Accounting Policies of Prozone Realty Ltd. Company
Mar 31, 2023
1 Corporate information
Prozone Realty Limited (Formerly known as Prozone Intu Properties Limited) (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of developing, owning and operating of Shopping Malls, Commercial and Residential Premises and providing related management consultancy services. The equity shares of the Company are listed on both the Bombay Stock Exchange and the National Stock Exchange.
a. Statement of Compliance
These Ind AS standalone financial statements (hereinafter "Ind AS financial statements") have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act.
These Ind AS financial statements for the year ended 31 March 2023 have been reviewed by the Audit Committee and approved by the Board of Directors at their meetings held on 30th May 2023.
Details of accounting policies are included in Note 2.2 to the Ind AS financial statements.
b. Historical cost convention
These financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities which are measured at fair value.
1. Financial instruments measured at fair value through profit or loss, if applicable.
2. Financial instruments measured at fair value through other comprehensive income, if applicable
c. Functional and presentation currency
These Ind AS financial statements are presented in Indian Rupees (INR), which is the Company''s functional currency. All the financial information have been presented in Indian Rupees (?) and all amounts have been rounded-off to the nearest Lakhs, except for share data and as otherwise stated.
d. Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and assumptions are required in particular for:
¦ Measurement of fair values
The Company''s accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
¦ Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
¦ Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
¦ Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
¦ Deferred tax assets
I n assessing the realisability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the Company will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
¦ Defined benefit plans
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its longterm nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
e. Recent Accounting Developments
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1,2023, as below:
Ind AS 1 - Presentation of Financial Statements - The
amendment require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general-purpose financial statements.
Ind AS 12 - Income Taxes - The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
The Company does not expect these amendments to have any significant impact in its financial statements.
2.2 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
a. Current vs non-current classification
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents.
The Company has identified twelve months as its operating cycle.
Current - non current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
Assets
An asset is classified as current when it satisfies any of the following criteria:
a. it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;
b. it is held primarily for the purpose of being traded;
c. i t is expected to be realised within 12 months after the reporting date; or
d. i t is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a. i t is expected to be settled in the company''s normal operating cycle;
b. it is held primarily for the purpose of being traded;
c. it is due to be settled within 12 months after the reporting date; or
d. the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non current.
b. 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.
(i) Non-derivative financial assets
A financial asset is
(i) a contractual right to receive cash or another financial asset; to exchange financial assets or financial liabilities under potentially favourable conditions;
(ii) or a contract that will or may be settled in the entity''s own equity instruments and a non-derivative for which the entity is or may be obliged to receive a variable number of the entity''s own equity instruments; or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity''s own equity instruments..
Recognition, measurement and classification
A financial asset is recognised in the balance sheet only when the Company becomes party to the contractual provisions to the instrument. All financial assets except trade receivables are measured initially at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset. Trade receivables at the time of initial recognition is measured at their transaction price if it does not contain a significant financing component..
The Company classifies its financial assets into
a) financial assets measured at amortised cost, and
b) financial assets measured at fair value through profit or loss (FVTPL).
c) financial assets measured at fair value through other comprehensive income (FVTOCI).
Management determines the classification of its financial assets at the time of initial recognition or, where applicable, at the time of reclassification.
a. Financial assets measured at amortised costs
A financial asset is classified at amortised costs if it is held within a business model whose objective is to a) hold financial asset in order to collect contractual cash flows and b) the contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using effective interest rate method (EIR). Amortised cost is arrive at after taking into consideration any discount or fees or costs that are an integral part of the EIR. The amortisation of such interests forms part of finance income in the statement of profit and loss. Any impairment loss arising from these assets are recognised in the statement of profit and loss.
b. financial assets measured at fair value
Financial assets are measured at fair value through OCI if these financial assets are held within a business model with an objective to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in the Statement of Profit and Loss.
Financial asset not measured at amortised cost or at fair value through OCI is carried at FVTPL..
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments are included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
De-recognition and offsetting
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
(ii) Non-derivative financial liabilities
A financial liability is
(i) a contractual obligation to deliver cash or another financial asset to another entity; or to exchange financial instruments under potentially unfavourable conditions;
(ii) or a contract that will or may be settled in the entity''s own equity instruments and is a non-derivative for which the entity is or may be obliged to deliver a variable number of its own equity instruments; or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity''s own equity instruments.
Recognition, measurement and classification
A financial liability is recognised in the balance sheet only when the Company becomes party to the contractual provisions to the instrument. The Company initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are classified as either held at
a) fair value through profit or loss, or
b) at amortised cost. Management determines the classification of its financial liabilities at the time of initial recognition or, where applicable, at the time of reclassification.
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. 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 Statement of Profit and Loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the Statement of Profit and Loss.
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.
