Mar 31, 2016
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.03.2016
NOTE NO. 1
Significant Accounting Policies
a) Corporate Information
MVL Ltd. (hereinafter referred to as the âCompanyâ) is a Company domiciled in India and incorporated under the provisions of the Companies Act 1956 read with companies Act 2013 (The Act). The Company is engaged in the business of Real estate builders & developers.
b) Basis of Accounting
The financial statements of the company are prepared and presented under the historical cost convention and comply in all material respects with applicable accounting standards as specified under section 133 of the companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, All incomes & expenditure are accounted for on accrual method of accounting unless otherwise stated hereafter. Accounting policies not specifically referred to are consistent with Generally Accepted Accounting Principles
c) Use of Estimates
The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting year. Actual results could differ from those estimates and any revision is recognized in the current and future years.
d) Revenue Recognition Real Estate Projects
i. Revenue from Real Estate Projects is recognized in accordance with the provisions of Accounting Standard (AS) 9 on Revenue Recognition, read with Guidance Note on âRecognition of Revenue by Real Estate Developersâ
Revenue is recognized based on âPercentage of Completionâ method and on the percentage of actual project costs incurred thereon to total estimated project cost, subject to such actual cost incurred being at least 25 per cent or more of the total estimated project cost
ii. The estimates of the projected revenues, saleable area and projected costs are reviewed periodically by the management and any effect of changes in estimates is recognized in the period, such changes are determined.
iii. Where aggregate of the payments received provide insufficient evidence of Buyers commitment to make the complete payment, revenue is recognized only to the extent of realization.
iv. While all incomes and expenses are accounted for on accrual basis, Interest on delayed payments by customers against dues is taken on realization, owing to uncertainties involved.
v. With effect from April 1, 2012 in accordance with the Revised Guidance Note issued by Institute of Chartered Accountants of India (âICAIâ) on âAccounting for Real Estate Transactions (Revised 2012)â, the Company has revised its Accounting Policy of revenue recognition for all projects commencing on or after April 1, 2012 or project where the revenue is recognized for the first time on or after the said date. As per this Guidance Note, the revenue is recognized on percentage of completion method provided all of the following conditions are met at the reporting date.
- at least 25% of estimated construction and development costs (excluding land cost) has been incurred;
- at least 25% of the saleable project area is secured by the Agreements to sell/application forms (containing salient terms of the agreement to sell); and
- at least 10% of the total revenue as per agreement to sell are realized in respect of these agreements.
e) Cost of construction / Development
Accumulated project cost i.e. cost of construction / development comprises of: -
i) Expenses directly related to the project.
ii) Finance Cost including interest and charges incurred up to the completion of the project are considered as attributable cost to the project and included under accumulated Project cost.
iii) Project costs in relation to a project, ordinarily comprise of :-
- Cost of land and cost of development rights: All costs related to the acquisition of land, development rights, rehabilitation costs, registration charges, stamp duty, brokerage costs, statutory dues paid to sanctioning authorities and other incidental expenses.
- Construction and development costs: These would include costs that relate directly to the specific project and costs that may be attributable to project activity in general and can be allocated to the project.
- Borrowing Costs: (In accordance with Accounting Standard (AS 16))
i) Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets for the year up to the completion/installation or construction of such asset respectively are capitalized as part of the cost of such asset.
ii) Borrowing costs directly attributable to projects under taken by the company are charged to each such project on year to year basis and is treated as cost of the project.
iii) All other borrowing costs are charged to revenue in the year in which they are incurred.
f) Inventory
Inventory comprises of lands, projects completed or under construction, building material in hand and rights in identified lands including: -
i) Work-in-progress comprising of land, materials, services and other overheads related to project under construction, valued at cost.
ii) Stock of building material, valued at cost.
iii) Completed units remaining unsold, valued at lower of cost or market value.
g) Trade Receivables represents
- Receivables due as per Builder Buyer Agreements net of amounts received.
