Mar 31, 2023
1. Corporate information
Puravankara Limited (the ''Company'') was incorporated on June 3, 1986 under the provisions of the Companies Act applicable in India (âActâ). The registered office is located at 130/1, Ulsoor Road, Bengaluru 560042, India. The Company''s shares are listed on two recognized stock exchanges in India namely National Stock Exchange of India Limited and BSE Limited. The Company is engaged in the business of real estate development.
The Standalone financial statements were authorized for issue in accordance with a resolution of the Board of Directors on May 26, 2023.
2. Significant accounting policies
The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (''Ind AS'') specified under section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and the Companies (Accounts) Rules, 2014, as amended, and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III), as applicable to the standalone financial statements.
The standalone financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
(a) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities. The effect of change in an accounting estimate is recognized prospectively.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has evaluated and considered its operating cycle as four years for the purpose of current and non-current classification of assets and liabilities.
Deferred tax assets/ liabilities are classified as non-current assets/ liabilities.
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. This applies mainly to components for machinery. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment, including day-today repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the Property, plant and equipment is de-recognized.
Costs of assets not ready for use at the balance sheet date are disclosed under capital work- in
Depreciation is calculated on straight line method using the following useful lives estimated by the management, which are equal to those prescribed under Schedule II to the Companies Act, 2013, except certain categories of assets whose useful life is estimated by the management based on planned usage and technical evaluation thereon:
[Category of Asset |
Useful lives (in years) |
Useful lives as per Schedule II (in years) |
Buildings |
60 |
|
Plant, machinery and equipments: |
||
- Shuttering materials |
7 |
|
- Other plant, machinery and equipments |
10 |
15 |
Furniture and fixtures |
10 |
10 |
Computer equipment |
||
- Servers and networking equipments |
15SS55S5S836 |
|
- End user devices |
3 |
3 |
Office equipment |
5 |
5 |
Motor Vehicles |
8 |
8 |
Leasehold improvements are amortised over the remaining period of lease or their estimated useful life (10 years), whichever is shorter on straight line basis.
The residual values, useful lives and methods of depreciation of property, plant and equipment and investment property are reviewed at each
financial year end and adjusted prospectively, if appropriate.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are
Intangible assets comprising of computer software are amortized using straight line method over a period of six years, which is estimated by the management to be the useful life of the asset.
The residual values, useful lives and methods of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when asset is derecognized.
I nvestment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer
Investment properties are de-recognized when the entity transfers control of the same to the buyer Further the entity also derecognises investment properties when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
A. Financial assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Where the Company is lessee
A contract is, or contains, a lease if the contract involves -
(a) The use of an identified asset,
(b) The right to obtain substantially all the economic benefits from use of the identified asset, and
(c) The right to direct the use of the identified asset
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less
any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
I f ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 2.2(h) Impairment of non-financial assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company applies the short-term lease recognition exemption to its short-term leases i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of the asset are classified as operating leases. Assets subject to operating leases are included under Investment property.
Lease income from operating lease is recognized on a straight-line basis over the term of the relevant lease including lease income on fair value of refundable security deposits, unless the lease agreement explicitly states that increase is on account of inflation. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized/inventorised as part of the cost of the respective asset. All other borrowing costs are charged to statement of profit and loss.
The Company treats as part of general borrowings any borrowing originally made to develop a qualifying asset when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete.
Direct expenditure relating to real estate activity is inventorised. Other expenditure (including borrowing costs) during construction period
is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the statement of profit and loss. Direct and other expenditure is determined based on specific identification to the real estate activity.
i. Work-in-progress: Represents cost incurred in respect of unsold area (including land) of the real estate development projects or cost incurred on projects where the revenue is yet to be recognized. Work-in-progress is valued at lower of cost and net realizable value.
ii. Finished goods - Stock of Flats: Valued at lower of cost and net realizable value.
iii. Raw materials, components and stores: Valued at lower of cost and net realizable value. Cost is determined based on FIFO basis.
iv. Land stock: Valued at lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Advances paid by the Company to the seller/ intermediary toward outright purchase of land is recognized as land advance under other assets during the course of obtaining clear and
marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories/ capital work in progress.
Land/ development rights received under joint development arrangements (''JDA'') is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The amount of non-refundable deposit paid by the Company under JDA is recognized as land advance under other assets and on the launch of the project, the non-refundable amount is transferred as land cost to work-in-progress/ capital work in progress. Further, the amount of refundable deposit paid by the Company under JDA is recognized as deposits under loans.
