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Accounting Policies of Parsvnath Developers Ltd. Company

Mar 31, 2015

Note 1: Corporate information

PARSVNATH DEVELOPERS LIMITED ("the Company") is a Company registered under the Companies Act, 1956. It was incorporated on 24 July, 1990. The Company is primarily engaged in the business of promotion, construction and development of integrated townships, residential & commercial complexes, multistoried buildings, fats, houses, apartments, shopping malls, IT parks, hotels, SEZ, etc.

a. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year, except for change in the accounting policy for depreciation (see note 45).

b. Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

c. Inventories

Inventory comprises completed property for sale and property under construction (work-in-progress).

i. Completed unsold inventory is valued at lower of cost and net realisable value. Cost is determined by including cost of land (including development rights), internal development cost, external development charges, materials, services, related overheads and apportioned borrowing costs.

ii. Work-in-progress is valued at lower of cost and net realisable value. Cost comprises cost of land (including development rights), internal development cost, external development charges, materials, services, overheads related to projects under construction and apportioned borrowing costs.

d. Cash and cash equivalents (for purposes of Cash flow statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances and highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

e. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

f. Fixed assets

Fixed assets are carried at cost less accumulated depreciation. The cost of fixed assets comprises its purchase price, directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition or construction of qualifying fixed assets, up to the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase/completion is capitalised only if such expenditure results in an increase in the future benefits from such assets beyond its previously assessed standard of performance.

g. Capital work-in-progress

Projects under which tangible fixed assets are not ready for their intended use and other capital work- in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing costs.

h. Pre-operative expenditure pending allocation

Pre-operative expenditure incurred in relation to construction of fixed assets in respect of projects which are yet to commence commercial operations pending allocation includes:

i. Incidental expenditure during construction period comprising payment to and provision for employees, professional fees and other directly attributable expenses pending allocation to fixed assets on completion of the Project.

ii. Borrowing costs net of interest income pending allocation to fixed assets on completion of the Project.

i. Depreciation

i. Depreciation on tangible fixed assets has been provided on the straight line basis as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of 'Shuttering and Scafolding', in whose case the life of the assets has been assessed on technical advice, taking into account the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technology changes and maintenance support etc. Accordingly the useful life of the assets taken is as under:

ii. Cost of building on land held on lease/license basis is amortised over the period of license of project facility on straight line basis.

j. Revenue recognition

i. Revenue from real estate projects including integrated townships is recognised on the 'Percentage of Completion Method' of accounting. Revenue is recognised, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including land as against the total estimated cost of the project under execution subject to such actual costs being 30% or more of the total estimated cost. 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.

In accordance with Revised Guidance Note issued by the Institute of Chartered Accountants of India (ICAI), on 'Accounting for Real Estate Transactions (Revised 2012)', revenue recognition for all real estate projects commencing on or after 1 April, 2012 or where the revenue is recognised for the first time on or after 1 April, 2012, revenue is recognised on percentage of completion method if (a) Critical approvals for commencement of the project have been obtained (b) actual construction and development cost (excluding land cost) incurred is 25% or more of the estimated cost, (c) At least 25% of the saleable project area is secured by contracts or agreements with buyers and (d) At least 10% of the total revenue as per sales agreement or any other legally enforceable document are realised as at the reporting date. However, there was no such project during the year.

ii. In case of joint development projects, revenue is recognised to the extent of Company's percentage share of the underlying real estate development project.

iii. Revenue from sale of land without any signifcant development is recognised when the agreement to sell is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer.

iv. Revenue from sale of development rights is recognised when agreements are executed.

v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the financial statements. The related costs there against are charged to the Statement of profit and loss of the year. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract.

vi. Any expected loss on real estate projects or construction contracts is recognised as an expense when it is probable that the total cost will exceed the total revenue.

vii. The revenue on account of interest on delayed payment by customers and expenditure on account of compensation/penalty for project delays are accounted for at the time of acceptance/ settlement with the customers due to uncertainties with regard to determination of amount receivable/ payable.

viii. Income from licence fee is recognised on accrual basis in accordance with the terms of agreement with the sub-licensees.