- Unbilled receivables against revenue recognized on âpercentage of completion methodâ
h) Fixed Assets
Fixed Assets are stated at cost, net of accumulated depreciation. Cost includes original cost of acquisition, including incidental expenses related to such acquisition and installation.
i) Depreciation
i) Depreciation on tangible and intangible assets is provided on the Useful life method as specified under Companies Act 2013. Depreciation on additions/ deletions to/from fixed assets is provided on pro-rata basis from the date the asset is put to use /discarded.
j) Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. k) Investments
Investments are all long term, which are stated at cost. Provision for diminution in value thereof, other than temporary in nature, is accounted for. l) Taxation
i) Current Tax
Provision for Income Tax is based on assessable profits of the company as computed in accordance with the relevant provision of the Income Tax Act, 1961 for the year ending 31st March 2016.
ii) Deferred Tax
Deferred Tax is recognized on timing differences; being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is a virtual certainty of their realization and on other items when there is reasonable certainty of realization. The tax effect is calculated on the accumulated timing differences at the yearend based on the tax rates and laws enacted or substantially enacted on the balance sheet date. m) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent Liability is disclosed for (1) Possible obligations which will be confirmed only by future events not wholly within the control of the company or (2) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of obligation cannot be made. Contingent assets are not recognized in the financial statements since this may result in recognition of income that may not be realized in the near future.
(a) There is no variation or change in the issued, subscribed and fully paid-up capital structure during the year. Therefore, no separate disclosure of reconciliation of the number of equity share outstanding as at the beginning and at the end of the year is required.
(b) Shareholders Holding more then 5% shares based on legal ownership in the subscribed share capital of the company is set out below:
Mar 31, 2015
Not available
Mar 31, 2014
(a) Basis of Accounting
The financial statements are prepared under the historical cost
convention, using accrual basis of accounting, unless otherwise stated
under Note No.1 (c) iv, in accordance with the generally accepted
accounting principles in India, the accounting standards notified under
the companies (Accounting Standard) Rules 2006 (as amended) and the
relevant provisions of the Companies Act, 1956 (The Act)
(b) Use of Estimates
The presentation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting year. Actual results could differ from those
estimates and any revision is recognized in the current and future
years.
(c) Revenue Recognition
Real Estate Projects
i. Revenue from Real Estate Projects is recognized in accordance with
the provisions of Accounting Standard (AS) 9 on Revenue Recognition,
read with Guidance Note on "Recognition of Revenue by Real Estate
Developers"
Revenue is recognized based on "Percentage of Completion" method and on
the percentage of actual project costs incurred thereon to total
estimated project cost, subject to such actual cost incurred being 25
per cent or more of the total estimated project cost
ii. The estimates of the projected revenues, saleable area and
projected costs are reviewed periodically by the management and any
effect of changes in estimates is recognized in the period such changes
are determined.
iii. Where aggregate of the payments received provide insufficient
evidence of Buyers commitment to make the complete payment, revenue is
recognized only to the extent of realization.
iv. While all incomes and expenses are accounted for on accrual basis,
Interest on delayed payments by customers against dues is taken on
realization, owing to practical difficulties and uncertainties
involved.
v. With effect from April 1, 2012 in accordance with the Revised
Guidance Note issued by Institute of Chartered Accountants of India
("ICAI") on "Accounting for Real Estate Transactions (Revised 2012)",
the Company has revised its Accounting Policy of revenue recognition
for all projects commencing on or after April 1, 2012 or project where
the revenue is recognized for the first time on or after the said date.
As per this Guidance Note, the revenue is recognized on percentage of
completion method provided all of the following conditions are met at
the reporting date.
- atleast 25% of estimated construction and development costs
(excluding land cost) has been incurred;
- atleast 25% of the saleable project area is secured by the Agreements
to sell/application forms (containing salient terms of the agreement to
sell); and
- atleast 10% of the total revenue as per agreement to sell are
realized in respect of these agreements.
(d) Cost of construction / Development
Accumulated project cost i.e. cost of construction / development
comprises of: -
a) Expenses directly related to the project.
b) Finance Cost including interest and charges incurred up to the
completion of the project are considered as attributable cost to the
project and included under accumulated Project cost.
c) Project costs in relation to a project ordinarily comprise
- Cost of land and cost of development rights -All costs related to the
acquisition of land, development rights in the land or property
including cost of land, cost of development rights, rehabilitation
costs, registration charges, stamp duty, brokerage costs and incidental
expenses.
- Borrowing Costs - In accordance with Accounting Standard (AS) 16,
Borrowing Costs which are incurred directly in relation to a project or
which are apportioned to a project.
- Construction and development costs - These would include costs that
relate directly to the specific project and costs that may be
attributable to project activity in general and can be allocated to the
project.