(k) Revenue recognition A. Revenue recognition
a. (i) Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are
separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer, if any.
Revenue from real estate development is recognised at the point in time, when the control of the asset is transferred to the customer
Revenue consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated/ interdependent.
The performance obligation in relation to real estate development is satisfied upon completion of project work and transfer of control of the asset to the customer
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the
Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to/from the customer
Further, for projects executed through joint development arrangements not being jointly controlled operations, wherein the land owner/possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds, the revenue from the development and transfer of constructed area/revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis on launch of the project. Revenue is recognised over time using input method, on the basis of the inputs to the satisfaction of a performance obligation relative to the total expected inputs to the satisfaction of that performance obligation.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the land
owner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
The Company recognises as an asset the incremental costs of obtaining a contract with
a customer if the Company expects to recover those costs. The Company incurs costs such as sales commission when it enters into a new contract, which are directly related to winning the contract. The asset recognised is amortised on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.
The Company''s policy for recognition of revenue from operating leases is described in note 2.2(h).
The Company''s share in profits/losses from LLPs and partnership firm, where the Company is a partner, is recognised as income/loss in the statement of profit and loss as and when the right to receive its profit/ loss share is established by the Company in accordance with the terms of contract between the Company and the partnership entity.
a. Interest income
Interest income, including income arising from other financial instruments measured at amortised cost, is recognised using the effective interest rate method.
Revenue is recognised when the Company''s right to receive dividend is established, which is generally when shareholders approve the dividend.
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.
Foreign currency transactions and balances
i) Initial recognition - Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion - Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
iii) Exchange differences - The Company accounts for exchange differences arising on translation/ settlement of foreign
currency monetary items as income or as expense in the period in which they arise.
Retirement benefits in the form of state governed Employee Provident Fund and Employee State Insurance are defined contribution schemes (collectively the ''Schemes''). The Company has no obligation, other than the contribution payable to the Schemes. The Company recognizes contribution payable to the Schemes as expenditure. when an employee renders the related service. The contribution paid in excess of amount due is recognized as an asset and the contribution due in excess of amount paid is recognized as a liability.
Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation. which is done based on project unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income. In accordance with Ind AS. re-measurement gains and losses on defined benefit plans recognized in OCI are not to be subsequently reclassified to statement of profit and loss. As required under Ind AS compliant Schedule III. the Company recognizes re-measurement gains and losses on defined benefit plans (net of tax) to retained earnings.
The Company treats accumulated leave expected to be carried forward beyond twelve
months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method, made at the end of each financial year Actuarial gains/losses are immediately taken to the statement of profit and loss. The Company presents the accumulated leave liability as a current liability in the balance sheet. since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year
Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity. in which case. the current and deferred tax are also recognized in other comprehensive income or directly in equity. respectively.
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss
(either in other comprehensive income or in equity) in correlation to the underlying transaction either in OCI or in equity.
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses it in the financial statements, unless the possibility of an outflow of resources embodying economic benefits is remote.
I f the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value at initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability, except for transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss which are immediately recognized in statement of profit and loss. However, trade receivables that do not contain a significant financing component are measured at transaction price.
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business 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.
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized 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 amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Investment in subsidiaries, joint ventures and associates are carried at cost. Impairment recognized, if any, is reduced from the carrying value.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as payables, as appropriate. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts. The subsequent measurement of financial liabilities depends on their classification, which is described below.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Financial liabilities are subsequently measured at amortized cost using the effective interest (âSjjR'') method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized 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 amortization is included as finance costs in the statement of profit and loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company recognizes a liability to make cash distributions to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are
recorded as a liability on the date of declaration by the Company''s Board of Directors.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. For the purpose of the Company''s statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding cash credit/bank overdrafts as they
are considered an integral part of the Company''s cash management.
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
Non-current assets and classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported balances of revenues, expenses, assets and liabilities and the
accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these judgments, assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In the process of applying the Company''s accounting policies, management makes judgement, estimates and assumptions which have the most significant effect on the amounts recognized in the financial statements.