De-recognition and offsetting
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
b) Financial assets that are debt instruments and are measured as at FVTOCI
c) Any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18.
At the time of recognition of impairment loss on other financial assets, the Company determines that whether there has been a significant increase in the credit risk since its initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the financial instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL..
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance/ reversal is recognised during the period as income/ expense in the statement of profit and loss. In case of financial assets measured as at amortised cost, ECL is presented as an allowance. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount but is disclosed as net carrying amount.
(iv) Hybrid contracts
Hybrid contract comprises of Compulsorily convertible debentures. If a contract contains one or more embedded derivatives and the host is not an asset in the scope of Ind AS 109, then an entity may designate the entire hybrid contract as at FVTPL unless the embedded derivative does not significantly modify the cash flows that would otherwise arise on the contract and it is clear with little or no analysis when a similar hybrid instrument is first considered that separation would be prohibited.
Such designation is possible only when it reduces the complexities associated with separating embedded derivatives or when measuring the entire instrument at FVTPL is more reliable than measuring the fair value of the embedded derivative.
c. 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 from management consultancy is recognised on accrual basis as per the terms and conditions of the contract.
Interest income is recognised on a time proportion basis taking into account the amount outstanding and the interest rate applicable.
Dividend income is recognised in the statement of profit and loss on the date the entity''s right to receive the payments is established.
d. Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, and borrowing costs on qualifying assets.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in the statement of profit or loss.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statement of profit or loss as incurred.
Depreciation
Depreciation on Property, Plant and Equipment of the company has been provided as per written down value method as per the estimated useful lives of the respective item of Property, Plant and Equipment indicated in Part ''C'' of Schedule II of the Act.
The details are set out as below:
|
Asset |
Useful Life as per Schedule II of the Act |
|
Furniture and fittings |
10 years |
|
Motor vehicles |
8 years |
|
Office equipments |
5 years |
|
Computers |
3 years |
On transition to Ind AS, the Company has elected to continue with the carrying value of the investment property existing as at 1st April 2016 as per Previous GAAP and use that as its deemed cost.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.
e. Investment Property
IInvestment properties are held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.Any gain or loss on disposal of investment property calculated as the difference between the net proceeds from disposal and the carrying amount of the item is recognised in Statement of Profit & Loss.
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 who holds a recognised and relevant professional qualification and has recent experience in the location and category of the investment property being valued.
Depreciation on Investment Property has been provided as per written down value method as per the useful lives indicated in Part ''C'' of Schedule II of the Act which is 60 years.
On transition to Ind AS, the Company has elected to continue with the carrying value of the investment property existing as at 1st April 2016 as per Previous GAAP and use that as its deemed cost.
f. 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 capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
g. Impairment of non-financial assets
The carrying amounts of the Company''s non-financial assets and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit, or CGU").
The Company''s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss and such lossed recognised in respect of CGUs are allocated to reduce the carrying amounts of assets in the unit on a pro rata basis.
h. Employee Benefits
Defined Contribution Plan
Contributions to defined contribution schemes such as provident fund, employees'' state insurance, labour welfare are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. The above benefits are classified as Defined Contribution Schemes as the Company has no further obligations beyond the monthly contributions.
Defined Benefit Plan
The Company also provides for gratuity which is a defined benefit plan, the liabilities of which is determined based on valuations, as at the balance sheet date, made by an independent actuary using the projected unit credit method. Re-measurement, comprising of actuarial gains and losses, in respect of gratuity are recognised in the OCI, in the period in which they occur. Re-measurement recognised in OCI are not reclassified to the Statement of Profit and Loss in subsequent periods. Past service cost is recognised in the Statement of Profit and Loss in the year of plan amendment or curtailment. The classification of the Company''s obligation into current and non-current is as per the actuarial valuation report.
Leave entitlement and compensated absences
Accumulated leave which is expected to be utilised within next twelve months, is treated as short-term employee benefit. Leave entitlement, other than short term compensated absences, are provided based on a actuarial valuation, similar to that of gratuity benefit. Re-measurement, comprising of actuarial gains and losses, in respect of leave entitlement are recognised in the Statement of Profit and Loss in the period in which they occur.
Short-term Benefits
Short-term employee benefits such as salaries, wages, performance incentives etc. are recognised as expenses at the undiscounted amounts in the Statement of Profit and Loss of the period in which the related service is rendered. Expenses on non-accumulating compensated absences is recognised in the period in which the absences occur.
Termination benefits
Termination benefits are recognised as an expense as and when incurred.
i. Income-tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates items recognised directly in equity or in other comprehensive income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is determined by applying the Balance Sheet approach. Deferred tax assets and liabilities are recognised for all deductible temporary differences between the financial statements'' carrying amount of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the Balance Sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date. Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Such assets are reviewed at each Balance Sheet date to reassess realisation.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
j. Foreign Exchange Translation and Accounting of Foreign Exchange Transaction
Initial Recognition
Foreign currency transactions are initially 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. However, for practical reasons, the Company uses a monthly average rate if the average rate approximate the actual rate at the date of the transactions.
