Mar 31, 2018
1 Significant accounting policies
1.1 Basis of preparation
The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).
For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended March 31, 2018 are the first financial statements of the Company which are prepared in accordance with Ind AS. Refer to note 45 for information on how the Company adopted Ind AS.
The financial statements have been prepared on the historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
The financial statements are presented in INR and all values are rounded to the nearest Lakhs, except when otherwise indicated.
- Amended Standards adopted by the Group - The amendments to the Ind AS7 require disclosure of changes in liabilities arising from the financing activities.
2.2 Summary of significant accounting policies
a) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. Revenue does not include sales tax/ value added tax (VAT) and Goods Service Tax (GST) as the same is not received by the Company on its own account. Rather, it is tax collected by the seller on behalf of the government. Accordingly, it is excluded from revenue.
i. Recognition of revenue from real estate development
Revenue from real estate projects is recognised when it is reasonably certain that the ultimate collection will be made and that there is buyers'' commitment to make the complete payment. The following specific recognition criteria must also be met before revenue is recognised.
Revenue from real estate projects 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:
a) all critical approval necessary for the commencement of the project has been obtained
b) the stage of completion of the project has reached a reasonable level of development, i.e., 25% or more of the construction and development cost related to project has been incurred,
c) at least 25% of the saleable project area is secured by sales contracts/ agreements with buyers,
d) at least 10% of the contract value as per the agreements of sale or any other legally enforceable documents are realised at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts.
For computation of revenue, the stage of completion is arrived at with reference to the entire project costs incurred including land costs, borrowing costs and construction and development costs as compared to the estimated total costs of the project. The percentage completion method is applied on a cumulative basis in each reporting period and the estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The changes to estimates also include changes arising out of cancellation of contracts. In such cases any revenues attributable to such contracts previously recognised are reversed.
When it is probable that total project costs will exceed total eligible project revenues, the expected loss is recognised as an expense immediately when such probability is determined.
Further, for projects executed through joint development arrangements, wherein the land owner/ possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. The project costs include fair value of land being offered for the project and revenue from the development and transfer of constructed area/ revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.
ii. Recognition of revenue from contractual projects
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
The stage of completion on a project is measured on the basis of proportion of the contract work/based upon the contracts/ agreements entered into by the Company with its customers.
iii. Unbilled Receivables & Billed Receivables in excess of revenue
Unbilled receivables represents revenue recognized based on Percentage of Completion Method over and above the amount due as per the payment plans agreed with the customers.
Billing in excess of revenue represents the amount due as per the payment plans agreed with the customers over and above the revenue recognized based on Percentage of Completion Method.
iv. Share in profits/(loss) from investments in Association of Person (''AOP'')
The Company''s share in profits from AOP where the Company is a member, is recognized on the basis of such AOP''s audited accounts, as per terms of the agreement
v. Income from Sale of Land & Plots
Sale of Land and plots (including development rights) is recognized in the financial year in which the agreement to sell is executed. Where the Company has any remaining substantial obligations as per the agreements, revenue is recognized on the percentage of completion method of accounting.
vi. Interest income
Interest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
vii. Dividend income
Revenue is recognised when the shareholders'' or unit holders'' right to receive payment is established, which is generally when shareholder approve the dividend.
b) Property, plant and equipment
Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.
Property, plant & equipment are carried at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses related to the acquisition or construction of the respective assets.
Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Other borrowing costs are expensed as incurred.
Subsequent costs are included in the asset''s carrying amount or recognised as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item with the item will flow to the Company and the cost of the item can be measured realiably. All other expenses on existing property, plant and equipment, 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.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
c) Depreciation on property, plant and equipment
Depreciation on property, plant and equipment is provided ''Written Down Value Method'' based on useful life as prescribed under Schedule II of Companies Act, 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
d) Intangible Fixed Assets
Intangible assets are stated at cost less accumulated amortisation and net of impairments, if any. An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Company and its cost can be measured reliably. Intangible assets/ Computer software is amortised using straight line method over a period of 5 years, which is estimated by the management to be the useful life of the asset.
Since there is no change in the functional currency, the Company has elected to continue with the carrying value for all of its intangible assets as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., 1 April 2016.
e) Investment Property
Ind AS 101 permits a first-time adopter to measure an item of investment property and investment property under construction at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
Investment properties are de-recognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
f) Segment reporting
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.
Unallocated items - Unallocated items include general corporate asset, liability, income and expense items which are not allocated to any business segment
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
g) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.
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 difference: 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.
h) Impairment of non financial 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 unit''s (CGU) fair value less costs of disposal and its value in use. 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. When 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 fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Impairment losses, including impairment on inventories, are recognised 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.
i) Impairment of financial assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
j) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The real estate development projects undertaken by the Company run over a period ranging upto 5 years or such extended period. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of upto 5 years or such an extended period. Borrowings in connection with such projects are classified as short-term (i.e current) since they are payable over the term of the respective projects.
Assets and liabilities, other than those discussed above, are classified as current to the extent they are expected to be realised / are contractually repayable within 12 months from the Balance sheet date and as non-current, in other cases.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
k) Fair value measurement
The Company measures financial instruments, such as investments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2âValuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
l) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
Debt instruments at amortised cost
Debt instruments at fair value through other comprehensive income (FVTOCI)
Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as payables, as appropriate.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
m) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the Effective Interest method amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
n) Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition/ construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use/ sale. All other borrowing costs not eligible for inventorisation/ capitalisation are charged to statement of profit and loss.
o) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
p) 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 deposits with an original maturity of three months or less , which are subject to an insignificant risk of changes in value. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal usage.
q) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme and the contributions are charged to the statement of profit and loss of the year when the contributions to the provident fund are due. There are no other obligations other than the contribution payable to the government administered provident fund.