The key judgements, estimates and assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its judgements, assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur
The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
Revenue consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated/ interdependent. In assessing whether performance obligations relating to sale of undivided share of land and constructed area are highly interrelated/ interdependent, the Company considers factors such as:
- whether the customer could benefit from the undivided share of land or the constructed area on its own or together with other resources readily available to the customer
- whether the entity will be able to fulfil its promise under the contract, to transfer the undivided share of land without transfer of constructed area or transfer the constructed area without transfer of undivided share of land.
Revenue from sale of real estate units is recognised when (or as) control of such units is transferred to the customer The entity assesses timing of transfer of control of such units to the customers as transferred over time if one of the following criteria are met:
- The customer simultaneously receives and consumes the benefits provided by the entity''s performance as the entity performs.
The entity''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.
The entity''s performance does not create an asset with an alternative use to the entity
and the entity has an enforceable right to payment for performance completed to date.
I f control is not transferred over time as above, the entity considers the same as transferred at a point in time.
For contracts where control is transferred at a point in time the Company considers the following indicators of the transfer of control of the asset to the customer:
- When the entity obtains a present right to payment for the asset.
- When the entity transfers legal title of the asset to the customer
- When the entity transfers physical possession of the asset to the customer
- When the entity transfers significant risks and rewards of ownership of the asset to the customer
- When the customer has accepted the asset.
The aforesaid indicators of transfer of control are also considered for determination of the timing of derecognition of investment property.
c) Accounting for revenue and land cost for projects executed through joint development arrangements (âJDAâ)
For projects executed through joint development arrangements, the Company has evaluated that land owners are not engaged in the same line of business as the Company and hence has concluded that such arrangements are contracts with customers. The revenue from the development and transfer of constructed area/revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. Such assessment is carried out at the launch of the real estate project and is not reassessed at each reporting period. The management is of the view that the fair value method and estimates are reflective of the current market condition.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to/from the customer
The Company determines whether a property is classified as investment property or inventory as below.
Investment property comprises land and buildings (principally office and retail properties) that are not occupied substantially for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are substantially rented to tenants and not intended to be sold in the ordinary course of business.
Inventory comprises property that is held for sale in the ordinary course of business. Principally, this is residential and commercial property that the Company develops and intends to sell before or during the course of construction or upon completion of construction.
Estimation of net realizable value for inventory and land advance
I nventory is stated at the lower of cost and net realizable value (NRV).
NRV for completed inventory property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the Company, based on comparable transactions identified by the Company for properties in the
same geographical market serving the same real estate segment.
NRV in respect of inventory property under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and an estimate of the time value of money to the date of completion.
With respect to land inventory and land advance given, the net recoverable value is based on the present value of future cash flows, which depends on the estimate of, among other things, the likelihood that a project will be completed, the expected date of completion, the discount rate used and the estimation of sale prices and construction costs.
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF
model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to disclosure of fair value of investment property recorded by the Company.
The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation 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 and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases are based on expected future inflation rates and expected salary increase thereon.
Financial instrument are subsequently measured at amortized cost using the effective interest
(''EIR'') method. The computation of amortized cost is sensitive to the inputs to EIR including effective rate of interest, contractual cash flows and the expected life of the financial instrument. Changes in assumptions about these inputs could affect the reported value of financial instruments.
vi) Useful life and residual value of property, plant and equipment, investment property and intangible assets
The useful life and residual value of property, plant and equipment, investment property and intangible assets are determined based on evaluation made by the management of the expected usage of the asset, the physical wear and tear and technical or commercial obsolescence of the asset. Due to the judgements involved in such estimates the useful life and residual value are sensitive to the actual usage in future period.
Provision for litigations and contingencies is determined based on evaluation made by the management of the present obligation arising from past events the settlement of which is
expected to result in outflow of resources embodying economic benefits, which involves judgements around estimates the ultimate outcome of such past events and measurement of the obligation amount. Due to judgements involved in such estimation the provision is sensitive to the actual outcome in future periods.
When the fair values of financial instruments recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The fair valuation requires management to make certain judgments about the model inputs, including forecast cash flows, disco
Mar 31, 2018
(a) Use of estimates
The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities. The effect of change in an accounting estimate is recognized prospectively.
(b) Changes in accounting policies and disclosures New and amended standards and interpretations
The Company applied for the first time the following amendment to Ind AS, which are effective for annual periods beginning on or after April 1, 2017. The nature and the impact of the amendment is described below:
Amendments to Ind AS 7 Statement of Cash Flows: Disclosure
The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Company has provided the information for both the current and the comparative period in note 15.