(e) Inventory
The Inventory comprises of lands, projects completed or under
construction, building material in hand and rights in identified lands
including: -
a) Work-in-progress comprises of land, materials, services and other
overheads related to project under construction and is valued at cost.
b) Stock of building material is valued at cost.
c) Completed units remaining unsold are valued at lower of cost or
market value.
(f) Fixed Assets
Fixed Assets are stated at cost, net of accumulated depreciation. Cost
includes original cost of acquisition, including incidental expenses
related to such acquisition and installation.
(g) Depreciation
a) Depreciation on fixed assets is provided on the straight line method
at the rates and in the manner specified in Schedule XIV of the Act.
b) Depreciation on additions/ deletions to/from fixed assets is
provided on pro-rata basis from the date the asset is put to use/
discarded.
c) Individual Assets costing less than Rs.5000.00 are depreciated in
full in the year of purchase.
(h) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If such indication exists,
the company estimates the recoverable amount of the asset. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
statement of Profit and Loss. If at the Balance sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
(i) Investments
Investments are all long term, which are stated at cost. Provision for
diminution in value thereof, other than temporary in nature, is
accounted for.
(j) Borrowing Cost
a) Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets for the year up to the
completion/installation or construction of such asset respectively are
capitalized as part of the cost of such asset.
b) Borrowing costs directly attributable to projects under taken by the
company are charged to each such project on year to year basis and is
treated as cost of the project.
c) All other borrowing costs are charged to revenue in the year in
which they are incurre
(k) Taxation
a) Current Tax
Provision for Income Tax is based on assessable profits of the company
as computed in accordance with the relevant provision of the Income Tax
Act, 1961 for the year ending 31st March 2014.
b) Deferred Tax
Deferred Tax is recognized on timing differences; being the difference
between taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax assets on unabsorbed tax losses and tax depreciation are
recognized only when there is a virtual certainty of their realization
and on other items when there is reasonable certainty of realization.
The tax effect is calculated on the accumulated timing differences at
the yearend based on the tax rates and laws enacted or substantially
enacted on the balance sheet date.
(l) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent Liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of obligation cannot be made. Contingent assets
are not recognized in the financial statements since this may result in
recognition of income that may not be realized in the near future.
Mar 31, 2013
(a) Basis of Accounting The financial statements are prepared under
the historical cost convention, using accrual basis of accounting,
in accordance with the generally accepted accounting principles in
India, the accounting standards notified under the companies
(Accounting Standard) Rules 2006 (as amended) and the relevant
provisions of the Companies Act, 1956 (The Act)
(b) Use of Estimates The presentation of financial statements
in conformity with the generally accepted accounting principles
requires estimates and assumptions to be made that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates and any revision is
recognized in the current and future periods.
(c) Revenue Recognition
Real Estate Projects Revenue from Real Estate Projects is recognized on
the ''Percentage of Completion method'' (POC) of accounting. Revenue
comprises of the aggregate amounts of sale contracts entered into and
is recognized on the basis of percentage of actual costs incurred,
including land and total estimated cost of projects under execution,
subject to such cost being 25% or more of the total estimated cost.
The estimates of the projected revenues, salable area and projected
costs are reviewed periodically by the management and any effect of
changes in estimates is recognized in the period such changes are
determined. Where aggregate of the payments received provide
insufficient evidence of Buyers commitment to make the complete
payment, revenue is recognized only to the extent of realization.
Whereas all income and expenses are accounted for on accrual basis,
Interest on delayed payments by customers against dues is taken on
realization owing to practical difficulties and uncertainties involved.
(d) Cost of construction / Development Accumulated project cost i.e.
cost of construction / development comprises of: - a) Expenses directly
related to the project. b) General Administration & Selling and
Marketing costs that are attributable to the project in general and can
be allocated to the project.
c) Finance Cost including interest and
charges incurred up to the completion of the project are considered as
attributable cost to the project and included under accumulated Project
cost. Cost of Construction / Development is charged to statement of
profit and loss in proportion to the project area sold for which
revenue has been recognized Adjustments if required are made on
completion of the respective projects.
(e) Inventory The Inventory
comprises of lands, projects completed or under construction, building
material in hand and rights in identified lands including: -
a)
Work-in-progress comprises of land, materials, services and other
overheads related to project under construction and is valued at cost.
b) Stock of building material is valued at cost. c) Completed units
remaining unsold are valued at lower of cost or market value.