ix. Income from rent is recognised on accrual basis in accordance with the terms of agreement with the lessee.

x. Income from maintenance charges is recognised on accrual basis.

xi. Interest income is recognised on accrual basis on a time proportion basis.

xii. Dividend income is recognised when the Company's right to receive dividend is established.

k. Cost of construction/development

Cost of construction/development (including cost of land/development rights) incurred is charged to the Statement of Profit and Loss based on the proportionate area in respect of which revenue is recognised as per policy in 'j' above. Adjustments, if required, are made on completion of the respective projects.

l. Unbilled receivables

Unbilled receivables represent revenue recognised on 'Percentage of Completion Method' less amount due from customers as per payment plans adopted by them.

m. Foreign currency transactions and translations

i. Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

ii. Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

iii. Exchange differences arising on settlement/ restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

n. Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

o. Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.

i. Defined contribution plan

The Company's contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

ii. Defined benefit plan

For defined benefit plans in the form of gratuity, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The employee benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost.

iii. Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. Cost of short-term compensated absences is accounted when employees render the services that increase their entitlement of future compensated absences.

iv. Long-term employee benefits

compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date on the basis of actuarial valuation.

p. Borrowing cost

Borrowing costs include interest and amortisation of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets.

Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity of the qualifying asset is interrupted.

q. Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

r. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.

Assets given under operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight line basis over the lease term. Costs, including depreciation are recognised as expense in the Statement of Profit and Loss.

s. Earnings per share

Basic earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.

t. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set of. Deferred tax assets are reviewed at each balance sheet date for their realisability.

Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.

u. Accounting for joint ventures

i. Jointly controlled operations – The Company's share of revenue, expenses, assets and liabilities are included in the financial statements as revenue, expenses, assets and liabilities respectively.

ii. Jointly controlled entities – The Company's investment in jointly controlled entities is reflected as investment and accounted for in accordance with the Company's accounting policy of Investments (see note 2 n above).

v. Impairment of assets

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss.

w. Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding employee benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

x. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilising the credits.

y. Operating cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classification of its assets and liabilities as current and non-current.

ii. Rights, preferences and restrictions attached to equity shares:

The Company has issued only one class of equity shares having a par value of Rs. 5/- per share. Each holder of equity shares is entitled to one vote per share held. The dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.


Mar 31, 2014

A. Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notifed under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Afairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

B. USE OF ESTIMATES

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could difer due to these estimates and the diferences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

C. INVENTORIES

Inventory comprises completed property for sale and property under construction (work-in-progress).

i. Completed unsold inventory is valued at lower of cost and net realisable value. Cost is determined by including cost of land (including development rights), materials, services, related overheads and apportioned borrowing costs.

ii. Work-in-progress is valued at lower of cost and net realisable value. Cost comprises cost of land (including development rights), materials, services, overheads related to projects under construction and apportioned borrowing costs.

d. Cash and cash equivalents (for purposes of cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

E. CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the efects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and fnancing activities of the Company are segregated based on the available information.

F. FIXED ASSETS

Fixed assets are carried at cost less accumulated depreciation. The cost of fixed assets comprises its purchase price, directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition or construction of qualifying fixed assets, up to the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase/completion is capitalised only if such expenditure results in an increase in the future benefits from such assets beyond its previously assessed standard of performance.

G. DEPRECIATION

i. Depreciation on fixed assets is provided on written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 or based on the management''s estimates of the useful life of the assets, whichever is higher. Accordingly, the depreciation rates used are as under:

ii. Cost of building on land held on license basis is amortized over the period of license of project facility on straight line basis.

iii. Assets costing Rs. 5,000 or less individually are fully depreciated in the year of purchase.

H. CAPITAL WORK-IN-PROGRESS

Projects under which tangible fixed assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing costs.

I. PRE-OPERATIVE EXPENDITURE PENDING ALLOCATION

Pre-operative expenditure incurred in relation to construction of fixed assets in respect of projects which are yet to commence commercial operations pending allocation includes:

i. Incidental expenditure during construction period comprising payment to and provision for employees, professional fees and other administrative expenses pending allocation to fixed assets on completion of the Project.

ii. Borrowing costs net of interest income pending allocation to fixed assets on completion of the Project.