Provision towards gratuity, a defined benefit plan, is made for the difference between actuarial valuation by an independent actuary and the fund balance, as at the year-end. The cost of providing benefits under gratuity is determined on the basis of actuarial valuation using the projected unit credit method at each year end.
Accumulated leave, which is expected to be utilized within the next 12 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.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Expense in respect of other short term benefits is recognised on the basis of the amount paid or payable for the period for which the services are rendered by the employee.
r) Provisions
A provision is recognized when a Company has a present obligation (legal or constructive) as result of past event and it is probable that an outflow of embodying economic benefits of resources will be required to settle a reliably assessable obligation. Provisions are determined based on best estimate required to settle each obligation at each balance sheet date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
s) 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, unless the possibility of an outflow of resources embodying economic benefit is remote.
t) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
u) Taxes
Tax expense comprises of current and deferred tax.
Current income tax
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act 1961. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred income tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Minimum Alternative Tax (MAT) may become payable when the taxable profit is lower than the book profit. Taxes paid under MAT are available as a set off against regular corporate tax payable in subsequent years, as per the provisions of Income Tax Act. 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.
v) Land
Advances paid by the Company to the seller/ intermediary toward outright purchase of land is recognised 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.
Land/ development rights received under Joint Development Arrangements (JDA) is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. Further, non-refundable deposit amount paid by the Company under joint development arrangements is recognised as land advance under other assets and on the launch of the project, the non-refundable amount is transferred as land cost to work-in-progress. Further, the amount of refundable deposit paid by the Company under JDA is recognised as deposits under loans.
w) Leases
Where the Company is lessee
Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased asset, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognized as finance costs in the statement of profit and loss.
A leased asset is depreciated on a straight-line basis over the lower of the lease term or the estimated useful life of the asset unless there is reasonable certainty that the Company will obtain ownership, wherein such assets are depreciated over the estimated useful life of the asset.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, 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 lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
x) Inventories
Direct expenditure relating to real estate activity is accounted to inventories. Other expenditure (including borrowing costs) during construction period are accounted to inventories to the extent the expenditure is directly attributable to the 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.
3 Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make judgements, estimates and assumptions that affect the reported balances of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Judgements
In the process of applying the accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
i) Going concern
These financial statements have been prepared on a going concern basis notwithstanding accumulated losses as at the balance sheet date and a negative net current assets situation.
These financial statements therefore do not include any adjustments relating to recoverability and classification of asset amounts or to classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
ii) Classification of property
The Company determines whether a property is classified as investment property or inventory as below.
Investment property comprises land and buildings (principally office and retail properties) that are not occupied substantially for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are substantially rented to tenants and not intended to be sold in the ordinary course of business.
Inventory comprises property that is held for sale in the ordinary course of business. Principally, this is residential and commercial property that the Company develops and intends to sell before or during the course of construction or upon completion of construction.
b) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
i) Revenue recognition, contract costs and valuation of unbilled revenue
The Company uses the percentage-of-completion method for recognition of revenue, accounting for unbilled revenue and contract cost thereon for its real estate projects. The percentage of completion is measured by reference to the stage of the projects determined based on the proportion contract costs incurred for work performed to date bear to the estimated total contract costs. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Significant assumptions are required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract revenue and contract cost and the recoverability of the contracts. These estimates are based on events existing at the end of each reporting date.
For revenue recognition for projects executed through joint development arrangements, refer clause (ii) below as regards estimates and assumptions involved.
ii) Accounting for revenue and land cost for projects executed through joint development arrangements
For projects executed through joint development arrangements, as explained in note 2.2(a) under significant accounting policies, the revenue from the development and transfer of constructed area/revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. Such assessment is carried out at the launch of the real estate project and is not reassessed at each reporting period. The management is of the view that the fair value method and estimates are reflective of the current market condition.
iii) Estimation of net realizable value for inventory (including land advance)
Inventory is stated at the lower of cost and net realizable value (NRV).
NRV for completed inventory property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the Company, based on comparable transactions identified by the Company for properties in the same geographical market serving the same real estate segment.
NRV in respect of inventory property under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and an estimate of the time value of money to the date of completion.
With respect to Land advance given, the net recoverable value is based on the present value of future cash flows, which depends on the estimate of, among other things, the likelihood that a project will be completed, the expected date of completion, the discount rate used and the estimation of sale prices and construction costs.
iv) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and market risk. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
v) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which the reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.
Mar 31, 2016
1. Company overview
Nitesh Estates Limited (the Company or ''NEL'') was incorporated on 20 February 2004. NEL is a real estate developer engaged in the business development, sale, management and operation of residential buildings, retail and hotel projects, commercial premises and other related activities.
2. Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these financial statements.
2.1 Basis of preparation of financial statements
These financial statements have been prepared and presented on accrual basis of accounting and comply with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013.
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
2.2 Going concern
These financial statements have been prepared on a going concern basis notwithstanding accumulated losses as at the balance sheet date and a negative net current assets situation.
These financial statements therefore do not include any adjustments relating to recoverability and classification of asset amounts or to classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
2.3 Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements and the reported amounts of income and expenditure during the year reported. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
2.4 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. Revenue from operations is net of Sales Tax/ Value Added Tax and net of adjustments on account of cancellation/ returns.
a) Recognition of revenue from contractual projects
If the outcome of the contractual contract can be reliably measured, revenue associated with the construction contract is recognized by reference to the stage of completion of the contract activity of each project at the year end. (Percentage of Completion method).
b) Recognition of revenue from property development
For projects commenced and revenue recognition started before 1 April 2012
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, except for contracts where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards. In such cases, the revenue is recognized on percentage of completion method. Revenue is recognized in proportion that the contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs. Land costs are not included for the purpose of computing the percentage of completion.
