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Accounting Policies of Brigade Enterprises Ltd. Company

Mar 31, 2016

1. Corporate information

Brigade Enterprises Limited (‘BEL'' or the ‘Company'') was incorporated on November 8, 1995 and is listed on the National Stock Exchange of India Limited and BSE Limited. The Company is carrying on the business of real estate development, leasing and hospitality and related services.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

2.1 Summary of significant accounting policies

(a) Changes in accounting policies - Component Accounting

Pursuant to adoption of component accounting by the Company from 1 April 2015 as required under Schedule II to the Companies Act, 2013, the Company has identified and determined cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. These components are depreciated separately over their useful lives; the remaining components are depreciated over the life of the principal asset. If a component has zero remaining useful life on the date of component accounting becoming effective, i.e., 1 April 2015, its carrying amount, after retaining any residual value, is charged to the statement of profit and loss. The carrying amount of other components, i.e., components whose remaining useful life is not nil on 1 April 2015, is depreciated over their remaining useful lives.

Had the Company continued to use the earlier policy of depreciating plant, property and equipment, depreciation for the current year would have been lower by Rs. 1,674 lakhs and correspondingly, the profit for the current year and the net block of tangible assets as at the current year-end would have been higher by such amount.

(b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. Any revision to accounting estimates is recognized prospectively.

(c) Tangible fixed assets and capital work-in-progress

Tangible fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which is not related to the construction activity nor is incidental thereto is charged to the statement of profit and loss.

Costs of assets not ready for use at the balance sheet date are disclosed under capital work- in- progress.

(d) Depreciation on tangible fixed assets

Depreciation on fixed assets is calculated on written down value basis using the following useful lives estimated by the management, which are equal to those prescribed under Schedule II to the Companies Act, 2013:

Leasehold land is amortized on a straight line basis over the balance period of lease.

Based on the planned usage of certain project-specific assets and technical evaluation thereon, the management has estimated the useful lives of such classes of assets as below, which are lower from the useful lives as indicated in Schedule II and are depreciated on straight line basis:

(e) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

Intangible assets comprising of computer software are amortized on a written down value basis over a period of three years, which is estimated by the management to be the useful life of the asset.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when asset is derecognized.

(f) Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

(g) Leases

Where the Company is lessee

Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

Where the Company is the less or

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.

(h) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

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/inventoried as part of the cost of the respective asset. All other borrowing costs are charged to statement of profit and loss.

(i) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.

Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

(j) Inventories

Direct expenditure relating to real estate activity is inventories. Other expenditure (including borrowing costs) during construction period is inventories to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the statement of profit and loss. Direct and other expenditure is determined based on specific identification to the real estate activity.

i. Work-in-progress: Represents cost incurred in respect of unsold area (including land) of the real estate development projects or cost incurred on projects where the revenue is yet to be recognized. Work-in-progress is valued at lower of cost and net realizable value.

ii. Finished goods - Stock of Flats: Valued at lower of cost and net realizable value.

iii. Raw materials, components and stores: Valued at lower of cost and net realizable value. Cost is determined based on FIFO basis.

iv. Land stock: Valued at lower of cost and net realizable value.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

(k) Land

Advances paid by the Company to the seller/ intermediary toward outright purchase of land is recognized as land advance under loans and advances during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories.

Amounts paid by the Company to the land owners towards right for development of land in exchange of constructed area are recognized as land advance under loans and advances and on the launch of the project, the non-refundable amount is transferred as land cost to work-in-progress.

The Company has entered into agreements with land owners/ possessor to develop properties on such land in lieu of which, the Company has agreed to transfer certain percentage of constructed area. The Company measures development rights/land received under these agreements at cost of construction transferred, as adjusted for other cash/ non-cash consideration on a net basis.

(l) 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.

The Company collects taxes such as value added tax, luxury tax, entertainment tax, service tax, etc on behalf of the Government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from the aforesaid revenue/ income.