(f)
Fixed Assets Fixed Assets are stated at cost, net of accumulated
depreciation. Cost includes original cost of acquisition, including
incidental expenses related to such acquisition and installation.
(g)
Depreciation a) Depreciation on fixed assets is provided on the
straight line method at the rates and in the manner specified in
Schedule XIV of the Act.
b) Depreciation on additions/ deletions
to/from fixed assets is provided on pro-rata basis from the date the
asset is put to use /discarded.
c) Individual Assets costing less than
Rs.5000.00 are depreciated in full in the year of purchase.
(h)
Impairment of Assets The Company assesses at each balance sheet date
whether there is any indication that an asset may be impaired. If such
indication exists, the company estimates the recoverable amount of the
asset. If such recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and
is recognized in the Profit and Loss Account. If at the Balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
(i) Investments
Investments are all long term, which are stated at cost. Provision for
diminution in value thereof, other than temporary in nature, is
accounted for.
(j) Borrowing Cost
a) Borrowing costs that are directly
attributable to the acquisition or construction of qualifying assets
for the period up to the completion/installation or construction of
such asset respectively are capitalized as part of the cost of such
asset.
b) Borrowing costs directly attributable to projects undertaken
by the company are charged to each such project on year to year basis
and is treated as cost of the project. c) All other borrowing costs
are charged to revenue in the year in which they are incurred.
(k)
Taxation a) Current Tax Provision for Income Tax is based on assessable
profits of the company as computed in accordance with the relevant
provision of the Income Tax Act, 1961 for the period ending 31st March
2013.
k) Deferred Tax Deferred Tax is recognized on timing
differences; being the difference between taxable income and accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred tax assets on unabsorbed tax
losses and tax depreciation are recognized only when there is a virtual
certainty of their realization and on other items when there is
reasonable certainty of realization. The tax effect is calculated on
the accumulated timing differences at the yearend based on the tax
rates and laws enacted or substantially enacted on the balance sheet
date.
(l) Retirement Benefits Liability for gratuity and leave
encashment is provided as at the end of each calendar year, as last
year. Liability if any for three months period ending on each financial
year get adjusted / accounted for as at the end of each calendar year.
(m)Provisions, Contingent Liabilities and Contingent Assets: Provisions
are recognized only when there is a present obligation as a result of
past events and when a reliable estimate of the amount of obligation
can be made. Contingent Liability is disclosed for (1) Possible
obligations which will be confirmed only by future events not wholly
within the control of the company or (2) Present obligations arising
from past events where it is not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the
amount of obligation cannot be made. Contingent assets are not
recognized in the financial statements since this may result in
recognition of income that may not be realized in the near future.
Dec 31, 2011
1. Basis of Accounting
The financial statements are prepared under the historical cost
convention, using accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, the accounting
standards notified under the companies (Accounting Standard) Rules 2006
(as amended) and the relevant provisions of the Companies Act, 1956
(The Act)
2. Use of Estimates
The presentation of financial statements in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates and any revision is recognized in the current and future
periods.
3. Revenue Recognition
Real Estate Projects
Revenue from Real Estate Projects is recognized on the 'Percentage of
Completion method' (POC) of accounting. Revenue comprises of the
aggregate amounts of sale contracts entered into and is recognized on
the basis of percentage of actual costs incurred, including land and
total estimated cost of projects under execution, subject to such cost
being 25% or more of the total estimated cost.
The estimates of the projected revenues, salable area and projected
costs are reviewed periodically by the management and any effect of
changes in estimates is recognized in the period such changes are
determined.
Where aggregate of the payments received provide insufficient evidence
of Buyers commitment to make the complete payment, revenue is
recognized only to the extent of realization.
Whereas all income and expenses are accounted for on accrual basis,
Interest on delayed payments by customers against dues is taken on
realization owing to practical difficulties and uncertainties involved.
4. Cost of construction / Development
Accumulated project cost i.e. cost of construction / development
comprises of: -
a) Expenses directly related to the project.
b) General Administration & Selling and Marketing costs that are
attributable to the project in general and can be allocated to the
project.
c) Finance Cost including interest and charges incurred up to the
completion of the project are considered as attributable cost to the
project and included under accumulated Project cost.