For projects commenced on or after 1 April 2012 and also to projects which have already commenced but where revenue is being recognized for the first time on or after 1 April 2012
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 contract entered into with the 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 :
a) All critical approval necessary for the commencement of the project has been obtained
b) The stage of completion of the project has reached a reasonable level of development, i.e., 25% or more of the construction and development cost related to project has been incurred,
c) At least 25% of the saleable project area is secured by sales contracts/ agreements with buyers,
d) At least 10% of the revenue as per each sales contracts/ agreements with buyers are realized at the balance sheet date
When the outcome of a real estate project can be estimated reliably and the conditions above are satisfied project revenue and project costs associated with the real estate project 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).
Contract costs include the estimated cost of construction, development and other directly attributable costs of the projects under construction. In cases where the total project cost is estimated to exceed the total estimated revenue from a project, the loss is recognized immediately.
The estimates for saleable area and contract costs are reviewed by the management periodically and the cumulative effect of changes in these estimates are recognized in the period in which these changes may be reliably measured.
Unbilled Receivables &Billed Receivables in excess of revenue
Unbilled receivables represents revenue recognized based on Percentage of Completion Method over and above the amount due as per the payment plans agreed with the customers.
Billing in excess of revenue represents the amount due as per the payment plans agreed with the customers over and above the revenue recognized based on Percentage of Completion Method.
c) Share in profits/(loss) from investments in Association of Person (''AOP'')
The Company''s share in profits from AOP where the Company is a member, is recognized on the basis of such AOP''s audited accounts, as per terms of the agreement.
d) Income from Sale of Land & Plots
Sale of Land and plots (including development rights) is recognized in the financial year in which the agreement to sell is executed. Where the Company has any remaining substantial obligations as per the agreements, revenue is recognized on the percentage of completion method of accounting.
e) Interest income
Interest income is recognized using the time-proportion method, based on the amount outstanding and the rate applicable.
Mar 31, 2014
1. Background
Nitesh Estates Limited (the Company or ''NEL'') was incorporated on 20
February 2004. NEL is a real estate developer engaged in the business
of development, sale, management and operation of residential
buildings, retail and hotel projects, commercial premises and other
related activities.
2. Basis of preparation of financial statements
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with Accounting Standards ("AS") prescribed in the Companies
(Accounting Standard) Rules 2006, other pronouncements of the Institute
of Chartered Accountants of India ("ICAI") and the relevant provisions
of the Companies Act, 2013, to the extent applicable and the Companies
Act, 1956, to the extent applicable.
All assets and liabilities have been classifed as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956.
3. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India requires management to make
estimates and assumptions that afect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities on the date of
the financial statements. Actual results could difer from those
estimates. Any revision to accounting estimates is recognised
prospectively in current and future periods.
4. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured. Revenue from operations is net of sales tax/ value
added tax and net of adjustments on account of cancellation/returns.
a) Recognition of revenue from contractual projects
If the outcome of the contractual contract can be reliably measured,
revenue associated with the construction contract is recognised by
reference to the stage of completion of the contract activity at year
end (the percentage of completion method).
b) Recognition of revenue from property development
Projects in progress as on 1 April 2012 where revenues were partially
recognised in earlier years
Revenue from real estate development is recognised 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, except for contracts where the Company still has
obligations to perform substantial acts even after the transfer of all
significant risks and rewards. In such cases, the revenue is recognised
on percentage of completion method. Revenue is recognised in proportion
that the contract costs incurred for work performed up to the reporting
date bear to the estimated total contract costs. Land costs are not
included for the purpose of computing the percentage of completion.
Projects in progress where revenue recognition commenced on or after 1
April 2012
Revenue from real estate development is recognised upon transfer of all
significant risks and rewards of ownership of such real estate/property,
as per the terms of contract entered into with the 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 recognised by applying the percentage of completion
method only if the following thresholds have been met:
a) all critical approvals necessary for the commencement of the project
have been obtained
b) the stage of completion of the project has reached a reasonable
level of development, i.e., 25% or more of the construction and
development cost related to project has been incurred
c) atleast 25% of the saleable project area is secured by sales
contracts/ agreements with buyers
d) atleast 10% of the revenue as per each sales contract/ agreement
with buyers are realized at the balance sheet date
When the outcome of a real estate project can be estimated reliably and
the conditions above are satisfed project revenue and project costs
associated with the real estate project are recognised 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).
Contract costs include the estimated cost of construction, development
and other directly attributable costs of the projects under
construction. In cases where the total project cost is estimated to
exceed the total estimated revenue from a project, the loss is
recognised immediately.
The estimates for saleable area and contract costs are reviewed by the
management periodically and the cumulative efect of changes in these
estimates are recognised in the period in which these changes may be
reliably measured.
c) Share in profits/ (loss) from investments in Association of Person
(''AOP'')
The Company''s share in profits from AOP where the Company is a member,
is recognised on the basis of such AOP''s audited accounts, as per terms
of the agreement.
d) Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
e) Income from Sale of Plots
Sale of land and plots (including development rights) is recognized in
the financial year in which the agreement to sell is executed. Where the
Company has any remaining substantial obligations as per the
agreements, revenue is recognized on the percentage of completion
method of accounting.
f) Unbilled revenue
Unbilled receivables represents revenue recognized based on Percentage
of Completion Method over and above the amount due as per the payment
plans agreed with the customers.
g) Billings in excess of revenue
Billing in excess of revenue represents the amount due as per the
payment plans agreed with the customers over and above the revenue
recognized based on Percentage of Completion Method.