The following specific recognition criteria must also be met before revenue is recognized:

Recognition of revenue from real estate development

Revenue from real estate development is recognized upon transfer of all significant risks and rewards of ownership of such real estate/ property, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the sales contracts/ agreements. Where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards, revenue in such cases is recognized by applying the percentage of completion method only if the following thresholds have been met:

i. all critical approvals necessary for the commencement of the project have been obtained;

ii. the expenditure incurred on construction and development costs (excluding land cost) is not less than 25 % of the total estimated construction and development costs;

iii. at least 25 % of the saleable project area is secured by contracts/agreements with buyers; and

iv. at least 10 % of the contracts/agreements value are realized at the reporting date in respect of such contracts/ agreements.

When the outcome of a real estate project can be estimated reliably and the conditions above are satisfied, revenue and costs associated with the real estate development are recognized as revenue and expenses by reference to the stage of completion of the project activity at the reporting date arrived at with reference to the entire project costs incurred (including land costs).

Revenue from hospitality services

Revenue from hospitality operations comprise revenue from rooms, restaurants, banquets and other allied services, including telecommunication, laundry, etc. Revenue is recognized as and when the services are rendered and is disclosed net of allowances.

Income from leasing

Rental income receivable under operating leases (excluding variable rental income) is recognized in the income statement on a straight-line basis over the term of the lease. Rental income under operating leases having variable rental income is recognized as per the terms of the contract.

Income from other services

Commission, management fees, vehicle parking fees and other fees receivable for services rendered are recognized as and when the services are rendered as per the terms of the contract.

Interest income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head “other income” in the statement of profit and loss.

Dividend income

Dividend income is recognized when the Company''s right to receive dividend is established by the reporting date.

(m) Foreign currency translation - Foreign currency transactions and balances

i. 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 the transaction.

ii. Conversion - Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a 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.

iii. Exchange differences - The Company accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as income or as expense in the period in which they arise.

(n) Retirement and other employee benefits

Retirement benefits in the form of state governed Employee Provident Fund, Employee State Insurance and Employee Pension Fund Schemes are defined contribution schemes (collectively the ‘Schemes''). The Company has no obligation, other than the contribution payable to the Schemes. The Company recognizes contribution payable to the Schemes as expenditure, when an employee renders the related service. The contribution paid in excess of amount due is recognized as an asset and the contribution due in excess of amount paid is recognized as a liability.

Gratuity is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method, made at the end of each financial year. Actuarial gains and losses are recognized in full in the period in which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method, made at the end of each financial year. Actuarial gains/losses are immediately taken to the statement of profit and loss. The Company presents the accumulated leave liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.

(o) Income 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 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting 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. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset 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.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized.

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 and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

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 in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, 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 down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

(p) Employee stock compensation cost

Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).

In accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.

(q) Segment reporting

i. Identification of segments - The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

ii. Inter-segment transfers - The Company generally accounts for intersegment sales and transfers at appropriate margins.

iii. Unallocated items - Unallocated items include general corporate asset, liability, income and expense items which are not allocated to any business segment.

iv. Segment accounting policies - The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

(r) 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. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.

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.

(s) Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

(t) 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 not probable that an outflow of resources will be required to settle the obligation. 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.

(u) Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

b) Terms/ rights 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 is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of director is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2016, the amount of per share dividend (including interim dividend) recognized as distributions to equity shareholders was Rs, 2 (March 31, 2015: Rs, 2)

In event of liquidation of the Company, the holders of equity shares would 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.

As per records of the Company, including its register of shareholders/ members and other declaration received from shareholders regarding beneficial interest, the above shareholding represent both legal and beneficial ownership of shares.

(d) Shares issued for consideration other than cash and reserved for issue under options

The Company has issued total 9 Lakhs shares (March 31, 2015: 5 lakhs shares) during the period of 5 years immediately preceding the reporting date on exercise of options granted under ESOP wherein part consideration was received in the form of employee services.

For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 42.


Mar 31, 2013

1.1 Basis for Preparation of Financial Statements:

The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting and in accordance with generally accepted accounting principles in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules 2006, to the extent applicable and in accordance with the Provisions of the Companies Act, 1956.