J. REVENUE RECOGNITION

i. Revenue from real estate projects including integrated townships is recognised on the ''Percentage of Completion Method'' of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including land as against the total estimated cost of the project under execution subject to such actual costs being 30% or more of the total estimated cost. The estimates of saleable area and costs are revised periodically by the management. The efect of such changes to estimates is recognised in the period such changes are determined.

In accordance with Revised Guidance Note issued by the Institute of Chartered Accountants of India (ICAI), on ''Accounting for Real Estate Transactions (Revised 2012)'', revenue recognition for all real estate projects commencing on or after 1 April, 2012 or where the revenue is recognised for the first time on or after 1 April, 2012, revenue is recognised on percentage of completion method if (a) actual construction and development cost (excluding land cost) incurred is 25% or more of the estimated cost, (b) At least 25% of the saleable project area is secured by contracts or agreements with buyers and (c) At least 10% of the total revenue as per sales agreement or any other legally enforceable document are realised as at the reporting date. However, there was no such project during the year.

ii. In case of joint development projects, revenue is recognised to the extent of Company''s percentage share of the underlying real estate development project.

iii. Revenue from sale of land without any significant development is recognised when the agreement to sell is executed resulting in transfer of all significant risk and rewards of ownership and possession is handed over to the buyer.

iv. Revenue from sale of development rights is recognised when agreements are executed.

v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the financial statements. The related costs there against are charged to the Statement of profit and loss of the year. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bears to the estimated total contract cost for each contract.

vi. Any expected loss on real estate projects or construction contracts is recognised as an expense when it is certain that the total cost will exceed the total revenue.

vii. The revenue on account of interest on delayed payment by customers and expenditure on account of compensation/ penalty for project delays are accounted for at the time of acceptance/settlement with the customers due to uncertainties with regard to determination of amount receivable/payable.

viii. Income from license fee is recognised on accrual basis in accordance with the terms of agreement with the sub- licensees.

ix. Interest income is recognised on accrual basis on a time proportion basis.

x. Dividend income is recognised when the Company''s right to receive dividend is established.

K. COST OF CONSTRUCTION/DEVELOPMENT

Cost of construction/development (including cost of land/ development rights) incurred is charged to the Statement of profit and loss proportionate to project area sold. Adjustments, if required, are made on completion of the respective projects.

L. UNBILLED RECEIVABLES

Unbilled receivables represent revenue recognised on ''Percentage of Completion Method'' less amount due from customers as per payment plans adopted by them.

M. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATIONS

i. Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

ii. Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

iii. Exchange diferences arising on settlement/restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of profit and Loss.

N. INVESTMENTS

Investments intended to be held for more than a year are classified as long term investments. All other investments are classified as current investments. Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

O. EMPLOYEE benefitS

Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.

I. DEFINED CONTRIBUTION PLAN

The Company''s contribution to provident fund and employee state insurance scheme are considered as Defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

II. DEFINED benefit PLAN

For Defined benefit plans in the form of gratuity, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already

vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the Defined benefit obligation as adjusted for unrecognised past service cost.

III. SHORT-TERM EMPLOYEE BENEFITS

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

IV. LONG TERM EMPLOYEE BENEFITS

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the Defined benefit obligation as at the balance sheet date.

P. BORROWING COST

Borrowing costs include interest and amortisation of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset is added to the cost of the assets.

Q. SEGMENT REPORTING

The Company identifes primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

R. LEASES

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of profit and Loss on a straight-line basis.

Assets given under operating leases are included in fixed assets. Lease income is recognised in the Statement of profit and Loss on a straight line basis over the lease term. Costs, including depreciation are recognised as expense in the Statement of profit and Loss.

S. EARNINGS PER SHARE

Basic earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.