5. Fixed assets and depreciation
Tangible fixed assets
Fixed assets are carried at cost of acquisition or construction less
accumulated depreciation. The cost of fixed assets includes freight,
duties, taxes and other incidental expenses related to the acquisition
or construction of the respective assets.
Borrowing costs directly attributable to acquisition or construction of
those fixed assets which necessarily take a substantial period of time
to get ready for their intended use are capitalised. Other borrowing
costs are expensed as incurred.
Advances paid towards the acquisition of fixed assets outstanding at
each balance sheet date and the cost of the fixed assets not ready for
their intended use before such date, are disclosed as capital
work-in-progress.
Depreciation on fixed assets is provided on the written down value
method as per the rates and in the manner prescribed in Schedule XIV to
the Companies Act, 1956. The rates of depreciation prescribed in
Schedule XIV to the Companies Act, 1956 are considered as the minimum
rates. However, where the management''s estimate of the useful life of a
fixed asset at the time of acquisition of the asset or of the remaining
useful life on a subsequent review is shorter than that envisaged in
the aforesaid Schedule, depreciation is provided at a higher rate based
on the management''s estimate of the useful life/ remaining useful life.
Pursuant to this policy, Management''s estimates of depreciation rate of
the following assets are as follows:
- Computer equipment : 40%
- Ofce equipment : 13.91%
- Furniture and fixtures : 18.10%
- Vehicles : 25.89%
Pro-rata depreciation is provided on all fixed assets purchased or sold
during the year. Assets costing individually Rs 5,000 or less are
depreciated fully in the year of acquisition.
Leasehold improvements are amortized over the remaining primary period
of lease upto 10 years or their estimated useful life, whichever is
shorter, on a straight line basis.
Intangible assets - Computer software is amortized using straight line
method over a period of 5 years, which is estimated by the management
to be the useful life of the asset.
6. Impairment of assets
The Company periodically assesses whether there is any indication that
an asset or a group of assets comprising a cash generating unit may be
impaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. For an asset or group of assets that
does not generate largely independent cash inflows, the recoverable
amount is determined for the cash- generating unit to which the asset
belongs. 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 recognised 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 refected at the recoverable amount subject to a maximum of
depreciable historical cost. An impairment loss is reversed only to the
extent that the carrying amount of asset does not exceed the net book
value that would have been determined if no impairment loss had been
recognized.
7. Investments
Investments that are readily realizable and intended to be held for not
more than a year are classifed as current investments. All other
investments are classifed as long-term investments. Current investments
are carried 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, if any, is made to recognize a
decline other than temporary in the value of the investments.
8. Inventories
Inventories are carried at the lower of cost and net realisable value.
Cost includes all applicable costs including borrowing costs incurred
in bringing the properties to their present location and condition. The
method of determination of cost for various categories of inventories
is as follows:
Land
Land is valued at cost of acquisition. Cost includes acquisition cost
and related development charges. Finished stocks of constructed
properties are valued at their cost of construction / acquisition.
Properties under development
Represents cost incurred in respect of unsold area of the real estate
development projects or cost incurred on projects where the revenue is
yet to be recognized. Real estate work-in-progress is valued at lower
of cost and net realizable value.
The net realisable value of work in progress is determined with
reference to the selling prices of related constructed property. Raw
materials and other supplies held for use in construction of property
are not written below cost except in cases where material prices have
declined and it is estimated that the cost of constructed property will
exceed their net realisable value.
9. Land held under joint development arrangements
In case of joint development with the land owner on space sharing
arrangement, on entering into the joint development agreement and
obtaining necessary approvals for commencement of construction, land is
initially recorded at the estimated cost of construction for the
portion of the building to be transferred to the land owner on
completion of construction. Changes in the estimate/ actual cost of
construction from the estimated cost are adjusted in the cost of land
in the year of such change/ occurrence.
10. Foreign exchange transactions
Foreign exchange transactions are recorded at the rates of exchange
prevailing on the dates of the respective transactions. Exchange
diference arising on foreign exchange transactions settled during the
year are recognised in the profit and loss account for the year.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date are translated at the closing exchange rate on
that date; the resultant exchange diferences are recognised in the
profit and loss account.
For derivative contracts entered into by the Company that are not
covered by AS-11, the Company follows the guidance in the announcement
of The Institute of Chartered Accountants of India (''ICAI'') dated 29
March 2008 whereby for each category of derivatives, the Company
records the net mark-to-market losses, if any. Net mark-to-market gains
are not recorded for such derivatives.
11. Taxation
Income-tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income-tax law) and deferred tax
charge or credit (refecting the tax efects of timing diferences between
accounting income and taxable income for the year). Deferred tax assets
are recognised only to the extent there is reasonable certainty that
the assets can be realised in future; however, where there is
unabsorbed depreciation or carried forward business loss under taxation
laws, deferred tax assets are recognised only if there is a virtual
certainty of realisation of such assets. Deferred tax assets/
liabilities are reviewed as at each balance sheet date and written down
or written-up to refect the amount that is reasonably/ virtually
certain (as the case may be) to be realised.
Minimum Alternative Tax (''MAT'') under the provisions of the Income-tax
Act, 1961 is recognised as current tax in the Statement of profit and
Loss. The credit available under the Act in respect of MAT paid is
recognised as an asset only when and to the extent there is convincing
evidence that the company will pay normal income tax during the period
for which the MAT credit can be carried forward for set-of against the
normal tax liability. MAT credit recognised as an asset is reviewed at
each balance sheet date and written down to the extent the aforesaid
convincing evidence no longer exists.