Conversion
Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting date. 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.
Treatment of Exchange Difference
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss except those arising from investment in Non Integral operations.
k. Miscellaneous Expenditure
Preliminary expenses are amortised in the year in which they are incurred.
l. Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.
m. Cash and cash equivalents
Cash and cash equivalent comprise of cash on hand and at banks including cheques on hand, which are subject to an insignificant risk of changes in value.
n. Rounding of amounts
All amounts disclosed in the financials statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III.
Mar 31, 2018
1. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing the opening Ind AS balance sheet at 1 April 2016 for the purposes of the transition to Ind AS, unless otherwise indicated.
A. Financial instruments
(i) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
(ii) Classification and subsequent measurement Financial assets
On initial recognition, a financial asset is classified as measured at
- amortised cost;
- FVOCI - debt investment;
- FVOCI - equity investment; or
- FVTPL
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designates as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces on accounting mismatch that would otherwise arise.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profit, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Company''s management;
- the risk that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company''s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ''principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company''s claim to cash flows from specified assets (e.g. non-recourse features)
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL- These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost- These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI- These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI - These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or loss.
Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
(iii) Derecognition
Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
B. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment (refer note 2.3).
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
(iv) Depreciation
Depreciation on Property, Plant and Equipment of the company has been provided as per written down value method as per the estimated useful lives of the respective item of Property, Plant and Equipment indicated in Part ''C'' of Schedule II of the Act.
(v) Capital work-in progress and capital advances
Capital work-in progress comprises of the cost of property, plant and equipment that are not yet ready for their intended use as at the balance sheet date. Advances given towards acquisition of property, plant and equipment outstanding at each balance sheet date are disclosed as ''Other non-current assets''.
C. Investment Property
(i) Recognition and measurement
Investment properties are held to earn rentals or for capital appreciation, or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
(ii) Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment properties recognised as at 1 April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such investment properties (refer note 2.3).
(iii) Subsequent expenditure
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit and loss as incurred. Any gain or loss on disposal of investment property calculated as the difference between the net proceeds from disposal and the carrying amount of the item is recognized in Statement of Profit and Loss.
Though the Company measures investment property using cost-based measurement, the fair value of investment property is disclosed in the note no 4 of the Ind AS financial statements.
(iv) Depreciation
Depreciation on Investment Property has been provided as per written down value method as per the useful lives indicated in Part ''C'' of Schedule II of the Act which is 60 years.
D. Impairment
(i) Impairment of financial instruments
The Company recognises loss allowances for expected credit losses on:
- financial assets measured at amortized cost; and
- financial assets measured at FVOCI- debt investments.
At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit impaired. A financial asset is ''credit impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for the following, which are measured as 12 month expected credit losses:
- debt securities that are determined to have low credit risk at the reporting date; and
- other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
Trade and other receivables
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected, etc. and expectations about future cash flows.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward looking information.
Measurement of expected credit losses
Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
Write off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generated sufficient cash flows to be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The Company''s non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Company''s corporate assets (e.g. central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.
An impairment loss in respect of goodwill is not subsequently reversed. In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
E. Employee benefits
(i) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts.
The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (''the asset ceiling''). In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plan are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service cost''or''past service gain'') or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
(iv) Other long-term employee benefits
The Company net obligation in respect of long-term employee benefits other than post-employment benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the projected unit credit method. Remeasurement gains or losses are recognises in profit or loss in the period in which they arise.
F. Provisions (other than for employee benefits)
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflows of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. Expected future operating losses are not provided for.
G. 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.
(i) Rendering of services
Revenue from management consultancy is recognized on accrual basis as per the terms and conditions of the contract.
(ii) Dividend Income
Dividend income is recognized in the statement of profit and loss on the date the entity''s right to receive the payments is established.
(iii) Rental income
Rent income is recognised on time proportionate basis over the period of the rent.
All revenue is stated exclusive of goods and service tax.
H. Leases
(i) Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. The liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.
(ii) Assets held under leases
Leases of property, plant and equipment that transfer to the Company substantially all the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to similar owned assets.
Assets held under leases that do not transfer to the Company substantially all the risks and rewards of ownership (i.e. operating leases) are not recognised in the Company''s Balance Sheet.
(iii) Lease payments
Payments made under operating leases are generally recognised in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
Minimum lease payments made under finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
I. Recognition of interest income or expense
Interest income or expense is recognised using the effective interest method.
The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset that have become credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
J. Income tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for the financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits. Deferred tax is not recognised for:
- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax assets and liabilities will be realised simultaneously.