Cost of Construction / Development is charged to profit and loss
account in proportion to the project area sold for which revenue has
been recognized Adjustments if required are made on completion of the
respective projects.
5. Inventory
The Inventory comprises of lands, projects completed or under
construction, building material in hand and rights in identified lands
including :-
a) Work-in-progress comprises of land, materials, services and other
overheads related to project under construction and is valued at cost.
b) Stock of building material is valued at cost.
c) Completed units remaining unsold are valued at lower of cost or
market value.
6. Fixed Assets
Fixed Assets are stated at cost, net of accumulated depreciation. Cost
includes original cost of acquisition, including incidental expenses
related to such acquisition and installation.
7. Depreciation
a) Depreciation on fixed assets is provided on the straight line method
at the rates and in the manner specified in Schedule XIV of the Act.
b) Depreciation on additions/ deletions to/from fixed assets is
provided on pro-rata basis from the date the asset is put to
use/discarded.
c) Individual Assets costing less than Rs. 5000.00 are depreciated in
full in the year of purchase.
8. Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If such indication exists,
the company estimates the recoverable amount of the asset. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Profit and Loss Account. If at the Balance sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
9. Investments:
Investments are all long term, which are stated at cost. Provision for
diminution in value thereof, other than temporary in nature, is
accounted for.
10. Borrowing Cost
a) Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets for the period up to the
completion/installation or construction of such asset respectively are
capitalized as part of the cost of such asset.
b) Borrowing costs directly attributable to projects under taken by the
company are charged to each such project on year to year basis and is
treated as cost of the project.
c) All other borrowing costs are charged to revenue in the year in
which they are incurred.
11. Taxation
a) Current Tax
Provision for Income Tax is based on assessable profits of the company
as computed in accordance with the relevant provision of the Income Tax
Act, 1961 for the year ending 31st December 2011.
b) Deferred Tax
Deferred Tax is recognized on timing differences; being the difference
between taxable incomes and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
Deferred tax assets on unabsorbed tax losses and tax depreciation are
recognized only when there is a virtual certainty of their realization
and on other items when there is reasonable certainty of realization.
The tax effect is calculated on the accumulated timing differences at
the year end based on the tax rates and laws enacted or substantially
enacted on the balance sheet date.
12. Retirement Benefits
a) Contributions payable by the Company to the concerned Government
Authorities in respect of Provident Fund, Family Pension fund and
Employee State Insurance are charged to the profit and loss account.
b) Provision for gratuity and Leave Encashment are made on actuarial
valuation, as per Accounting Standard (AS)-15.
13. Accounting Standards
The Company follows all applicable accounting standards as required
under Section 211 (3) (C) of the Act.
14. Preliminary Expenses
Preliminary expense of Rs. 1,03,868/- has been fully written off during
the year on adoption of Accounting Standard (AS-26)
15. Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent Liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of obligation cannot be made. Contingent assets
are not recognized in the financial statements since this may result in
recognition of income that may not be realized in the near future.
Dec 31, 2010
I) Basis of Accounting
The financial statements are prepared under the historical cost
convention, using accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, the accounting
standards notified under the companies (Acconting Standard) Rules 2006
(as amended) and the relevant provisions of the Companies Act, 1956
(The Act)
ii) Use of Estimates
The presentation of financial statement in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates and any revision is recognized in the current and future
periods.
iii) Revenue Recognition
Real Estate Projects
Revenue from Real Estate Projects is recognized on the ÃPercentage of
Completion method (POC) of accounting. Revenue comprises of the
aggregate amounts of sale contracts entered into and is recognized on
the basis of percentage of actual costs incurred, including land and
total estimated cost of projects under execution, subject to such cost
being 25% or more of the total estimated cost.
The estimates of the projected revenues, salable area and projected
costs are reviewed periodically by the management and any effect of
changes in estimates is recognized in the period such changes are
determined.
Where aggregate of the payments received provide insufficient evidence
of Buyers commitment to make the complete payment, revenue is
recognized only to the extent of realization.
Whereas all income and expenses are accounted for on accrual basis,
Interest on delayed payments by customers against dues is taken on
realization owing to practical difficulties and uncertainties involved.
iv) Cost of construction / Development
Accumulated project cost i.e. cost of construction / development
comprises of : -
a) Relate directly to the project.
b) General Administration & Selling and Marketing costs that are
attributable to the project in general and can be allocated to the
project.
c) Finance Cost including interest and charges incurred up to the
completion of the project are considered as attributable cost to the
project and included under accumulated Project cost i.e. Cost of
Construction / Development.
