement of long term foreign currency monetary items
pertaining to the acquisition of depreciable assets to the cost of the
asset and depreciates the same over the remaining life of the asset.
(ii) Depreciation on Tangible Fixed Assets:
(a) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(b) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV to the Companies Act, 1956, pro rata from
the month of purchase. If purchased on or before 15th of the month,
depreciation is charged from the month of purchase, otherwise
depreciation is charged from the month following the month of purchase.
(c) Depreciation is provided from the date of installation/acquisition
on a pro-rata basis. Depreciation on assets is provided on the written
down value method as per the rates specified in Schedule XIV to the
Companies Act, 1956. Assets individually costing Rs. 5,000/- or less
are depreciated fully in the year when they are put to use.
(d) Leasehold improvements are depreciated over the period of lease.
(e) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specified by the Income Tax Act, 1961 and the rules made there under in
terms of Section 205(2)(b) of the Companies Act, 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs. 244.16 Lakhs.
(f) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(g) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(h) No depreciation is charged on the assets sold/ discarded during the
year.
(iii) Amortization of Intangible Fixed Assets:
Intangible fixed assets are amortized on straight line basis over their
estimated useful economic life.
(iv) Capital Work-in-progress:
Capital work-in-progress represents directly attributable costs of
construction to be capitalized. All other expenses including interest
incurred during construction period to be capitalized as part of
construction cost to the extent to which these expenditures are
specifically attributable to the construction. Interest income earned
on temporary investment of funds brought in for the project during
construction period has been set off from the interest expense
accounted for as expenditure during the construction period.
e) Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the Company measures it on the basis of
discounted cash flows of next five years projections estimated based on
current prices. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
f) Foreign Currency Transactions Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non monetary items, which are measured in terms of historical costs
denominated in foreign currency, are reported using the exchange rate
at the date of the transaction. Non monetary items, which are measured
at fair value or other similar valuation denominated in a foreign
currency, are translated using the exchange rate at the date when such
value was determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
For exchange differences arising on certain long term foreign currency
monetary items, refer to note 2d above on tangible fixed assets.
All other exchange differences are recognized as income or as expenses
in the period in which they arise.
g) Revenue recognition
Revenue is recognized to the extent it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured. Specifically,
(i) Revenue from rendering of hospitality services is recognized when
the related services are performed and billed to the customer.
(ii) Interest income is recognized on time proportion basis taking into
account the amount outstanding and the rate applicable.
(iii) Dividend income from investments is recognized when the Company's
right to receive payment is established.
(iv) Income from generation of electricity is recognized when the
actual generated units are transferred and billed to the buyer.
(v) Income from hiring of vehicles is recognized on accrual basis on
the basis of agreed rate.
h) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments or short term
investments. All other investments are classified as non-current
investment or long-term investments. Current investments are valued at
lower of cost and fair value determined on an individual investment
basis. Changes in the carrying amount of current investments are
recognized in the statement of profit and loss. Non-current investments
are valued at cost. However, provision for diminution in value is made
to recognize a decline that is other than temporary in the value of
investments, wherever considered necessary. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
i) Inventories
Inventory is valued at cost or net realizable value whichever is lower.
The cost is determined by weighted average method. Operating equipment
in circulation is valued at weighted average cost less estimated
diminution in value on account of usage. j) Retirement benefits
Retirement benefit costs for the year are determined on the following
basis:
(i) All employees are covered under contributory provident fund benefit
of a contribution of 12% of salary. It is a defined contribution scheme
and the contribution is charged to the statement of profit and loss of
the year when the contribution to the respective fund is due. There is
no obligation other than the contribution payable to the respective
fund.
(ii) Provision for Employees' Gratuity is based on actuarial valuation
as on the date of balance sheet. All actuarial gains/losses arising
during the accounting year are recognized immediately in the statement
of profit and loss as income or expense.
(iii) Accrual for leave encashment benefit is based on actuarial
valuation as on the date of balance sheet in pursuance of the Company's
leave rules.
k) Income and Deferred Taxes
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 and tax laws prevailing in the
respective tax jurisdictions where the Company operates.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantially enacted at the
balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Deferred tax asset on unabsorbed
depreciation and carry forward losses is recognized only to the extent
that there is virtual certainty supported by convincing evidence that
they can be realized against future taxable profits.