Minimum Alternate Tax (''MAT'') credit entitlement is generally recognised as a deferred tax asset if it is probable (more likely than not) that MAT credit can be used in future years to reduce the regular tax liability.
K. Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
L. Foreign exchange translation and accounting of foreign exchange transaction
(i) Initial Recognition
Foreign currency transactions are initially 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. However, for practical reasons, the Company uses a monthly average rate if the average rate approximates the actual rate at the date of the transactions.
(ii) Conversion
Monetary assets and liabilities denominated in foreign currencies are reported using the closing rate at the reporting date. 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.
(iii) Treatment of Exchange Difference
Exchange differences arising on settlement/ restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
M. Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.
N. Cash and cash equivalents
Cash and cash equivalent comprise of cash on hand and at banks including cheques on hand, which are subject to an insignificant risk of changes in value.
O. Recent accounting pronouncements
Standards issued but not yet effective
(i) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
On March 28, 2018, the Ministry of Corporate Affairs (the MCA) notified the Companies (Indian Accounting Standards Amendment Rules 2018 containing Appendix B to Ind AS 21 Foreign currency transactions and advance consideration which clarifies the date of transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognises the nonmonetary asset or non-monetary liability arising from the payment or receipt of advance consideration towards such assets, expenses or income. If there are multiple payments or receipts in advance, then an entity must determine transaction date for each payment or receipts of advance consideration. The amendment will come into force from April 1, 2018. The Company is evaluating the impact of this amendment on its financial statements.
(ii) Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.
The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:
- Step 1: Identify the contract(s) with a customer
- Step 2: Identify the performance obligation in contract
- Step 3: Determine the transaction price
- Step 4: Allocate the transaction price to the performance obligations in the contract
- Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer.
The company is evaluating the requirements of the IND AS 115 and the effect on the financial statements is being evaluated.
2.3 First time adoption of Ind AS
Explanation of transition to Ind AS:
As stated in Note 2.1 of the standalone Ind AS financial statements, these are the Company''s first standalone financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company has prepared its standalone financial statements in accordance with Companies (Accounting Standards) Rules, 2006, notified under section 133 of the Act and other relevant provisions of the Act (''previous GAAP'').
The accounting policies set out in Note 2.2 have been applied in preparing these standalone financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening standalone Ind AS balance sheet on the date of transition i.e. 1 April 2016.
In preparing its standalone Ind AS balance sheet as at 1 April 2016 and in preparing the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in standalone financial statements prepared in accordance with previous GAAP. The below note explains the principal adjustments made by the Company in restating its standalone financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s standalone financial position, standalone financial performance and standalone cash flows.
A) Exemptions and exceptions availed
1) Ind-AS optional exemptions :
Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
a) Deemed cost
As per Ind AS 101 an entity may elect to:
(i) measure an item of property, plant and equipment at the date of transition at its fair value and use that fair value as its deemed cost at that date
(ii) use a previous GAAP revaluation of an item of property, plant and equipment at or before the date of transition as deemed cost at the date of the revaluation, provided the revaluation was, at the date of the revaluation, broadly comparable to:
- fair value;
- or cost or depreciated cost under Ind AS adjusted to reflect, for example, changes in a general or specific price index.
(iii) use carrying values of property, plant and equipment, intangible assets and investment properties as on the date of transition to Ind AS (which are measured in accordance with previous GAAP and after making adjustments relating to decommissioning liabilities prescribed under Ind AS 101) if there has been no change in its functional currency on the date of transition.
This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties. As permitted by Ind AS 101, the Company has elected to measure all of its property, plant and equipment and investment property at their previous GAAP carrying value.
b) Investments in subsidiaries, jointly controlled entities and associates
Ind AS 101 provides an exemption to the first-time adopter to measure an investment in subsidiaries, jointly controlled entities and associates at:
a) cost determined in accordance with Ind AS 27; or
b) deemed cost, which shall be its:
i) fair value at the entity''s date of transition to Ind ASs in its separate financial statements; or
ii) previous GAAP carrying amount at that date.
The Company has elected fair value at the date of transition as deemed cost for its investment in each subsidiary, joint venture or associate.
c) For financial instruments, wherein fair market values are not available (viz. interest free and below market rate security deposits or loans) the Company has elected to adopt fair value recognition prospectively to transactions entered after the date of transition.
2) Ind AS mandatory exceptions:
a) Estimates
An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP apart from the following items where application of Indian GAAP did not require estimation:
- FVTOCI - unquoted equity shares, compulsorily convertible preference shares and debt securities.
- FVTPL - investment in mutual funds
- Determination of the discounted value for financial instruments carried at amortised cost.