1.2. Use of Estimates:

Preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires Company Management to make estimates and assumptions that affect reported balance of assets and liabilities and disclosures relating to contingent assets and liabilities as of the date of Financials and reported amounts of income and expenses during the period. Examples of such estimate include Revenues and Profits expected to be earned on projects carried on by the Company, contract costs expected to be incurred for completion of project, provision for doubtful debts, income taxes, etc. Actual results could differ from these estimates. Differences, if any, between the actual results and estimates are recognised in the period in which the results are known or materialised.

1.3. Expenditure

Expenses are accounted on the accrual basis and provi- sions are made for all known losses and liabilities.

1.4. Valuation of Inventories and Construction Work-in- Progress:

a) Valuation of Inventories, representing stock of materials at project site/with contractors, has been done after providing for obsolescence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on FIFO basis.

b) Valuation of inventories, representing food and beverages, held at Brigade Sheraton at Gateway has been done after providing for obsolescence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on Weighted Average basis.

c) The value of construction work-in-progress during the period is determined as an aggregate of opening work in progress, cost of construction, and construction overheads incurred during the year as reduced by cost of completed contract transferred to income and closing stock of materials, if any.

d) The value of completed projects intended for immediate sale is considered as an inventory and value of completed projects / units intended to be retained / leased is considered as fixed asset.

e) Land held for development, Work in Progress and Closing Stock of unsold units is valued at Cost or Net Realizable Value whichever is lower.

1.5. Cash Flow Statement:

Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, financing and investing activities of the Company are segregated.

1.6. Events occurring after the date of Balance Sheet: Material events occurring after the date of Balance Sheet are taken into cognisance.

1.7. Depreciation:

Depreciation in respect of fixed assets, is provided adopting Written Down Value Method at the rates provided under Schedule XIV to the Companies Act, 1956, except with respect to certain assets, depreciation is charged on Straight Line Method as shown below.

Depreciation is charged on a pro-rata basis for assets purchased / put to use / sold during the year. Individual assets costing less than or equal to Rs 5,000/- is fully depre- ciated in the year of purchase.

1.8. Revenue Recognition:

Income from contractual Real Estate projects is determined and recognised, based on the percentage of completion method, as the aggregate of the profits earned on the projects completed / under completion and the value of construction work done during the period.

Profit so recognised in respect of individual projects is adjusted to ensure that it does not exceed the estimated overall profit margin. Loss on projects, if any, is fully provided for.

Stage of completion of projects in progress is deter- mined on the basis of the proportion of the contract costs incurred, in respect of individual projects for work performed up to the period of the financial statements, bear to the estimated total project cost. Income recognised as contract revenue during the period is based on the lower of stage of completion as determined above and actual amount received on sale (pursuant to agreements entered into by the Company). Project revenues on new projects are recognised when the cost incurred for stage of completion of each project reaches a significant level (excluding land cost), which is estimated to be at least 25%.

The estimates for sale value and contract costs are reviewed by Management periodically and the cumulative effect of the changes in these estimates, if any, are recognised in the period in which these changes may be reliably measured.

In respect of sale of completed units, revenue is recognised when the significant risks and rewards of ownership of the units in real estate have been passed on to the buyer.

Interest income is recognised on time basis and is determined by the amount outstanding and rate applicable.

Dividend income is recognised as and when right to receive payment is established.

Rental income / lease rentals are recognised on accrual basis in accordance with the terms of agreement.

Differential income arising on account of any charges collected from Buyers including Deposits and the related expenses incurred are recognised in the year of completion of the project / handing over of the flats to the customers.

In respect of Hospitality operations, revenue from rooms, restaurants, banquets and other services comprising of renting of rooms, sale of food and beverages, allied services relating to hotel opera- tions, including net income from telecommunication services and management and operating fees, revenue is recognised upon rendering of the services.

1.9. Fixed Assets:

Tangible:

Fixed assets are stated at cost of acquisition including directly attributable costs for bringing the asset into use, less accumulated depreciation and impairment losses, if any. Capital Work in Progress comprises the cost of fixed assets under construction and not yet ready for their intended use. Capital Work in Progress is carried at cost, comprising direct cost, related incidental expenses and attributable interest.