At each balance sheet date, the Company reassesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Minimum Alternate Tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e. the period for which MAT credit is allowed to be
carried forward. In the year in which the Company recognizes MAT credit
as an asset, the said asset is created by way of credit to the
statement of profit and loss and shown as "MAT Credit Entitlement". The
Company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes it down to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period and utilize the MAT Credit Entitlement. l) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs 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 respective asset. All other borrowing costs are
expensed in the period they occur. m) Earnings per equity share
Basic earnings per equity share is calculated by dividing the net
profit or loss for the period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares. n)
Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
realizable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
o) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is probable that an outflow of resources will be required to
settle the obligations. A contingent liability also arises in extremely
rare cases where there is a liability that cannot be recognized because
it cannot be measured reliably. The Company does not recognize a
contingent liability but discloses its existence in the financial
statements.
p) Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and cash/cheques on
hand and short term deposits with Banks with an original maturity of
three months.
q). Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. In its
measurement, the Company does not include depreciation and amortization
expense, finance costs and tax expense.
Mar 31, 2011
1. (i) Basis of Accounting
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies Accounting
Standards Rules, 2006 under the relevant provisions of the Companies
Act, 1956. The financial statements have been prepared under the
historical cost convention on an accrual basis. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous period.
(ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon managementÃs
best knowledge of current events and actions, actual results could
differ from the estimates.
(iii) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
(a) Revenue from rendering of hospitality services is recognized when
the related services are performed and billed to the customer.
(b) Interest income is recognized on time proportion basis taking into
account the amount outstanding and the rate applicable.
(c) Dividend income from investments is recognized when the CompanyÃs
right to receive payment is established.
(d) Income from generation of electricity is recognized when the actual
generated units are transferred and billed to the buyer.
(e) Income from hiring of vehicles is recognized on accrual basis on
the basis of agreed rate.
(iv) Income in Foreign Exchange
The bills for services rendered are raised in Indian Rupees. The
payment received in foreign currency against these bills, is credited
and accounted for at the rate / rates prevalent on the date of receipt
of payment. The gains / losses arising out of fluctuation in the
exchange rates are accounted for on realization.
(v) Interest on Income Tax Refunds / Demands
It is accounted for as income in the period/year when granted and as
tax expense when determined by the Department.
(vi) Borrowing Cost
Borrowing costs attributable to the acquisition or construction of a
qualifying asset are capitalised as part of the cost of the asset.
Other borrowing costs are recognised as an expense in the period in
which they are incurred.
(vii) Claims Recoverable
Claims recoverable are accrued only to the extent as admitted by the
parties
(viii) Expenses remittable in foreign exchange
These are charged based on invoices (including for earlier years) as
approved and accepted by the appropriate authorities as applicable.
2. (i) Foreign Exchange Transaction
Transactions in foreign currency are recorded at the exchange rates
prevailing at the time of the transaction, while those remaining
unsettled at the period/year end are translated at the period/year end
rates resulting in exchange differences being recognized as income
/expense (net), except exchange difference related to foreign currency
loan taken for projects.
(ii) Foreign Currency Balances
Foreign Currency balances at the period/year end have been converted at
the period/year end rate of exchange except those covered by forward
cover contracts in respect of foreign currency loans, which are
converted at the contracted forward rates.
3. Employee Benefits
(i) Provision for gratuity and leave encashment are based on actuarial
valuation as on the date of the Balance Sheet.
(ii) All employees are covered under contributory provident fund
benefit of a contribution of 12% of salary. It is a defined
contribution scheme and the contribution is charged to Profit and Loss
Account of the period/year when the contributions to the respective
funds are due. There are no obligations other than the contributions
payable to the respective fund.
4. Taxation
(i) Tax expense comprises of current and deferred tax. Current income
tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act, 1961.
Deferred income taxes refects the impact of current period/ year timing
differences between taxable income and accounting income for the
period/year and reversal of timing differences of earlier years.
(ii) Deferred Tax is provided during the period/year, using the
liability method on all temporary differences at the Balance Sheet date
between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes in accordance with Accounting
Standard 22 (AS-22).
(iii) Deferred Tax asset is recognized only to the extent that there is
a reasonable certainty that sufficient taxable profit will be available
against which such deferred tax asset can be realized.
(iv) Deferred Tax asset and liability are measured at the tax rates
that are expected to apply to the period when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantially enacted at the Balance Sheet date.