Cost of Construction / Development is charged to profit and loss
account in proportionate to the project area sold for which revenue has
been recognized Adjustments if required are made on completion of the
respective projects.
v) Inventory
Inventory comprises of sale of property completed or under construction
(work in progress) for sale and building materials in hand.
a) Work-in-progress comprises of land, materials, services and other
overheads related to project under construction, is valued at cost.
b) Stock of building material is valued at cost.
c) Completed units remaining unsold are valued at lower of cost or
market value.
vi) Fixed Assets
Fixed Assets are stated at cost, less accumulated depreciation. Cost
includes original cost of acquisition, including incidental expenses
related to such acquisition and installation.
vii) Depreciation
a) Depreciation on fixed assets is provided on the straight line method
at the rates and as per the manner prescribed in Schedule XIV of the
Act.
b) Depreciation on additions/ deletions to/from fixed assets is
provided on pro-rata basis from the date the asset is put to
use/discarded.
c) Individual Assets costing less than Rs. 5000.00 are depreciated in
full in the year of purchase.
viii) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If such indication exists,
the company estimates the recoverable amount of the asset. If such
recoverable amount of the asset or the recoverable amount of the cash
generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognized in the
Profit and Loss Account. If at the Balance sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
ix) Investments:
Investments are all long term which are stated at cost. Provision for
diminution in value thereof, other than temporary in nature, is
accounted for.
x) Borrowing Cost
a) Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets for the period up to the
completion/installation or construction of such asset respectively are
capitalized as part of the cost of such asset.
b) Borrowing costs directly attributable to projects under taken by the
company are charged to each such project on year to year basis and is
treated as cost of the project.
c) All other borrowing costs are charged to revenue in the year in
which they are incurred.
xi) Current Year Taxation
a) (i) Provision for Income Tax is based on assessable profits of the
company as computed in accordance with the relevant provision of the
Income Tax Act, 1961 for the year ending 31st December 2010.
(ii) The company is entitled for availing exemption from income tax
under section 80IB (10) of the Income Tax Act, 1961 on its two
projects.
b) Deferred Tax
Deferred Taxation is provided using the liability method in respect of
the tax effect arising from all material timing differences between the
accounting and tax treatment of Income and expenditure which are
expected with reasonable probability to crystallize in foreseeable
future. Deferred tax benefits are recognized in the financial
statements only to the extent of any deferred tax liability or when
such benefits are reasonably expected to be realizable in the near
future.
xii) Retirement Benefits
a) Contributions payable by the Company to the concerned Government
Authorities in respect of Provident Fund, Family Pension fund and
Employee State Insurance are charged to the profit and loss account.
b) Provision for gratuity and Leave Encashment is made on actuarial
valuation, as per Accounting Standard (AS)-15.
Defined Benefit Plans
Valuation in respect of Gratuity and Leave encashment have been carried
out by independent actuary, as at 31st December, 2010:
xiii) Accounting Standards
The Company follows all applicable accounting standards as required
under Section 211 (3) (C) of the Act.
xiv) Segment Reporting
The Companys operations comprise of one Segment only i.e. ÃReal Estate
Projects Development. There are no other businesses/geographical
segments to be reported as per Accounting Standard (AS) -17.
xv) Provisions, contingent liabilities and Contingent Assets:
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent Liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of obligation cannot be made. Contingent assets
are not recognized in the financial statements since this may result in
recognition of income that may not be realized in the near future.
xvi) Preliminary Expenses
Preliminary expenses acquired on merger of companies are being
amortized in ten equated annual installment.
xvii) Amalgamation
The scheme of amalgamation of Balaji Tirupati Buildcon Ltd.
(amalgamated company) with MVL Ltd. was approved by the Honble High
Court of Delhi on 8th Oct 2010. However the effective date of the said
scheme is 12th January 2011 which is an event occurring after the
balance sheet date. The shareholders of amalgamated company are
entitled to 67 (Sixty Seven) equity shares of the face value of Re.1/-
each of MVL Ltd. in lieu of every 3 equity shares of the face value of
Rs. 10/- each held and the said shares shall rank paripasu w.e.f. the
appointed date Ist July 2009. Following assets and liabilities of the
amalgamated company ( in lieu of 67,000,000 equity shares of Re. 1/-
each) shall get amalgamated as per the approved scheme w.e.f. the
effective date.