- Impairment of financial assets based on expected credit loss model
The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2016, the date of transition to Ind AS and as of 31 March 2017.
b) Impairment of financial assets
Ind AS 101 requires an entity to assess and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognised and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively.
B) Transition to Ind AS - Reconciliations
The following reconciliations provide a quantification of the effect of significant differences arising from the transition from previous GAAP to Ind AS in accordance with Ind AS 1 01 :
I. Reconciliation of Balance sheet as at 1 April 2016 and 31 March 2017
II. Reconciliation of Total Comprehensive Income for the year ended 31 March 2017
III. Reconciliation of Equity as at 1 April 2016 and 31 March 2017 between previous GAAP and IND AS The presentation requirements under Previous GAAP differs from Ind AS and hence Previous GAAP information has been regrouped for ease of reconciliation with Ind AS. The Regrouped Previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP.
Mar 31, 2016
for the year ended 31st March, 2016 Corporate information:
Prozone Intu Properties Limited (Formerly known as Prozone Capital Shopping Centreâs Limited) (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of developing, owning and operating of Shopping Malls, Commercial and Residential Premises. The Company is also providing related management consultancy services. The equity shares of the Company are listed on both the Bombay Stock Exchange and the National Stock Exchange.
Note 1 : Significant Accounting Policies
a) Basis of Accounting:
i. The Financial Statements have been prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and in compliance with all the mandatory accounting standards as prescribed under Section 133 of the Companies Act 2013 (''Act'') read with Rule 7 of the Companies (Accounts) rules, 2014.
ii. Financial Statements are based on historical cost convention and are prepared on accrual basis.
b) Use of Estimates:
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.
Difference between actual results and estimates are recognized in the periods in which the results are known/ materialize.
c) Revenue Recognition :
i. Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.
ii. Revenue from management consultancy is recognized on accrual basis as per the terms and conditions of the contract.
iii. Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
iv. Dividend income is recognized when the right to receive payment is established.
d) Fixed Assets:
Fixed Assets are stated at actual cost less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
e) Depreciation and Amortization:
Depreciation on Fixed Assets is provided on ''Written down value method'' based on the useful life of assets and in the manner specified in the Schedule II of the Companies Act, 2013.
f) Impairment of Fixed Assets:
As at the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indication that an impairment loss may have occurred in accordance with Accounting Standard 28 on ''''Impairment of Assets". Where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed asset is made for the difference.
g) Miscellaneous Expenditure:
Preliminary expenses are amortized in the year in which they are incurred.
h) Employee Benefits:
i) Company''s Contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.
ii) Liability for Leave Encashment Benefits has been provided on the basis of the actuarial valuation, using the projected unit method, as at the date of the Balance Sheet.
iii) Retirement benefits in the form of Gratuity are considered as defined benefits obligations and are provided on the basis of the actuarial valuation, using the projected unit method, as at the date of the Balance Sheet.
i) Investments:
Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long term investments and are carried at cost less any provision for diminution in value other than temporary. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower.
j) Provision and Contingent Liabilities:
The Company recognizes a provision when there is a present obligation as a result of a past 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.
k) Foreign Currency Transactions :
i) The transactions in foreign currencies are stated at the rate of exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange prevailing on the date of transaction and the date of realization is charged to the Statement of Profit and Loss.
iii Non-monetary items are reported at the exchange rate at the date of transaction.
iv) Differences on translations of Current Assets and Current Liabilities remaining unsettled at the year-end are recognized in the Statement of Profit and Loss.
v) The premium or discount in respect of forward exchange contract is amortized over the life of contract. The net gain or losses on account of any exchange difference, cancellation or renewal of such forward exchange contracts are recognized in the Statement of Profit & Loss.
l) Accounting for Taxation of Income : Current taxes
Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred tax assets are reviewed as at each Balance Sheet date.
(b) Details of shares issued for a consideration other than cash :
During the year 2011-12, the Company has allotted 1,523.53 Lakhs equity shares of Rs.2 each fully paid up to the Shareholders of Demerged Company and Transferor Company pursuant to the Scheme of Demerger and Amalgamation.
(c) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.2 per share. Each holder of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holder 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.
a) Advance Recoverable in Cash or Kind includes a sum of Rs.150 lakhs (PY Rs.150 lakhs) due from De Lara Tourism Corporation Limited (DTCL) pursuant to award from a panel of Arbitrators constituted by the Arbitral Tribunal as per the instruction of SC. In view of the Award given by the Arbitral Tribunal, the management had considered Rs.150 Lacs as good and fully recoverable. Further, DTCL had challenged this award before the Chief Judge, City Civil Court Hyderabad by filing an appeal. The said appeal is pending.
b) Advance Recoverable in Cash or Kind also includes advance of Rs.1961.50 lakhs (PY Rs. 910 lakhs) towards Joint construction of real estate projects in Mumbai. These projects are at initials stage.
c) Loan to JVC represents the amount funded by the Company for various initial project expenses. At present there is no significant progress in the said project. However, there is no impairment in the value of the project.