5. Fixed Assets and Depreciation
(a) Fixed Assets
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts, net of impairment loss if any, less depreciation/
amortisation. Cost represents the direct expenses incurred on
acquisition /construction of the assets and the relative share of
indirect expenses relating to construction allocated in proportion to
the direct costs involved.
(b) Depreciation
(i) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(ii) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV of the Companies Act, 1956 pro rata from
the month of purchase. If purchased before or on 15th of the month,
depreciation is charged from the month of purchase, otherwise
depreciation is charged from the month following the month of purchase.
(iii) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specified by the Income Tax Act, 1961 and the rules made there under in
terms of Section 205(2) (b) of the Companies Act, 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs.244.16 Lakhs.
(iv) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(v) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(vi) No depreciation is charged on the assets sold/ discarded during
the period/year.
(c) Capital Work in Progress
Capital work in progress represents expenditure directly relating to
construction activity to be capitalized. All indirect expenditure
including interest incurred during construction period to be
capitalized as part of the indirect construction cost to the extent to
which the expenditure is indirectly related to construction or is
incidental thereto
6. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments or short term
investments. All other investments are classified as long-term
investments. Current investments are valued at the lower of cost and
fair value. Changes in the carrying amount of current investments are
recognised in the Profit and Loss Account. Long-term investments are
valued at cost, less any provision for diminution, other than
temporary, in the value of such investments; decline, if any, is
charged to the Profit and Loss Account. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
7. Inventory
(i) Inventory is valued at cost or net realizable value whichever is
lower. The Cost is being determined by weighted average method.
(ii) Operating equipment in circulation is valued at weighted average
cost less estimated diminution in value on account of usage.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetÃs net selling price and value in use. In
assessing value in use, the Company measures its Ãvalue in useà on the
basis of undiscounted cash flows of next five years projections
estimated based on current prices.
9. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period/year.
For the purposes of calculating diluted earning per share, the net
profits or loss attributable to equity shareholders and the weighted
average number of shares outstanding are adjusted for the effects of
all dilutive potential equity shares, if any.
10. Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to refect the current best
estimates.
11. Cash and Cash Equivalents
Cash and cash equivalents in the cash flow comprise of cash at bank and
cash /cheques in hand and short term deposits with banks less short
term advances from banks.
12. Dividend
Proposed Dividend on equity shares is accounted for pending approval at
the Annual General Meeting.
Mar 31, 2010
1. (i) Basis of Accounting
The fnancial statements have been prepared to comply in all material
respects with the Accounting Standards notifed by Companies Accounting
Standards Rules, 2006 under the relevant provisions of the Companies
Act, 1956. The financial state- ments have been prepared under the
historical cost convention on an accrual basis. The accounting policies
have been con- sistently applied by the Company and are consistent with
those used in the previous period.
(ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon managementÃs
best knowledge of current events and actions, actual results could
differ from the estimates.
(iii) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
(a) Revenue from rendering of hospitality services is recognized when
the related services are performed and billed to the customer.
(b) Interest income is recognized on time proportion basis taking into
account the amount outstanding and the rate appli- cable.
(c) Dividend income from investments is recognized when the CompanyÃs
right to receive payment is established.
(d) Income from generation of electricity is recognized when the actual
generated units are transferred and billed to the buyer.
(e) Income from hiring of vehicles is recognized on accrual basis on
the basis of agreed rate.
(iv) Income in Foreign Exchange
The bills for services rendered are raised in Indian Rupees. The
payment received in foreign currency against these bills, is credited
and accounted for at the rate / rates prevalent on the date of receipt
of payment. The gains / losses arising out of fuc- tuation in the
exchange rates are accounted for on realization.
(v) Interest on Income Tax Refunds / Demands
It is accounted for as income in the period/year when granted and as
tax expense when determined by the Department.
(vi) Claims Recoverable Claims recoverable are accrued only to the
extent as admitted by the parties
(vii) Expenses remittable in foreign exchange
These are charged based on invoices (including for earlier years) as
approved and accepted by the appropriate authorities as applicable.
2. (i) Foreign Exchange Transaction
Transactions in foreign currency are recorded at the exchange rates
prevailing at the time of the transaction, while those re- maining
unsettled at the period/year end are translated at the period/year end
rates resulting in exchange differences being recognized as income
/expense (net).
(ii) Foreign Currency Balances
Foreign Currency balances at the period/year end have been converted at
the period/year end rate of exchange except those covered by forward
cover contracts in respect of foreign currency loans, which are
converted at the contracted forward rates.