The Company ofsets, the current tax assets and liabilities (on a year
on year basis), where it has a legally enforceable right and where it
intends to settle such assets and liabilities on a net basis.
12. Provisions and contingencies
The Company recognises a provision when there is a present obligation
as a result of a past obligating event that probably requires an outflow
of resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received under it, are recognised
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on a reliable estimate of such obligation.
Mar 31, 2012
A) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial statements.
However, it has significant impact on presentation and disclosures made
in the financial statements. The Company has also reclassified the
previous year figures in accordance with the requirements applicable in
the current year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that afect 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.
c) Fixed assets
i. Tangible fixed assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment losses, if any. Cost comprises the 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 tangible 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 tangible fixed assets are
measured as the difference between the net of disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
Profit and loss when the asset is derecognized.
ii. Intangible fixed assets
Intangible fixed 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.
Gains or losses arising from derecognition of intangible fixed assets
are measured as the difference between the net of disposal proceeds and
the carrying amount of the asset and are recognized in the statement of
Profit and loss when the asset is derecognized.
d) Depreciation / amortisation
Depreciation on assets is provided using written down value method
('WDV') at the rates prescribed under Schedule XIV of the Companies
Act, 1956, which is also estimated by the management to be the
estimated useful lives of the assets.
Schedule XIV Rates (WDV)
Computers 40.00%
Office Equipment 13.91%
Furniture and Fittings 18.10%
Motor Cars 25.89%
Leasehold improvements are amortised over the remaining primary period
of lease upto 10 years or their estimated useful life, whichever is
shorter, on a straight-line basis.
Assets individually costing less than or equal to Rs.5,000 are fully
depreciated in the year of purchase.
Intangible fixed assets - Computer software is amortised using straight
line method over a period of 5 years, which is estimated by the
management to be the useful life of the asset.
e) Impairment of tangible and intangible fixed 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 unit's (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 reffects 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 identifed, an appropriate valuation
model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company's cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long term growth
rate is calculated and applied to project future cash flows after the
fifth year.
Impairment losses, including impairment on inventories, 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.
f) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classifed as operating
leases. Operating lease payments are recognised as an expense in the
statement of Profit and loss on a straight-line basis over the lease
term.
g) 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 classifed as current investments. All other investments are
classifed as non current 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.
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 the value is made to recognize a decline other than
temporary in the value of 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.
h) Inventories
Inventories are valued at lower of cost and net realizable value. Cost
includes direct and indirect expenditure, which is determined based on
Specific identification to the construction activity.
Direct expenditure relating to construction activity is inventorised.
Indirect expenditure (including borrowing costs) during construction
period is inventorised to the extent the expenditure is related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period
which is neither related to the construction activity nor is incidental
thereto is charged to the statement of Profit and loss.
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.
i) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following Specific recognition criteria must also
be met before revenue is recognized:
Income from contractual activities
Revenue from fixed price construction contracts is recognised by
reference to the stage of completion of the project at the reporting
date. The stage of completion of project is determined by the
proportion that contract costs incurred for work performed up to the
reporting date bear to the estimated total contract costs. When
estimated contract costs exceed contract revenue, the expected loss is
recognized immediately.
Revenue from cost plus construction contracts is recognized on the
basis of an agreed mark up on costs incurred, in accordance with the
terms of the agreement entered into by the Company and its customers.
Revenue from other contractual activities is recognized as activities
are performed, on an accrual basis, based on arrangements with
concerned parties.
Contract revenue earned in excess of billing has been reffected under
"Other current assets" and billing in excess of contract revenue has
been reffected under "Other current liabilities" in the balance sheet.
Income from property development
Revenue from real estate under development is recognised upon transfer
of all significant risks and rewards of ownership of such real estate,
as per the terms of the contracts entered into with buyers, which
generally coincides with the firming of the sales contracts/ agreements,
except for contracts where the Company still has obligations to perform
substantial acts even after the transfer of all significant risks and
rewards. In such cases, the revenue is recognised on percentage of
completion method, when the stage of completion of each project reaches
a reasonable level of progress. Revenue is recognised in proportion
that the contract costs incurred for work performed up to the reporting
date bear to the estimated total contract costs. Land costs are not
included for the purpose of computing the percentage of completion.
Income from sale of developed property
Revenue from sale of developed property is recognised upon transfer of
all significant risks and rewards of ownership of such developed
property, as per the terms of the contracts entered into with buyers,
which generally coincides with the firming of the sales contracts/
agreements.
Share in Profits of Association of Person ('AOP')
The Company's share in Profits from AOP where the Company is a member,
is recognised on the basis of such AOP's audited accounts, as per terms
of the agreement.
Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable
j) Foreign currency translation
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.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of the Company at rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognized as income or
as expenses in the year in which they arise.
k) Borrowing costs
Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds. Borrowing costs
directly attributable to the acquisition, construction or production of
an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are expensed in the
period they occur.
l) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defned
contribution scheme and the contributions are charged to the statement
of Profit and loss for the year when the contributions to the respective
funds are due. There are no other obligations other than the
contribution payable to the respective trusts.
Gratuity liability is a defned benefit obligation and is provided for on
the basis of an actuarial valuation on projected unit credit method
made at the reporting date. The gratuity liability is not externally
funded. Actuarial gains/losses are immediately taken to the statement
of Profit and loss and are not deferred.