G) The Company is mainly engaged in the business of designing, developing, owning and operating of Shopping Malls, Commercial and Residential Premises through its various SPVs. The Company is also providing related management consultancy services to its SPVs. There is no other reportable business segment as per Accounting Standard (AS-17).
H) The name of the Company has been changed from ''Prozone Capital Shopping Centres Limited'' to ''Prozone Intu Properties Limited'' vide special resolution passed through postal ballot on 12th June, 2014. The Registrar of Companies, Mumbai has issued a fresh Certificate of Incorporation to this effect on 24th July, 2014, being the effective date of change of name of the company.
I) The Company has revised depreciation rates on tangible fixed assets w.e.f. April 01, 2014 as per the useful life specified in the Schedule II of the Companies Act, 2013 or as re-assessed by the Company. As prescribed in Schedule II, an amount of Rs.10.37 Lakhs (net of deferred tax) has been charged to the opening balance of retained earnings for the assets in respect of which the remaining useful life is NIL as on April 01, 2014 and in respect of other assets on that date, depreciation has been calculated based on the remaining useful life of those assets.
J) Disclosure with regards to section 186 (4) of the Companies Act, 2013
i) For Investment refer note no. 10.
ii) For Corporate Guarantees given refer note no. 25(A)(i).
iii) For Loans given :
K) Figures less than Rs.500/- have been shown at actual wherever statutory required to be disclosed since figures have been rounded off to the nearest thousands
L) The Company has re-grouped, reclassified and/or re-arranged previous year''s figures, wherever necessary to conform to current year''s classification.
Mar 31, 2015
CORPORATE INFORMATION:
Prozone Intu Properties Limited (Formerly known as Prozone Capital
Shopping Centres Limited) (the Company) is a public company domiciled
in India and incorporated under the provisions of the Companies Act,
1956. The Company is engaged in the business of developing, owning and
operating of Shopping Malls, Commercial and Residential Premises. The
Company is also providing related management consultancy services. The
equity shares of the Company are listed on both the Bombay Stock
Exchange and the National Stock Exchange.
a) Basis of Accounting:
i. The Financial Statements have been prepared in accordance with
Indian Generally Accepted Accounting Principles (GAAP) under the
historical cost convention on the accrual basis and in compliance with
all the mandatory accounting standards as prescribed under Section 133
of the Companies Act 2013 (Act') read with Rule 7 of the Companies
(Accounts) rules, 2014.
ii. Financial Statements are based on historical cost convention and
are prepared on accrual basis.
b) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the financial statements and
the reported amounts of revenues and expenses during the reporting
period.
Difference between actual results and estimates are recognized in the
periods in which the results are known/ materialize.
c) Revenue Recognition :
i. Revenue is recognised when it is earned and no significant
uncertainty exists as to its realisation or collection.
ii. Revenue from management consultancy is recognised on accrual basis
as per the terms and conditions of the contract.
iii. Interest is recognised on a time proportion basis taking in to
account the amount outstanding and the rate applicable.
iv. Dividend income is recognised when the right to receive payment is
established.
d) Fixed Assets:
Fixed Assets are stated at actual cost less accumulated depreciation.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
e) Depreciation and Amortization:
Depreciation on Fixed Assets is provided on 'Written down value method'
based on the useful life of assets and in the manner specified in the
Schedule II of the Companies Act, 2013.
f) Impairment of Fixed Assets:
As at the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on ''Impairment of Assets''. Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed asset is made for the
difference.
g) Miscellaneous Expenditure:
Preliminary expenses are amortized in the year in which they are
incurred.
h) Employee Benefits:
i) Company's Contribution to Provident Fund and other Funds for the
year is accounted on accrual basis and charged to the Statement of
Profit & Loss for the year.
ii) Liability for Leave Encashment Benefits has been provided on
accrual basis.
iii) Retirement benefits in the form of Gratuity are considered as
defined benefits obligations and are provided on the basis of the
actuarial valuation, using the projected unit method, as at the date of
the Balance Sheet.
i) Investments:
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investments and are
carried at cost less any provision for diminution in value other than
temporary. Investments other than long term investments being current
investments are valued at cost or fair market value whichever is lower.
j) Foreign Currency Transactions :
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Statement of Profit and Loss.
iii) Non-monetary items are reported at the exchange rate at the date
of transaction.
iv) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Statement of Profit and Loss.
v) The premium or discount in respect of forward exchange contract is
amortized over the life of contract. The net gain or losses on account
of any exchange difference, cancellation or renewal of such forward
exchange contracts are recognized in the Statement of Profit & Loss.
k) Provision and Contingent Liabilities:
The Company recognizes a provision when there is a present obligation
as a result of a past 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.
l) Accounting for Taxation of Income :
Current taxes
Provision for current income-tax is recognized in accordance with the
provisions of Indian Income- tax Act, 1961 and is made annually based
on the tax liability after taking credit for tax allowances and
exemptions
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realized in the future. Deferred tax assets are reviewed as at each
Balance Sheet date.