(c) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has evaluated and considered its operating cycle as four years for the purpose of current and non-current classification of assets and liabilities.
Deferred tax assets/ liabilities are classified as non-current assets/ liabilities.
(d) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. This applies mainly to components for machinery. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the property, plant and equipment is de-recognized.
Costs of assets not ready for use at the balance sheet date are disclosed under capital work-in-progress. Capital work-in-progress is stated at cost, net of accumulated impairment loss, if any.
(e) Depreciation on property, plant and equipment and investment property.
Depreciation is calculated on straight line method using the following useful lives estimated by the management, which are equal to those prescribed under Schedule II to the Companies Act, 2013, except certain categories of assets whose useful life is estimated by the management based on planned usage and technical evaluation thereon:
Leasehold improvements are amortised over the remaining period of lease or their estimated useful life (10 years), whichever is shorter on straight line basis.
The residual values, useful lives and methods of depreciation of property, plant and equipment and investment property are reviewed at each financial year end and adjusted prospectively, if appropriate.
(f) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets comprising of computer software are amortized using straight line method over a period of six years, which is estimated by the management to be the useful life of the asset.
The residual values, useful lives and methods of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when asset is derecognized.
(g) Investment property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer.
Investment properties are de-recognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
(h) Impairment
A. Financial assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and/or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
B. Non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(i) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Where the Company is lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimateduseful life of the asset and the lease term.
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Where the Company is the lessor
Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included under Investment property.
Lease income from operating lease is recognized on a straight-line basis over the term of the relevant lease including lease income on fair value of refundable security deposits, unless the lease agreement explicitly states that increase is on account of inflation. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
(j) Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized/inventorised as part of the cost of the respective asset. All other borrowing costs are charged to statement of profit and loss.
(k) Inventories
Direct expenditure relating to real estate activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the statement of profit and loss. Direct and other expenditure is determined based on specific identification to the real estate activity.
i. Work-in-progress: Represents cost incurred in respect of unsold area (including land) of the real estate development projects or cost incurred on projects where the revenue is yet to be recognized. Work-in-progress is valued at lower of cost and net realizable value.
ii. Finished goods - Stock of Flats: Valued at lower of cost and net realizable value.
iii. Raw materials, components and stores: Valued at lower of cost and net realizable value. Cost is determined based on FIFO basis.
iv. Land stock: Valued at lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(l) Land
Advances paid by the Company to the seller/intermediary toward outright purchase of land is recognized as land advance under other assets during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories/capital work-in-progress.
Land/development rights received under joint development arrangements (âJDAâ) is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The amount of non-refundable deposit paid by the Company under JDA is recognized as land advance under other assets and on the launch of the project, the non-refundable amount is transferred as land cost to work-in-progress/capital work-in-progress. Further, the amount of refundable deposit paid by the Company under JDA is recognized as deposits under loans.
(m) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The Company collects taxes such as sales tax/value added tax, luxury tax, entertainment tax, service tax, goods and service tax etc. on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from the aforesaid revenue/income.
The following specific recognition criteria must also be met before revenue is recognized:
Recognition of revenue from real estate development
Revenue from real estate projects is recognized when it is reasonably certain that the ultimate collection will be made and that there is buyersâ commitment to make the complete payment. The following specific recognition criteria must also be met before revenue is recognized:
Revenue from real estate projects is recognized upon transfer of all significant risks and rewards of ownership of such real estate/ property, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the sales contracts/ agreements/ other legally enforceable documents. Where the Company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards, revenue in such cases is recognized by applying the percentage of completion method only if the following thresholds have been met:
(a) all critical approvals necessary for the commencement of the project have been obtained;
(b) the expenditure incurred on construction and development costs (excluding land cost) is not less than 25% of the total estimated construction and development costs;
(c) at least 25 % of the saleable project area is secured by contracts/agreements with buyers; and
(d) at least 10 % of the contracts/agreements value are realized at the reporting date in respect of such contracts/agreements.
When the outcome of a real estate project can be estimated reliably and the conditions above are satisfied, project revenue and project costs associated with the real estate project should be recognized as revenue and expenses by reference to the stage of completion of the project activity at the reporting date arrived at with reference to the entire project costs incurred (including land costs). When it is probable that total project costs will exceed total eligible project revenues, the expected loss is recognised as an expense immediately in the statement of profit and loss.