Accumulated leave, which is expected to be utilized within the next 12
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 12 months, as long-term employee benefit for measurement purpose.
Such long-term compensated absences are provided for based on the
actuarial valuation using the projected unit credit method at the
year-end. Actuarial gains/losses are immediately taken to the statement
of Profit and loss and are not deferred. The Company presents the entire
leave as a current liability in the balance sheet, since it does not
have any unconditional right to defer its settlement for 12 months
after the reporting date.
m) 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.
Current income tax relating to items recognized directly in equity is
recognized in equity and not in the statement of Profit and loss.
Deferred income taxes reffect 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 income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of Profit and loss.
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. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-of 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.
n) Advances/deposits against property
Advances paid by the Company to the seller/ intermediary toward
outright purchase of land is recognized as 'Advances against property'
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 work in progress.
Deposits paid by the Company to the seller towards right for
development of land in exchange of constructed area are recognized as
deposits under Loans and Advances, unless they are non-refundable,
wherein they are transferred to inventories on the launch of project.
o) Provisions
A provision is recognized when the Company has a present obligation as
a result of past events and 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 reffect the current best estimates.
p) 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.
q) Earnings per share
Basic earnings per share are calculated by dividing the net Profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year
are adjusted for event of bonus issue.
For the purpose of calculating diluted earnings per share, the net
Profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
r) 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.
s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of Profit and loss. The Company
measures EBITDA on the basis of Profit/(loss). In its measurement, the
Company does not include depreciation and amortization expense, fnance
costs and tax expense.
Mar 31, 2011
A) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956.The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to accounting estimates is
recognized prospectively in the current and future years.
c) Fixed assets including intangible assets
Fixed assets including intangible assets are stated at cost, less
accumulated depreciation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to
its working condition for its intended use.
Advances paid towards the acquisition of fixed assets outstanding at
each balance sheet date and the cost of fixed assets not ready for
their intended use before such date are disclosed under capital work in
progress.
d) Depreciation / Amortisation
Depreciation on assets, other than those described below, is provided
using written down value method ('WDV') at the rates prescribed under
Schedule XIV of the Companies Act, 1956, which is also estimated by the
management to be the estimated useful lives of the assets.
Schedule XIV Rates (WDV)
Computers 40.00%
Office Equipment 13.91%
Furniture and Fittings 18.10%
Motor Cars 25.89%
Assets individually costing less than or equal to Rs.5,000 are fully
depreciated in the year of purchase.
Leasehold improvements are amortised over the remaining primary period
of lease or their estimated useful life, whichever is shorter, on a
straight-line basis.
Intangible assets - Computer software is amortised using straight line
method over a period of 5 years, which is estimated by the management
to be the useful life of the asset.
e) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
f) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
g) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
Investments are carried 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 the value is made to
recognize a decline other than temporary in the value of investments.
h) Inventories
Inventories comprising of Work in Progress are valued at lower of cost
and net realizable value. Cost includes direct and indirect
expenditure, which is determined based on specific identification to
the construction activity.
Direct expenditure relating to construction activity is inventorised.
Indirect expenditure (including borrowing costs) during construction
period is inventorised to the extent the expenditure is related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period
which is neither related to the construction activity nor is incidental
thereto is charged to the profit and loss account.
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.
i) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Income from contractual activities
Revenue from fixed price construction contracts is recognised by
reference to the stage of completion of the project at the balance
sheet date. The stage of completion of project is determined by the
proportion that contract costs incurred for work performed up to the
balance sheet date bear to the estimated total contract costs. When
estimated contract costs exceed contract revenue, the expected loss is
recognized immediately.
Revenue from cost plus construction contracts is recognized on the
basis of an agreed mark up on costs incurred, in accordance with the
terms of the agreement entered into by the Company and its customers.
Revenue from other contractual activities is recognized as activities
are performed, on an accrual basis, based on arrangements with
concerned parties.
Contract revenue earned in excess of billing has been reflected
under"Other Current Assets"and billing in excess of contract revenue
has been reflected under"Current Liabilities"in the balance sheet.
Income from property development
Revenue from real estate underdevelopment is recognised upon transfer
of all significant risks and rewards of ownership of such real estate,
as per the terms of the contracts entered into with buyers, which
generally coincides with the firming of the sales contracts/
agreements, except for contracts where the Company still has
obligations to perform substantial acts even after the transfer of all
significant risks and rewards. In such cases, the revenue is recognised
on percentage of completion method, when the stage of completion of
each project reaches a reasonable level of progress. Revenue is
recognised in proportion that the contract costs incurred for work
performed up to the reporting date bear to the estimated total contract
costs. Land costs are not included for the purpose of computing the
percentage of completion.
Income from sale of developed property
Revenue from sale of developed property is recognised upon transfer of
all significant risks and rewards of ownership of such developed
property, as per the terms of the contracts entered into with buyers,
which generally coincides with the firming of the sales
contracts/agreements.
Share in profits of Association of Person ('AOP')
The Company's share in profits from AOP where the Company is a member,
is recognised on the basis of such AOP's audited accounts, as perterms
of the agreement.
Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
j) Foreign currency translation
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.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of the Company at rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognized as income or
as expenses in the year in which they arise.
k) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
I) Retirement and other employee benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective trusts.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the balance sheet date. The gratuity liability is not externally
funded.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided based on actuarial
valuation performed at the balance sheet date. The actuarial valuation
is done as per projected unit credit method.
Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
m) Income taxes
Tax expense comprises of current and deferred tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Income-tax Act, 1961 enacted in
India. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised 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 realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits. The carrying amount of deferred tax
assets are reviewed at each balance sheet date. The Company writes-down
the carrying amount of a 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 realised. Any such write-down is reversed to
the extent that it becomes reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available.