Intangible:

Intangible assets are carried at cost less accumulated amortisation and impairment loss, if any. The Cost of Intangible asset comprises its purchase cost and directly attributable expenditure.

1.10. Foreign currency transactions:

Foreign currency transactions are recorded in reporting currency at exchange rates prevailing on the date of trans- actions. Exchange gain or loss arising on settlement are adjusted to the statement of profit and loss. All monetary items denominated in foreign currency are converted at the rates prevailing on the date of the Financial Statement.

1.11. Investments:

Investments that are intended to be held for more than a year, from the date of acquisition, are classified as Long Term Investments. Long Term Investments are carried at the cost, and a provision for diminution in value in investments is made to recognise a decline, other than temporary, in the value of the investments. Investments other than long term investments being current investments are carried at the lower of cost or fair value.

Investments, which are readily realisable and intended to be held for not more than one year from balance sheet date, are classified as current investments. All other investments are classified as non-current investments.

1.12. Employee Benefits:

Short-Term Employee Benefits:

The employee benefits payable only within 12 months of rendering the services are classified as Short Term Employee Benefits. Benefits such as salaries, leave travel allowance, short term compensated absences, etc., and the expected cost of bonus are recognised in the period in which the employee renders the related service.

Post Employment Benefits:

Defined Contribution Plans:

The Company has contributed to state governed Provident Fund Scheme, Employee State Insurance Scheme, and Employee Pension Scheme which are Defined Contribution Plans. Contribution paid or payable under the Schemes is recognised during the period in which the employee renders the related service.

Defined Benefit Plans:

The Employees'' Gratuity is a Defined Benefit Plan. The present value of the obligation under such plan is determined based on the actuarial valuation using the projected unit credit method which recognises each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an Employee Gratuity Fund managed by Life Insurance Corporation of India (LIC). Actuarial gains or losses are charged to Profit and Loss Account.

Liability in respect of leave encashment is provided for on actuarial basis using the projected unit credit method (same as above).

1.13. Borrowing Costs:

Borrowing costs attributable to acquisition and construction of assets are capitalised as part of the cost of such assets up to the date the asset is put to use. Other borrowing costs are charged as expense in the year in which these are incurred.

1.14. Segment reporting:

The company identifies primary segments based on the dominant source, nature of risks and returns and internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the management. The Accounting policies adopted for the segment reporting are in line with the accounting policies of the company.

1.15. Earnings per Share:

Basic Earnings per Share is computed by dividing net income by the weighted average number of common stock outstanding during the period.

The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e., the average market value of the outstanding shares). Diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.16. Provision for Taxation:

The provision for taxation is made on Taxes Payable Method and determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets or liabilities, on timing differences, being the difference between taxable incomes and accounting incomes that originate in one period, and are reversible in one or more subsequent periods.

1.17. Impairment of Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard-28 "Impairment of Assets" prescribed under the Companies (Accounting Standards) Rules 2006, where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.

1.18. Provisions and Contingent Liabilities:

Provision is recognised when an enterprise has a present obligation as a result of past event and 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 determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimate. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.19. Amortisation of Miscellaneous Expenditure: Expenses incurred towards Initial Public Offer and other deferred expenses (being operational expenses in respect of certain projects incurred till commencement of commercial operation) classified under Miscellaneous Expenditure are written off equally over a period of 5 years.

In case of Sheraton Hotel Bangalore at Brigade Gateway, Pre-operative expenses incurred till commencement of commercial operations, classified under Miscellaneous Expenditure are written off equally over a period of 5 years.


Mar 31, 2012

1.1 Basis for Preparation of Financial Statements:

The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting and in accordance with generally accepted accounting principles in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules 2006, to the extent applicable and in accordance with the Provisions of the Companies Act, 1956. The Accounting Policies adopted In the preparation of the financial statements are consistent with those followed in the previous year.