T. TAXES ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing diferences, being the diferences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing diferences. Deferred tax assets are recognised for timing diferences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufcient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufcient future taxable income available to realise the assets. Deferred tax assets and liabilities are ofset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set of. Deferred tax assets are reviewed at each balance sheet date for their realisability.

u. ACCOUNTING FOR JOINT VENTURES

i. Jointly controlled operations - The Company''s share of revenue, expenses, assets and liabilities are included in the financial statements as revenue, expenses, assets and liabilities respectively.

ii. Jointly controlled entities - The Company''s investment in jointly controlled entities is refected as investment and accounted for in accordance with the Company''s accounting policy of Investments (see note 2 nd above).

v. IMPAIRMENT OF ASSETS

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of profit and Loss.

w. PROVISIONS AND CONTINGENCIES

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

x. SERVICE TAX INPUT CREDIT

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

y. OPERATING CYCLE

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classifcation of its assets and liabilities as current and non- current.

ii. RIGHTS, PREFERENCES AND RESTRICTIONS ATTACHED TO EQUITY SHARES:

The Company has issued only one class of equity shares having a par value of Rs. 5/- per share. Each holder of equity shares is entitled to one vote per share held. The dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.


Mar 31, 2013

A. Basis of accounting and preparation of fi nancial statements

The fi nancial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notifi ed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The fi nancial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the fi nancial statements are consistent with those followed in the previous year.

b. Use of estimates

The preparation of the fi nancial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the fi nancial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

c. Inventories

Inventory comprises completed property for sale and property under construction (work-in-progress).

i. Completed unsold inventory is valued at lower of cost and net realisable value. Cost is determined by including cost of land (including development rights), materials, services, related overheads and apportioned borrowing costs.

ii. Work-in-progress is valued at lower of cost and net realisable value. Cost comprises cost of land (including development rights), materials, services, overheads related to projects under construction and apportioned borrowing costs.

d. Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances, highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignifi cant risk of changes in value.

e. Cash fl ow statement

Cash fl ows are reported using the indirect method, whereby profi t / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash fl ows from operating, investing and fi nancing activities of the Company are segregated based on the available information.

f. Fixed assets

Fixed assets are carried at cost less accumulated depreciation. The cost of fi xed assets comprises its purchase price, directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition or construction of qualifying fi xed assets, up to the date the asset is ready for its intended use. Subsequent expenditure on fi xed assets after its purchase/completion is capitalised only if such expenditure results in an increase in the future benefi ts from such assets beyond its previously assessed standard of performance.

g. Depreciation

i. Depreciation on fi xed assets is provided on written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956 or based on the management''s estimates of the useful life of the assets, whichever is higher. Accordingly, the depreciation rates used are as under:

ii. Cost of building on land held on license basis is amortized over the period of license of project facility on straight line basis.

iii. Assets costing D 5,000 or less individually are fully depreciated in the year of purchase.

h. Capital work-in-progress

Projects under which tangible fi xed assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing costs.

i Pre-operative expenditure pending allocation

Pre-operative expenditure incurred in relation to construction of fi xed assets in respect of projects which are yet to commence commercial operations pending allocation includes:

i. Incidental expenditure during construction period comprising payment to and provision for employees, professional fees and other administrative expenses pending allocation to fi xed assets on completion of the Project.

ii. Borrowing costs net of interest income pending allocation to fi xed assets on completion of the Project.

j. Revenue recognition

i. Revenue from real estate projects including integrated townships is recognised on the ''Percentage of Completion Method'' of accounting. Revenue is recognized, in relation to the sold areas only, on the basis of percentage of actual cost incurred thereon including land as against the total estimated cost of the project under execution subject to such actual costs being 30% or more of the total estimated cost. 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.

In accordance with Revised Guidance Note issued by the Institute of Chartered Accountants of India (ICAI), on ''Accounting for Real Estate Transactions (Revised 2012)'', revenue recognition for all real estate projects commencing on or after 1 April, 2012 or where the revenue is recognised fi rst time on or after 1 April, 2012, revenue is recognised on percentage of completion method if (a) actual construction and development cost (excluding land cost) incurred is 25% or more of the estimated cost, (b) At least 25% of the saleable project area is secured by contracts or agreements with buyers and (c) At least 10% of the total revenue as per sales agreement or any other legally enforceable document are realised as at the reporting date. However, there was no such project during the year.