Mar 31, 2014
A) Basis of Accounting:
i. The Financial Statements have been prepared in compliance with all
material aspects as notified in Accounting Standards by Companies
(Accounting Standard) Rules 2006 and the relevant provisions of the
Companies Act, 1956 read with the General Circular 15/2013 dated 13
September 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act 2013.
ii. Financial Statements are based on historical cost convention and
are prepared on accrual basis.
b) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the financial statements and
the reported amounts of revenues and expenses during the reporting
period.
Difference between actual results and estimates are recognized in the
periods in which the results are known/ materialize.
c) Revenue Recognition :
i. Revenue is recognised when it is earned and no significant
uncertainty exists as to its realisation or collection.
ii. Revenue from management consultancy is recognised on accrual basis
as per the terms and condition of contract.
iii. Interest is recognised on a time proportion basis taking in to
account the amount outstanding and the rate applicable.
iv. Dividend income is recognised when the right to receive payment is
established.
d) Fixed Assets:
Fixed Assets are stated at actual cost less accumulated depreciation.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
e) Depreciation and Amortization:
Depreciation on Fixed Assets is provided on ''Written down method''
at the rates and in the manner prescribed in the Schedule XIV of the
Companies Act, 1956.
f) Impairment of Fixed Assets:
As at the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets''''. Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed asset is made for the
difference.
g) Miscellaneous Expenditure:
Preliminary expenses are being amortised in the year they are incurred.
h) Employee Benefits:
i) Company''s Contribution to Provident Fund and other Funds for the
year is accounted on accrual basis and charged to Profit & Loss Account
for the year.
ii) Liability for Leave Encashment Benefits has been provided on
accrual basis.
iii) Retirement benefits in the form of Gratuity are considered as
defined benefits obligations and are provided on the basis of the
actuarial valuation, using the projected unit method, as at the date of
the Balance Sheet.
i) Investments:
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investments and are
carried at cost less any provision for diminution in value other than
temporary. Investments other than long term investments being current
investments are valued at cost or fair market value whichever is lower.
j) Foreign Currency Transactions :
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) Non-monetary items are reported at the exchange rate at the date
of transaction.
iv) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
v) The premium or discount in respect of forward exchange contract is
amortized over the life of contract. The net gain or losses on account
of any exchange difference, cancellation or renewal of such forward
exchange contracts are recognised in the Profit & Loss Account.
k) Contingent Liabilities:
The Company recognizes a provision when there is a present obligation
as a result of a past 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.
l) Accounting for Taxation of Income :
Current taxes
Provision for current income-tax is recognized in accordance with the
provisions of Indian Income-tax Act, 1961 and is made annually based on
the tax liability after taking credit for tax allowances and exemptions
Deferred taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the Balance Sheet date. Deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realized in the future. Deferred tax assets are reviewed as at each
Balance Sheet date.
Mar 31, 2013
A) Basis of Accounting:
The Financial Statements have been prepared in compliance with all
material aspects as notified in Accounting Standards by Companies
(Accounting Standard) Rules 2006 and the relevant provisions of the
Companies Act, 1956.
ii. Financial Statements are based on historical cost convention and
are prepared on accrual basis.
b) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the financial statements and
the reported amounts of revenues and expenses during the reporting
period.
Difference between actual results and estimates are recognised in the
periods in which the results are known/ materialise.
c) Revenue Recognition :
Revenue is recognised when it is earned and no significant uncertainty
exists as to its realisation or collection.
ii. Revenue from management consultancy is recognised on accrual basis
as per the terms and condition of contract.
iii. Interest is recognised on a time proportion basis taking in to
account the amount outstanding and the rate applicable.
iv. Dividend income is recognised when the right to receive payment is
established.
d) Fixed Assets:
Fixed Assets are stated at actual cost less accumulated depreciation.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
e) Depreciation and Amortisation:
Depreciation on Fixed Assets is provided on ''Written down method'' at
the rates and in the manner prescribed in the Schedule XIV of the
Companies Act, 1956.
f) Impairment of Fixed Assets:
As at the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on "Impairment of Assets". Where the recoverable
amount of any fixed asset is lower than its carrying amount, a
provision for impairment loss on fixed asset is made for the
difference.
g) Miscellaneous Expenditure:
Preliminary expenses are being amortised in the year they are incurred.