1.2. Use of Estimates:

Preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires Company Management to make estimates and assumptions that affect reported balance of assets and liabilities and disclosures relating to contingent assets and liabilities as of the date of Financials and reported amounts of income and expenses during the period. Examples of such estimate include Revenues and Profits expected to be earned on projects carried on by the Company, contract costs expected to be incurred for completion of project, provision for doubtful debts, income taxes, etc. Actual results could differ from these estimates. Differences, if any, between the actual results and estimates are recognised in the period in which the results are known or materialised.

1.3. Expenditure

Expenses are accounted on the accrual basis and provisions are made for all known losses and liabilities.

1.4. Valuation of Inventories and Construction Work-in- Progress:

a) Valuation of Inventories, representing stock of materials at project site/with contractors, has been done after providing for obsolescence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on FIFO basis.

b) Valuation of inventories, representing food and beverages, held at Brigade Sheraton at Gateway has been done after providing for obsolescence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on Weighted Average basis.

c) The value of construction Work-in-Progress during the period is determined as follows:

- The aggregate of opening Work-in-Progress, cost of construction, and construction overheads incurred during the year as reduced by cost of completed contract transferred to income and closing stock of materials, if any.

- The value of completed projects intended for sale is considered as inventory and value of completed projects/units intended to be retained/leased is considered as fixed asset.

- Land held for development, Work-in-Progress and Closing Stock of unsold units is valued at Cost or Net Realisable Value, whichever is lower.

1.5. Cash Flow Statement:

Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; financing and investing activities of the Company are segregated.

1.6. Events occurring after the date of Balance Sheet: Material events occurring after the date of Balance Sheet are taken into cognisance.

1.7. Depreciation:

Depreciation in respect of fixed assets, is provided adopting Written down Value Method at the rates provided under Schedule XIV to the Companies Act, 1956, except,

- On assets held for the purpose of sale, on which no depreciation is charged.

- On the following assets leased out, depreciation is charged on Straight Line Method over the period of the lease as shown below.

Depreciation is charged on a pro-rata basis for assets purchased / put to use / sold during the year. Individual assets costing less than Rs 5,000/- is charged off in the year of purchase.

1.8. Revenue Recognition:

- Income from operations is determined and recog- nised, based on the percentage of completion method, as the aggregate of the profits earned on the projects completed/under completion and the value of construction work done during the period.

a) Profit so recognised in respect of individual projects is adjusted to ensure that it does not exceed the estimated overall profit margin. Loss on projects, if any, is fully provided for.

Stage of completion of projects in progress is determined on the basis of the proportion of the contract costs incurred, in respect of individual projects for work performed up to the period of the financial statements, bear to the estimated total project cost. Income recognised as contract revenue during the period is based on the lower of stage of completion as determined above and percentage of actual amount received on sale (pursuant to agreements entered into by the Company) of the estimated contract value of these projects. Project revenues on new projects are recognised when the stage of completion of each project reaches a significant level, which is estimated to be at least 25%.

The estimates for sale value and contract costs are reviewed by Management periodically and the cumulative effect of the changes in these estimates, if any, are recognised in the period in which these changes may be reliably measured.

- In respect of sale of completed units, revenue is recognised when the significant risks and rewards of ownership of the units in real estate have been passed on to the buyer.

b) Interest income is recognised on time basis and is determined by the amount outstanding and rate applicable.

c) Dividend income is recognised as and when right to receive payment is established.

d) Rental income / lease rentals are recognised on accrual basis in accordance with the terms of agreement.

e) Differential income arising on account of any charges collected including Deposits and the related expenses incurred are recognised in the year of completion of the project / handing over of the flats to the customers.

f) In respect of Hospitality operations comprising of, revenue from rooms, restaurants, banquets and other services comprise of renting of rooms, sale of food and beverages, allied services relating to hotel operations, including net income from telecommunication services and management and operating fees. Revenue is recognised upon rendering of the services.