3. Employee Benefits
(i) Provision for gratuity and leave encashment are based on actuarial
valuation as on the date of the Balance Sheet.
(ii) All employees are covered under contributory provident fund beneft
of a contribution of 12% of salary. It is a defned contribution scheme
and the contribution is charged to Proft and Loss Account of the
period/year when the contributions to the respective funds are due.
There are no obligations other than the contributions payable to the
respective fund.
4. Taxation
(i) Tax expense comprises of current and deferred tax. Current income
tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Indian Income Tax Act, 1961.
Deferred income taxes refects the impact of current period/year timing
differences between taxable income and accounting income for the
period/year and reversal of timing dif- ferences of earlier years.
(ii) Deferred Tax is provided during the period/year, using the
liability method on all temporary differences at the Balance Sheet date
between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes in accordance with Accounting
Standard 22 (AS-22).
(iii) Deferred Tax asset is recognized only to the extent that there is
a reasonable certainty that sufficient taxable profit will be available
against which such deferred tax asset can be realized.
(iv) Deferred Tax asset and liability are measured at the tax rates
that are expected to apply to the period when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantially enacted at the Balance Sheet date.
5. Fixed Assets and Depreciation
(a) Fixed Assets
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts, net of impairment loss if any, less deprecia- tion/
amortisation. Cost represents the direct expenses incurred on
acquisition /construction of the assets and the relative share of
indirect expenses relating to construction allocated in proportion to
the direct costs involved.
(b) Depreciation
(i) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(ii) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV of the Companies Act, 1956 pro rata from
the month of purchase. If purchased before or on 15th of the month,
depreciation is charged from the month of purchase, otherwise
depreciation is charged from the month following the month of purchase.
(iii) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specifed by the Income Tax Act, 1961 and the rules made there under in
terms of Section 205(2) (b) of the Companies Act, 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs.244.16 Lakhs.
(iv) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(v) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(vi) No depreciation is charged on the assets sold/ discarded during
the period/year.
(vii) The period in respect of lease of leasehold lands is either
perpetual or for substantially long term and hence no depre- ciation
has been charged on the premiums paid.
(c) Capital Work in Progress
Capital work in progress represents expenditure directly relating to
construction activity to be capitalized. All indirect expenditure
including interest incurred during construction period to be
capitalized as part of the indirect construction cost to the extent to
which the expenditure is indirectly related to construction or is
incidental thereto
6. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments or short term
investments. All other investments are classified as long-term
investments. Current investments are valued at the lower of cost and
fair value. Changes in the carrying amount of current investments are
recognised in the Profit and Loss Account. Long-term investments are
valued at cost, less any provision for diminution, other than
temporary, in the value of such investments; decline, if any, is
charged to the Profit and Loss Account. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
7. Inventory
(i) Inventory is valued at cost or net realizable value whichever is
lower.
(ii) Operating equipment in circulation is valued at weighted average
cost less estimated diminution in value on account of usage.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetÃs net selling price and value in use. In
assessing value in use, the Company measures its Ãvalue in useà on the
basis of undiscounted cash flows of next five years projections
estimated based on current prices.
9. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period/year.
For the purposes of calculating diluted earning per share, the net
profits or loss attributable to equity shareholders and the weighted
average number of shares outstanding are adjusted for the effects of
all dilutive potential equity shares, if any.
10. Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to refect the current best
estimates.
11. Cash and Cash Equivalents
Cash and cash equivalents in the cash flow comprise of cash at bank and
cash /cheques in hand and short term deposits with banks less short
term advances from banks.
12. Dividend
Proposed Dividend on equity shares and Fully Convertible Preference
Shares (FCPS) is accounted for pending approval at the Annual General
Meeting.
Sep 30, 2009
1. (i) Basis of Accounting
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies Accounting
Standards Rules, 2006 under the relevant provisions of the Companies
Act, 1956. The financial statements have been prepared under the
historical cost convention on an accrual basis. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year.
(ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon managements
best knowledge of current events and actions, actual results could
differ from the estimates.
(iii) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
(iv) Income in Foreign Exchange
The bills for services rendered are raised in Indian Rupees. The
payment received in foreign currency against these bills, is credited
and accounted for at the rate / rates prevalent on the date of receipt
of payment. The gains / losses arising out of fluctuation in the
exchange rates are accounted for on realization.