Dec 31, 2009
I) Basis of Accounting
The financial statements are prepared under the historical cost
convention, using accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, the accounting
standards issued by the Institute of Chartered Accountants of India and
the relevant provisions of the Companies Act, 1956 (The Act) ii) Use of
Estimates
The presentation of financial statement in conformity with the
generally accepted accounting principles requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates and any revision is recognized in the current and future
periods.
iii) Revenue Recognition
a) Real Estate Projects
Revenue from Real Estate Projects is recognized on the Percentage of
Completion method (POC) of accounting. Revenue under the POC method is
recognized on the basis of percentage of actual costs incurred,
including land, construction and development cost of projects under
execution subject to such actual cost being 25 percent of the total
estimated cost of projects.
The state of completion under the POC method is measured on the basis
of percentage that actual costs incurred on real estate projects
including land, construction and development cost bears to the
totatestimated cost of the project. The estimates of the projected
revenues, projected profits, projected costs, cost to completion and
the foreseeable loss are reviewed periodically by the management and
any effect of changes in estimates is recognized in the period such
changes are determined.
b) Interest due on delayed payments of installments from customers is
accounted on receipt basis due to uncertainty of recovery. iv) Fixed
Assets
Fixed Assets are stated at cost, less accumulated depreciation. Cost
includes original cost of acquisition, including incidental expenses
related to such acquisition and installation. v) Depreciation
a) Depreciation on fixed assets is provided on the straight line method
at the rates and as per the manner prescribed in Schedule XIV of the
Act.
b) Depreciation on additions/ deletions to fixed assets is provided on
pro-rata basis from the date the asset is put to use/ discarded.
c) Individual Assets costing less than Rs. 5000.00 are depreciated in
full in the year of purchase. vi) Inventories
a) Building material and consumable stores are valued at lower of cost
or market value on First in First out method.
b) Work in progress (Projects) including cost of land is valued at
cost. vii) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Profit and Loss Account. If at the Balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount. viii) Investments:
Investments are all long term which are stated at cost. Provision for
diminution in value thereof, other than temporary in nature, is
accounted for.
ix) Borrowing Cost
a) Borrowing costs that are directly attributable to the acquisition or
construction of qualifying assets for the period up to the
completion/installation or construction of such asset respectively are
capitalized as part of the cost of such asset.
b) Borrowing costs directly attributable to projects under taken by the
company are charged to each such project on year to year basis and is
treated as cost of the project.
c) All other borrowing costs are charged to revenue in the year in
which they are incurred.
x) Current Year Taxation
a) (i) Provision for Income Tax is based on assessable profits of the
company as computed in accordance with the relevant provision of the
Income Tax Act, 1961 for the year ending 31s December 2009.
(ii) The company is entitled for availing exemption from income tax
under section 80IB (10) of the Income Tax Act, 1961 on its two
projects.
b) Deferred Tax
Deferred Taxation is provided using the liability method in respect of
the tax effect arising from all material timing differences between the
accounting and tax treatment of Income and expenditure which are
expected with reasonable probability to crystallize in foreseeable
future. Deferred tax benefits are recognized in the financial
statements only to the extent of any deferred tax liability or when
such benefits are reasonably expected to be realizable in the near
future.
xi) Retirement Benefits
a) Contributions payable by the Company to the concerned Government
Authorities in respect of Provident Fund, Family Pension fund and
Employee State Insurance are charged to the profit and loss account.
b) Provision for gratuity and Leave Encashment is made on actuarial
valuation, as per Accounting Standard (AS)-15. xii) Accounting
Standards
The Company follows all applicable accounting standards as required
under Section 211 (3) (C) of the Act.
xii) Provisions, contingent liabilities and Contingent Assets:
Provisions are recognized only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of
obligation can be made. Contingent Liability is disclosed for (1)
Possible obligations which will be confirmed only by future events not
wholly within the control of the company or (2) Present obligations
arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable
estimate of the amount of obligation cannot be made. Contingent assets
are not recognized in the financial statements since this may result in
recognition of income that may not be realized in the near future.
xiv) Preliminary Expenses
Preliminary expenses are being amortized in ten annual equated
installments.
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