1.9. Tangible Fixed Assets:

Fixed assets are stated at cost of acquisition including directly attributable costs for bringing the asset into use, less accumulated depreciation and impairment losses, if any. Capital Work in Progress comprises the cost of fixed assets under construction and not yet ready for their intended use. Capital Work in Progress is carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.10 Intangible assets:

Intangible assets are carried at cost less accumulated amortisation and impairment loss, if any. The Cost of Intangible asset comprises its purchase cost and directly attributable expenditure.

1.11. Foreign currency transaction and translations:

Foreign currency transactions are restated at the rates ruling at the time of receipt/payment and all exchange losses/gains arising there from are adjusted to the respective accounts. All monetary items denominated in foreign currency are converted at the rates prevailing on the date of the Financial Statement.

1.12. Investments:

Investments are classified as Current Investments and Long Term Investments. Long Term Investments are carried at the cost, unless there is a permanent diminution in value of the investments and Current Investments are carried at the lower of cost or market value.

1.13. Employee Benefits:

a) Short-Term Employee Benefits:

The employee benefits payable only within 12 months of rendering the services are classified as Short Term Employee Benefits. Benefits such as salaries, leave travel allowance, short term compensated absences, etc., and the expected cost of bonus are recognised in the period in which the employee renders the related service.

b) Post Employment Benefits:

i. Defined Contribution Plans:

The Company has contributed to state governed Provident Fund Scheme, Employee State Insurance Scheme, and Employee Pension Scheme which are Defined Contribution Plans. Contribution paid or payable under the Schemes is recognised during the period in which the employee renders the related service.

ii. Defined Benefit Plans:

The Employees' Gratuity is a Defined Benefit Plan. The present value of the obligation under such plan is determined based on the actuarial valuation using the projected unit credit method which recognises each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an Employee Gratuity Fund managed by Life Insurance Corporation of India (LIC). Actuarial gains or losses are charged to Profit and Loss Account.

iii. Liability in respect of leave encashment is provided for on actuarial basis using the projected unit credit method (same as above).

1.14. Borrowing Costs:

Cost of funds borrowed for acquisition of fixed assets up to the date the asset is put to use is added to the value of the assets.

1.15. Segment reporting:

The company identifies primary segments based on the dominant source, nature of risks and returns and internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the management. The Accounting policies adopted for the segment reporting are in line with the accounting policies of the company.

1.16. Earnings per Share:

Basic Earnings per Share is computed by dividing net income by the weighted average number of common stock outstanding during the period.

The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e., the average market value of the outstanding shares). Diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.17. Provision for Taxation:

Deferred Tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets or liabilities, on timing differences, being the difference between taxable incomes and accounting incomes that originate in one period, and are reversible in one or more subsequent periods.

The provision for taxation is made on Taxes Payable Method as determined in accordance with the provisions of the Income-tax Act, 1961.

1.18. Impairment of Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard-28 "Impairment of Assets" prescribed under the Companies (Accounting Standards) Rules 2006, where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.

1.19. Provisions and Contingent Liabilities:

Provision is recognised when an enterprise has a present obligation as a result of past event and 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 determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimate. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.20. Amortisation of Miscellaneous Expenditure: Expenses incurred towards Initial Public Offer and other deferred expenses (being operational expenses in respect of certain projects incurred till commencement of commercial operation) classified under Miscellaneous Expenditure are written off equally over a period of 5 years.

In case of Sheraton Hotel Bangalore at Brigade Gateway, Pre-operative expenses incurred till commencement of commercial operations, classified under Miscellaneous Expenditure are written off equally over a period of 5 years.

1.21. Provision for Warranty:

No estimation of liability for warranties is given by the company in respect of its development since such warranties of the company are fully covered with a back to back liability with the Company's contractors and service providers.

1.22. Political Contribution:

The company has not made any political contribution (previous year Rs 5 Lakhs) during the year.

1.23. Quantitative details:

The company is engaged in the business of real estate and property development. Such activity cannot be expressed in any generic unit. Hence it is not possible to give the quantitative details of sales and the information as required under Part II of Schedule VI of the Companies Act, 1956.