h) Employee Benefits:
i) Company''s Contribution to Provident Fund and other Funds for the
year is accounted on accrual basis and charged to Profit & Loss Account
for the year.
ii) Liability for Leave Encashment Benefits has been provided on
accrual basis.
iii) Retirement benefits in the form of Gratuity are considered as
defined benefits obligations and are provided on the basis of the
actuarial valuation, using the projected unit method, as at the date of
the Balance Sheet.
i) Investments:
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investments and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
j) Foreign Currency Transactions :
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realisation is
charged to the Profit and Loss Account.
iii) Differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognised in the
Profit and Loss Account.
iv) The premium or discount in respect of forward exchange contract is
amortised over the life of contract. The net gain or losses on account
of any exchange difference, cancellation or renewal of such forward
exchange contracts are recognised in the Profit & Loss Account.
k) Contingent Liabilities:
The Company recognises a provision when there is a present obligation
as a result of a past 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.
I) Accounting for Taxation of Income :
Current taxes
Provision for current income-tax is recognised in accordance with the
provisions of Indian Income- tax Act, 1961 and is made annually based
on the tax liability after taking credit for tax allowances and
exemptions
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the Balance Sheet date. Deferred tax assets are recognised
only to the extent there is reasonable certainty that the assets can be
realised in the future. Deferred tax assets are reviewed as at each
Balance Sheet date.
Mar 31, 2012
A) Basis of Accounting:
i. The Financial Statements have been prepared in compliance with all
material aspects as notified in Accounting Standards by Companies
(Accounting Standard) Rules 2006 and the relevant provisions of the
Companies Act, 1956.
ii. Financial Statements are based on historical cost convention and
are prepared on accrual basis.
b) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities on the financial statements and
the reported amounts of revenues and expenses during the reporting
period.
Difference between actual results and estimates are recognized in the
periods in which the results are known/materialize.
c) Revenue Recognition :
i. Revenue is recognised when it is earned and no significant
uncertainty exists as to its realisation or collection.
ii. Revenue from management consultancy is recognised on accrual basis
as per the terms and condition of contract.
iii. Interest is recognised on a time proportion basis taking in to
account the amount outstanding and the rate applicable.
iv. Dividend income is recognised when the right to receive payment is
established.
d) Fixed Assets:
Fixed Assets are stated at actual cost less accumulated depreciation.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
e) Depreciation and Amortization:
depreciation on Fixed Assets is provided on 'Written down method' at
the rates and in the manner prescribed in the Schedule xIV of the
Companies Act, 1956.
f) Impairment of Fixed Assets:
As at the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indication that an impairment loss may have occurred in accordance with
Accounting Standard 28 on ''Impairment of Assets''. Where the
recoverable amount of any fixed asset is lower than its carrying
amount, a provision for impairment loss on fixed asset is made for the
difference.
g) Miscellaneous Expenditure:
Preliminary expenses are being amortised in the year they are incurred.
h) Employee Benefits:
i) Company's Contribution to Provident Fund and other Funds for the
year is accounted on accrual basis and charged to Profit & Loss Account
for the year.
ii) Liability for Leave Encashment Benefits has been provided on
accrual basis.
iii) Retirement benefits in the form of Gratuity are considered as
defined benefits obligations and are provided on the basis of the
actuarial valuation, using the projected unit method, as at the date of
the Balance Sheet.
i) Investments:
Investments that are intended to be held for more than a year, from the
date of acquisition, are classified as long term investments and are
carried at cost less any provision for permanent diminution in value.
Investments other than long term investments being current investments
are valued at cost or fair market value whichever is lower.
j) Foreign Currency Transactions :
i) The transactions in foreign currencies are stated at the rate of
exchange prevailing on the date of transactions.
ii) The difference on account of fluctuation in the rate of exchange
prevailing on the date of transaction and the date of realization is
charged to the Profit and Loss Account.
iii) differences on translations of Current Assets and Current
Liabilities remaining unsettled at the year-end are recognized in the
Profit and Loss Account.
iv) The premium or discount in respect of forward exchange contract is
amortized over the life of contract. The net gain or losses on account
of any exchange difference, cancellation or renewal of such forward
exchange contracts are recognised in the Profit & Loss Account.
k) Contingent Liabilities:
The Company recognizes a provision when there is a present obligation
as a result of a past 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.
l) Accounting for Taxation of Income :
Current taxes
Provision for current income-tax is recognized in accordance with the
provisions of Indian Income- tax Act, 1961 and is made annually based
on the tax liability after taking credit for tax allowances and
exemptions
Deferred taxes
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantially
enacted at the Balance Sheet date. deferred tax assets are recognized
only to the extent there is reasonable certainty that the assets can be
realized in the future. deferred tax assets are reviewed as at each
Balance Sheet date.
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