Minimum Alternate Tax (MAT) credit recognised as an asset only when and
to the extent there is convincing evidence that the Company will pay
normal income tax during the specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the profit and loss account and shown as MAT
Credit Entitlement. The Company reviews the same at each balance sheet
date and writes down the carrying amount of MAT Credit Entitlement to
the extent there is no longer convincing evidence to the effect that
Company will pay normal IncomeTax during the specified period.
n) Advances/deposits against property
Advances paid by the Company to the seller/ intermediary toward
outright purchase of land is recognized as 'Advances against property'
under Loans and Advances during the course of obtaining clear and
marketable title, free from all encumbrances and transfer of legaltitle
to the Company, where upon it is transferred to Work in progress.
Deposits paid by the Company to the seller towards right for
development of land in exchange of constructed area are recognized as
deposits under Loans and Advances, unless they are non-refundable,
wherein they are transferred to Work in progress on the launch of
project.
o) Provisions and contingencies
A provision is recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resource to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on the best 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 best estimates.
A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible
obligation or a present obligation, in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year are
adjusted for event of bonus issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
q) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short
term investments that are readily convertible into known amounts of
cash and which are subject to an insignificant risk of changes in
value.
3. Related party information a) List of Related parties
Key managerial personnel ('KMP')
Mr. Nitesh Shetty [Managing Director]
Mr. LS.Vaidyanathan [Executive Director]
Subsidiary companies Nitesh Indiranagar Retail Private Limited
Nitesh Housing Developers Private Limited
Nitesh Urban Development Private Limited
(formerly Nitesh Boat Club Development Private Limited)
Nitesh Kochi Projects & Developers Private Limited
Nitesh Property Management Private Limited
Associate company Nitesh Residency Hotels Private Limited
Joint venture enterprise Nitesh Estates - Whitefield [Association of
persons]
Enterprises owned or significantly influenced by KMP
Globosport India Private Limited
Lob Media Private Limited
Madison Developers Private Limited
Nisco Ventures Private Limited
Nitesh Agrico Private Limited
Nitesh Airways Private Limited
Winter Lands Developers Private Limited
(formerly Nitesh Devanahalli Township Private Limited)
Southern Hills Developers Private Limited
(formerly Nitesh Estates Projects Private Limited)
Nitesh Energy Private Limited
Nitesh Healthcare Private Limited
Nitesh Hospitals Private Limited
Nitesh Industries Private Limited
Nitesh Infrastructure Private Limited
Nitesh Land Holdings Private Limited
Nitesh Media Private Limited
Nitesh Mylapore Developers Private Limited
Nitesh Pharmacy Private Limited
Nitesh Publishers Private Limited
Nitstone Environment Private Limited
Nitstone Waste Management Private Limited
Nitesh Telecom Private Limited
Nitesh Warehousing Private Limited
Serve & Volley Holdings Private Limited
Grass Outdoor Media Private Limited
Serve & Volley Outdoor Advertising Private Limited
Serve & Volley Signages Private Limited
Nitesh Healthcare
Richmond Trading Enterprises
Nitesh Infrastructure and Construction
Notes:
a. On June 1, 2010, the Company purchased a developed property
(apartment) from Southern Hills Developers Private Limited ('SHDPL')
for a consideration of Rs.28,400,000 and sold the same to a third party
for a consideration of Rs.60,000,000 on June 15,2010. The Company
incurred other incidental costs of Rs.2,062,885 towards purchase of the
said apartment.
b. On September 30,2009 and October 21,2009, the Company assigned to
Nitesh Housing Developers Private Limited, a subsidiary of the Company
('NHDPL'), its rights to joint development arrangements with the owners
of land parcels. The Company had paid an advance of Rs. 218,606,995
under such arrangements, which has now been recovered from NHDPL
consequent upon the assignment of rights. The Company charged NHDPL an
assignment fee of Rs.76,000,000 in respect of the aforesaid assignment
of rights.
c. On November 24,2009, the Company purchased a developed property
(apartment) from SHDPL for a consideration of Rs.48,000,000 and sold the
same to a third party for a consideration of Rs.70,000,000 on December
29,2009.The Company incurred other incidental costs of Rs.2,000,000
towards purchase of the said apartment.
d. Pursuant to the Share Subscription Agreement ('SSA') entered into
between AMIFI Limited ('Investors'), Pushpalatha VShetty, Nitesh
Shetty, Nitesh Industries Private Limited and the Company, common costs
i.e. the salaries, general and administrative and selling overheads
incurred by the Company are being shared by SHDPL and the Company in
the ratio of their project expenses.
Accordingly, the Company has crossed charged SHDPL expenses amounting
to Rs.6,787,397 (Previous year: Rs.29,575,632). Although, the SSA has
been terminated effective October 9,2009, the Company and NEPPL
continued to share common costs in the ratio of their project expenses
up to June 30,2010.
e. The Company has invested a sum of Rs.410,805,790 (Previous year:
Rs.280,805,790) towards 29,120,579 (Previous year: 28,080,579) Class A
equity shares of Nitesh Residency Hotels Private Limited ('NRHPL').The
aforesaid investment has certain transfer restrictions (including
consent of another investor) under the Shareholders' Agreement entered
into with the other investors in NRHPL. As part of the loan arrangement
entered into by NRHPL for funding the hotel project, the Company has
provided an undertaking to such lenders not to divest its shares in
NRHPL. The aforesaid Class A shares have similar voting rights to the
Class B shares held by another investor but have different dividend
rights in terms of the shareholders agreement. Effective October
30,2009, NRHPL became an associate of the Company. The Company has a
commitment to invest additional share capital in NRHPL along with the
other investors. The Company's share of such additional investment as at
March 31,2011 is estimated to be Rs.330 Million (Previous year: Rs.460
million).
f. Refer notes to Schedule 3 for loans personally guaranteed by
certain directors of the Company.