Mar 31, 2011

1.1 Basis for Preparation of Financial Statements: The Financial Statements are prepared under the historical cost convention, on the accrual basis of accounting and in accordance with generally accepted accounting principles in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules 2006, to the extent applicable and in accordance with the Provisions of the Companies Act, 1956.

1.2. Use of Estimates:

Preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires Company Management to make estimates and assumptions that affect reported balance of assets and liabilities and disclosures relating to contingent assets and liabilities as of the date of Financials and reported amounts of income and expenses during the period. Examples of such estimate include Revenues and Profits expected to be earned on projects carried on by the Company, contract costs expected to be incurred for completion of project, provision for doubtful debts, income taxes, etc. Actual results could differ from these estimates. Differences, if any, between the actual results and estimates are recognised in the period in which the results are known or materialised.

1.3. Expenditure

Expenses are accounted on the accrual basis and provi- sions are made for all known losses and liabilities.

1.4. Valuation of Inventories and Construction Work-in- Progress:

a) Valuation of Inventories, representing stock of materials at project site/with contractors, has been done after providing for obsolescence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on FIFO basis.

b) Valuation of inventories, representing food and beverages, held at Sheraton Bangalore at Brigade Gateway has been done after providing for obsoles- cence, if any, at lower of Cost or Net Realisable Value. The cost is generally calculated on weighted average basis.

c) The value of construction Work-in-Progress during the period is determined as follows:

¾ The aggregate of opening Work-in-Progress, cost of construction, and construction overheads incurred during the year as reduced by cost of completed contract transferred to income and closing stock of materials if any.

¾ The value of completed projects intended for immediate sale is considered as an inventory and value of completed projects/units intended to be retained/leased is considered as fixed asset.

¾ Land held for development, Work-in-Progress, Trans- ferable Development Rights, and Closing Stock of unsold units is valued at Cost or Net Realisable Value whichever is lower.

1.5. Cash Flow Statement:

Cash Flows are reported using the indirect method, whereby Profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating; fnancing and investing activities of the Company are segregated.

1.6. Events occurring after the date of Balance Sheet: Material events occurring after the date of Balance Sheet are taken into cognisance.

1.7. Depreciation:

Depreciation in respect of fixed assets, is provided adopting Written Down Value Method at the rates provided under Schedule XIV to the Companies Act, 1956, except on assets held for the purpose of sale, no depreciation is charged.

¾ On the following assets leased out, depreciation is charged on Straight Line Method over the period of the lease as shown below.

Depreciation is charged on a pro-rata basis for assets purchased / put to use / sold during the year. Individual assets costing less than Rs 5,000/- is charged off in the year of purchase.

1.8. Revenue Recognition: ¾ Income from operations is determined and recog- nised, based on the percentage of completion method, as the aggregate of the Profits earned on the projects completed/under completion and the value of construction work done during the period.

Profit so recognised in respect of individual projects is adjusted to ensure that it does not exceed the estimated overall Profit margin. Loss on projects, if any, is fully provided for.

Stage of completion of projects in progress is deter- mined on the basis of the proportion of the contract costs incurred, in respect of individual projects for work performed up to the period of the financial statements, bear to the estimated total project cost. Income recognised as contract revenue during the period is based on the lower of stage of completion as determined above and percentage of actual amount received on sale (pursuant to agreements entered into by the Company) of the estimated contract value of these projects. Project revenues on new projects are recognised when the stage of completion of each project reaches a significant level, which is estimated to be at least 25%.

The estimates for sale value and contract costs are reviewed by Management periodically and the cumulative effect of the changes in these estimates, if any, are recognised in the period in which these changes may be reliably measured.

¾ In respect of sale of completed units, revenue is recognised when the significant risks and rewards of ownership of the units in real estate have been passed on to the buyer.

¾ Interest income is recognised on time basis and is determined by the amount outstanding and rate applicable.

¾ Dividend income is recognised as and when right to receive payment is established.

¾ Rental income / lease rentals are recognised on accrual basis in accordance with the terms of agreement.