ii. In case of joint development projects, revenue is recognised to the extent of company''s percentage share of the underlying real estate development project.

iii. Revenue from sale of land without any signifi cant development is recognised when the agreement to sell is executed resulting in transfer of all signifi cant risk and rewards of ownership and possession is handed over to the buyer.

iv. Revenue from sale of development rights is recognised when agreements are executed.

v. Income from construction contracts is recognised by reference to the stage of completion of the contract activity at the reporting date of the fi nancial statements. The related costs there against are charged to the Statement of profi t and loss of the year. The stage of completion of the contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date bear to the estimated total contract cost for each contract.

vi. Any expected loss on real estate projects or construction contracts is recognised as an expense when it is certain that the total cost will exceed the total revenue.

vii. The revenue on account of interest on delayed payment by customers and expenditure on account of compensation/ penalty for project delays are accounted for at the time of acceptance/settlement with the customers due to uncertainties with regard to determination of amount receivable/payable.

viii. Income from license fee is recognised on accrual basis in accordance with the terms of agreement with the sublicensees.

ix. Interest income is recognised on accrual basis on a time proportion basis.

x. Dividend income is recognised when the Company''s right to receive dividend is established.

k. Cost of construction/development

Cost of construction/development (including cost of land/ development rights) incurred is charged to the Statement of profi t and loss proportionate to project area sold. Adjustments, if required, are made on completion of the respective projects.

l. Unbilled receivables

Unbilled receivables represent revenue recognised on ''Percentage of Completion Method'' less amount due from customers as per payment plans adopted by them.

m. Foreign currency transactions and translations

i. Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

ii. Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.

iii. Exchange differences arising on settlement/restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profi t and Loss.

n. Investments

Investments intended to be held for more than a year are classifi ed as long term investments. All other investments are classifi ed as current investments. Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

o. Employee benefi ts

Employee benefi ts include provident fund, employee state insurance scheme, gratuity and compensated absences.

i. Defi ned contribution plan

The Company''s contribution to provident fund and employee state insurance scheme are considered as defi ned contribution plans and are charged as an expense based on the amount of contribution required to be made.

ii. Defi ned benefi t plan

For defi ned benefi t plans in the form of gratuity, the cost of providing benefi ts is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profi t and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefi ts are already vested and otherwise is amortised on a straight-line basis over the average period until the benefi ts become vested. The retirement benefi t obligation recognised in the Balance Sheet represents the present value of the defi ned benefi t obligation as adjusted for unrecognised past service cost.

iii. Short-term employee benefi ts

The undiscounted amount of short-term employee benefi ts expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefi ts include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

iv. Long term employee benefi ts

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defi ned benefi t obligation as at the balance sheet date.

p. Borrowing cost

Borrowing costs include interest and amortisation of ancillary costs incurred. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profi t and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/ development of the qualifying asset up to the date of capitalisation of such asset is added to the cost of the assets.

q. Segment policies

The Company identifi es primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate fi nancial information is available and for which operating profi t / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

r. Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profi t and Loss on a straight-line basis.

Assets given under operating leases are included in fi xed assets. Lease income is recognised in the Statement of Profi t and Loss on a straight line basis over the lease term. Costs, including depreciation are recognised as expense in the Statement of Profi t and Loss.

s. Earnings per share

Basic earnings per share is computed by dividing the profi t after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profi t after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profi t per share from continuing ordinary operations.

t. Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that suffi cient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be suffi cient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

u. Accounting for joint ventures

i. Jointly controlled operations – The Company''s share of revenue, expenses, assets and liabilities are included in the fi nancial statements as revenue, expenses, assets and liabilities respectively.

ii. Jointly controlled entities – The Company''s investment in jointly controlled entities is refl ected as investment and accounted for in accordance with the Company''s accounting policy of Investments (see note 2 n above).

v. Impairment of assets

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash fl ows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profi t and Loss.

w. Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outfl ow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefi ts) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refl ect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the fi nancial statements.

x. Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

y. Operating cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 48 months for real estate projects and 12 months for others for the purpose of classifi cation of its assets and liabilities as current and non-current.

 
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