(v) Interest on Income Tax Refunds / Demands
It is accounted for as income in the period/year when granted and as
tax expense when determined by the Department.
(vi) Claims Recoverable
Claims recoverable are accrued only to the extent as admitted by the
parties subject to Note 20 regarding certain claim relating to stamp
duty on certain land.
(vii) Expenses remittable in foreign exchange
These are charged based on invoices (including for earlier years) as
approved and accepted by the appropriate authorities as applicable.
2. (i) Foreign Exchange Transaction
Transactions in foreign currency are recorded at the exchange rates
prevailing at the time of the transaction, while those remaining
unsettled at the period/year end are translated at the period/year end
rates resulting in exchange differences being recognized as income
/expense (net).
(ii) Foreign Currency Balances
Foreign Currency balances at the period/year end have been converted at
the period/ year end rate of exchange except those covered by forward
cover contracts in respect of foreign currency loans, which are
converted at the contracted forward rates.
3. Employee Benefits
(i) Provision for gratuity and leave encashment are based on actuarial
valuation as on the date of the Balance Sheet.
(ii) All employees are covered under contributory provident fund
benefit of a contribution of 12% of salary. It is a defined
contribution scheme and the contribution is charged to Profit and Loss
Account of the period/year when the contributions to the respective
funds are due. There are no obligations other than the contributions
payable to the respective fund.
4. Taxation
(i) Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the
Indian Income Tax Act, 1961. Deferred income taxes reflects the impact
of current period/year timing differences between taxable income and
accounting income for the period/year and reversal of timing
differences of earlier years.
(ii) Deferred Tax is provided during the period/year, using the
liability method on all temporary differences at the Balance Sheet date
between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes in accordance with Accounting
Standard 22 (AS-22).
(iii) Deferred Tax asset is recognized only to the extent that there is
a reasonable certainty that sufficient taxable profit will be available
against which such deferred tax asset can be realized.
(iv) Deferred Tax asset and liability are measured at the tax rates
that are expected to apply to the period when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantially enacted at the Balance Sheet date.
5. Fixed Assets and Depreciation
(a) Fixed Assets
Fixed assets are stated at cost of acquisition or construction or at
revalued amounts, net of impairment loss if any, less depreciation/
amortisation. Cost represents the direct expenses incurred on
acquisition /construction of the assets and the relative share of
indirect expenses relating to construction allocated in proportion to
the direct costs involved.
(b) Depreciation
(i) Depreciation as per straight line method has been charged in the
accounts based on circular no 1/86 of the Department of Company
Affairs;
(ii) On the assets acquired on or after 2.4.87 at the rates as
prescribed under Schedule XIV of the Companies Act, 1956 pro rata from
the month of purchase. If purchased before or on 15th of the month,
depreciation is charged from the month of purchase otherwise
depreciation is charged from the month following the month of purchase.
(iii) On the assets prior to 2.4.87 at the rates computed in the
respective years of acquisition of those assets on the basis of rates
specified by the Income Tax Act, 1961 and the rules made thereunder in
terms of Section 205(2) (b) of the Companies Act, 1956 without making
any adjustment in respect of excess depreciation provided for in the
earlier years amounting to Rs.244.16 Lakhs.
(iv) Depreciation on leasehold improvements is being charged equally
over the period of the lease.
(v) Depreciation on the increased amount of assets due to revaluation
is computed on the basis of residual life of the assets as estimated by
the valuer on straight line method and charged to Revaluation Reserve
Account.
(vi) No depreciation is charged on the assets sold/ discarded during
the period/ year.
(vii) The period in respect of leases of leasehold lands is either
perpetual or for substantially long term and hence no depreciation has
been charged on the premiums paid.
6. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments or short term
investments. All other investments are classified as long-term
investments. Current investments are valued at the lower of cost and
fair value. Changes in the carrying amount of current investments are
recognised in the Profit and Loss Account. Long-term investments are
valued at cost, less any provision for diminution, other than
temporary, in the value of such investments; decline, if any, is
charged to the Profit and Loss Account. Cost comprises cost of
acquisition and related expenses such as brokerage and stamp duties.
7. Inventory
(a) Inventory is valued at cost or net realizable value whichever is
lower.
(b) Operating equipment in circulation is valued at weighted average
cost less estimated diminution in value on account of usage.
8. Impairment
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the Company measures its value in use on the
basis of undiscounted cash flows of next five years projections
estimated based on current prices.
9. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period/year.
10. Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
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