Mar 31, 2010
A) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to accounting estimates is
recognized prospectively in the current and future years.
c) Fixed assets including intangible assets
Fixed assets including intangible assets are stated at cost, less
accumulated depreciation and impairment losses, if any. Cost comprises
the purchase price and any attributable cost of bringing the asset to
its working condition for its intended use.
Advances paid towards the acquisition of fixed assets outstanding at
each balance sheet date and the cost of fixed assets not ready for
their intended use before such date are disclosed under capital work in
progress.
d) Depreciation / Amortisation
Depreciation on assets, other than those described below, is provided
using written down value method (WDV") at the rates prescribed under
Schedule XIV of the Companies Act, 1956, which is also estimated by the
management to be the estimated useful lives of the assets.
Assets individually costing less than or equal to Rs.5,000 are fully
depreciated in the year of purchase. Leasehold improvements are
amortised over the remaining primary period of lease or their estimated
useful life, whichever is shorter, on a straight-line basis.
Intangible assets - Computer software is amortised using straight line
method over a period of 5 years, which is estimated by the management
to be the useful life of the asset.
e) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. After
impairment, depreciation is provided on the revised carrying amount of
the asset over its remaining useful life.
f) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
g) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
Investments are carried 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 the value is made to
recognize a decline other than temporary in the value of investments.
h) Inventories
Inventories comprising of Work in Progress are valued at lower of cost
and net realizable value. Cost includes direct and indirect
expenditure, which is determined based on specific identification to
the construction activity.
Direct expenditure relating to construction activity is inventorised.
Indirect expenditure (including borrowing costs) during construction
period is inventorised to the extent the expenditure is related to
construction or is incidental thereto. Other indirect expenditure
(including borrowing costs) incurred during the construction period
which is neither related to the construction activity nor is incidental
thereto is charged to the profit and loss account.
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.
i) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Income from contractual activities
Revenue from fixed price construction contracts is recognised by
reference to the stage of completion of the project at the balance
sheet date. The stage of completion of project is determined by the
proportion that contract costs incurred for work performed up to the
balance sheet date bear to the estimated total contract costs. When
estimated contract costs exceed contract revenue, the expected loss is
recognized immediately.
Revenue from cost plus construction contracts is recognized on the
basis of an agreed mark up on costs incurred, in accordance with the
terms of the agreement entered into by the Company and its customers.
Revenue from other contractual activities is recognized as activities
are performed, on an accrual basis, based on arrangements with
concerned parties.
Contract revenue earned in excess of billing has been reflected under
"Other Current Assets" and billing in excess of contract revenue has
been reflected under "Current Liabilities" in the balance sheet.
Income from sale of development rights
Revenue from sale of development rights is recognised upon transfer of
all significant risks and rewards of ownership of such real estate, as
per the terms of the contracts entered into with buyers, which
generally coincides with the firming of the sales contracts/
agreements.
Income from sale of developed property
Revenue from sale of developed property is recognised upon transfer of
all significant risks and rewards of ownership of such developed
property, as per the terms of the contracts entered into with buyers,
which generally coincides with the firming of the sales contracts/
agreements,
Share in profits of Association of Person (AOP)
The Companys share in profits from AOP where the Company is a partner,
is recognised on the basis of such AOPs audited accounts, as per terms
of the agreement.
Interest income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
j) Foreign currency translation
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.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of the Company at rates different from
those at which they were initially recorded during the year, or
reported in previous financial statements, are recognized as income or
as expenses in the year in which they arise.
k) Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such asset. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
l) Retirement and other employee benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective trusts.
Gratuity liability is a defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the balance sheet date. The gratuity liability is not
externally funded.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided based on actuarial
valuation performed at the balance sheet date. The actuarial valuation
is done as per projected unit credit method.
Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
m) income taxes
Tax expense comprises of current, deferred and fringe benefits tax.
Current income tax and fringe benefits 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. Deferred income taxes reflects
the impact of current year timing differences between taxable income
and accounting income for the year and reversal of timing differences
of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised 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 realised. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits. The carrying amount of deferred tax
assets are reviewed at each balance sheet date. The Company writes-down
the carrying amount of a 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 realised. Any such write-down is reversed to
the extent that it becomes reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available.
Minimum Alternate Tax (MAT) credit recognised as an asset only when and
to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the profit and loss account and shown as MAT
Credit Entitlement. The Company reviews the same at each balance sheet
date and writes down the carrying amount of MAT Credit Entitlement to
the extent there is no longer convincing evidence to the effect that
Company will pay normal Income Tax during the specified period.
n) Advances/deposits against property
Advances paid by the Company to the seller/ intermediary toward
outright purchase of land is recognized as Advances against property
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 Work in progress.
Deposits paid by the Company to the seller towards right for
development of land in exchange of constructed area are recognized as
deposits under Loans and Advances, unless they are non-refundable,
wherein they are transferred to Work in progress on the launch of
project.
o) Provisions and contingencies
A provision is recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resource to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on the best 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 best estimates.
A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible
obligation or a present obligation, in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year
are adjusted for event of bonus issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
q) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short
term investments that are readily convertible into known amounts of
cash and which are subject to an insignificant risk of changes in
value.
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