¾ Differential income arising on account of any charges collected including Deposits and the related expenses incurred are recognised in the year of completion of the project / handing over of the fats to the customers.

¾ Income for operations of Brigade International School at Gateway is recognised on accrual basis in accor- dance with the terms of agreement.

¾ In respect of Brigade Sheraton operation, revenue from rooms, restaurants, banquets and other services comprise of renting of rooms, sale of food and beverages, allied services relating to hotel operations, including net income from telecommu- nication services and management and operating fees. Revenue is recognised upon rendering of the services.

1.9. Fixed Assets:

Fixed assets are stated at cost of acquisition including directly attributable costs for bringing the asset into use, less accumulated depreciation. Capital Work-in-Progress comprises the cost of fixed assets under construction and not yet ready for their intended use.

1.10. Foreign Currency Transactions:

Foreign currency transactions are restated at the rates ruling at the time of receipt/payment and all exchange losses/gains arising there from are adjusted to the respective accounts. All monetary items denominated in foreign currency are converted at the rates prevailing on the date of the Financial Statement.

1.11. Investments:

Investments are classifed as Current Investments and Long Term Investments. Long Term Investments are carried at the cost, unless there is a permanent diminution in value of the investments and Current Investments are carried at the lower of cost or market value.

1.12. Employee benefits:

a) Short-Term Employee benefits:

The employee benefits payable only within 12 months of rendering the services are classifed as Short Term Employee benefits. benefits such as salaries, leave travel allowance, short term compensated absences, etc., and the expected cost of bonus are recognised in the period in which the employee renders the related services.

b) Post Employment benefits:

i. Defned Contribution Plans:

The Company has contributed to state governed Provident Fund Scheme, Employee State Insurance Scheme, and Employee Pension Scheme which are Defned Contribution Plans. Contribution paid or payable under the Schemes is recognised during the period in which employee renders the related service.

ii. Defned benefit Plans:

The Employees Gratuity is a Defned benefit Plan.

The present value of the obligation under such plan is determined based on the actuarial valuation using the projected unit credit method which recognises each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the financial obligation. The Company has an Employee Gratuity Fund managed by Life Insurance Corporation of India (LIC). Actuarial gains or losses are charged to Profit and Loss Account.

iii. Liability in respect of leave encashment is provided for on actuarial basis using the projected unit credit method same as above.

1.13. Borrowing Costs

Cost of funds borrowed for acquisition of fixed assets up to the date the asset is put to use is added to the value of the assets.

1.14. Earnings per Share:

Basic Earnings per Share is computed by dividing net income by the weighted average number of common stock outstanding during the period.

The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable, had the shares been actually issued at fair value (i.e., the average market value of the outstanding shares). Diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.15. Provision for Taxation:

Deferred Tax is recognised, subject to the consideration of prudence, in respect of deferred tax assets or liabilities, on timing differences, being the difference between taxable incomes and accounting incomes that originate in one period, and are reversible in one or more subsequent periods.

The provision for taxation is made on Taxes Payable Method after considering the effect of deduction under Section 35D, Section 80IB and Section 115JBof the Income Tax Act, 1961.

1.16. Impairment of Assets:

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting

Standard-28 "Impairment of Assets" prescribed under the Companies (Accounting Standards) Rules 2006, where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.

1.17. Provisions and Contingent Liabilities:

Provision is recognised when an enterprise has a present obligation as a result of past event and is probable that an outfow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current management estimate. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is possible obligation or a present obligation that may, but probably will not, require an outfow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outfow of resources is remote, no provision or disclosure is made.

1.18. Amortisation of Miscellaneous Expenditure: Expenses incurred towards Initial Public Offer and other deferred expenses (being operational expenses in respect of certain projects incurred till commencement of commercial operation) classifed under Miscellaneous Expenditure are written off equally over a period of 5 years.

In case of Sheraton Hotel Bangalore at Brigade Gateway, pre-operative expenses incurred till commencement of commercial operation classifed under Miscellaneous Expenditure are written off equally over a period of 5 years.

 
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