Further, for projects executed through joint development arrangements not being jointly controlled operations, wherein the land owner/ possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds, the revenue from the development and transfer of constructed area/revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis on launch of the project.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the land owner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.
Interest income
Interest income, including income arising from other financial instruments measured at amortized cost, is recognized using the effective interest rate method.
Dividend income
Dividend income is recognized when the Companyâs right to receive dividend is established,which is generally when shareholders approve the dividend.
Share in profits/ losses of Limited Liability Partnership (âLLPâ) investments
The Companyâs share in profits from an LLP where the Company is a partner, is recognised as income in the statement of profit and loss as and when the right to receive its profit/ loss share is established by the Company in accordance with the terms of contract between the Company and the partnership entity.
(n) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is the Companyâs functional and presentation currency.
Foreign currency transactions and balances
i) Initial recognition - Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion - Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
iii) Exchange differences - The Company accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as income or as expense in the period in which they arise.
(o) Retirement and other employee benefits
Retirement benefits in the form of state governed Employee Provident Fund and Employee State Insurance are defined contribution schemes (collectively the âSchemesâ). The Company has no obligation, other than the contribution payable to the Schemes. The Company recognizes contribution payable to the Schemes as expenditure, when an employee renders the related service. The contribution paid in excess of amount due is recognized as an asset and the contribution due in excess of amount paid is recognized as a liability.
Gratuity, which is a defined benefit plan, is accrued based on an independent actuarial valuation, which is done based on project unit credit method as at the balance sheet date. The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income. In accordance with Ind AS, re-measurement gains and losses on defined benefit plans recognized in OCI are not to be subsequently reclassified to statement of profit and loss. As required under Ind AS compliant Schedule III, the Company recognizes re-measurement gains and losses on defined benefit plans (net of tax) to retained earnings.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method, made at the end of each financial year. Actuarial gains/losses are immediately taken to the statement of profit and loss. The Company presents the accumulated leave liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for twelve months after the reporting date.
(p) Income taxes
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.
Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively
i. Current income tax
Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
ii. Deferred income tax
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in othercomprehensive income or in equity)in correlation to the underlying transaction either in OCI or in equity.
(q) Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses it in the financial statements, unless the possibility of an outflow of resources embodying economic benefits is remote.
(r) Financial Instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value at initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability, except for transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss which are immediately recognized in statement of profit and loss.
i. Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business 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.
ii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.
iii. Debt instruments at amortized cost
A âdebt instrumentâ is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized 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 amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
iv. Investment in subsidiaries, joint ventures and associates
Investment in subsidiaries, joint ventures and associates are carried at cost. Impairment recognized, if any, is reduced from the carrying value.
v. De-recognition of financial asset
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
vi. Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as payables, as appropriate. The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.The subsequent measurement of financial liabilities depends on their classification, which is described below.
vii. Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
viii. Financial liabilities at amortized cost
Financial liabilities are subsequently measured at amortized cost using the effective interest (âEIRâ) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized 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 amortization is included as finance costs in the statement of profit and loss.
ix. De-recognition of financial liability
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
x. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.
Fair value hierarchy:
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(s) Cash dividend to equity holders of the Company
The Company recognizes a liability to make cash distributions to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
(t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(u) Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
Mar 31, 2017
1.1 Company overview
Puravankara Limited (the ''Company'') (formerly Puravankara Projects Limited) was incorporated on 03 June 1986 under Companies Act, 1956. The registered office is located at 130/1, Ulsoor Road, Bangalore 560042, India. The Company is engaged in the business of construction, development and sale of all or any part of housing projects, commercial premises and other related activities. The Company''s shares are listed on two recognized stock exchanges in India namely National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE).
With effect from 21 December 2016 the Company has changed its name from Puravankara Projects Limited to Puravankara Limited.
1.2 Significant accounting policies
a. Statement of compliance
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind-AS) as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (''MCA'')). The Company has uniformly applied the accounting policies during the periods presented.
For all periods up to and including the year ended 31 March 2016, the Company has prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). These financial statements for the year ended 31 March 2017 are the first financial statements which the Company has prepared in accordance with Ind AS (see note 50 for explanation for transition to Ind AS). For the purpose of comparatives, financial statements for the year ended 31 March 2016 are also prepared under Ind AS.
The financial statements for the year ended 31 March 2017 were authorized and approved for issue by the Board of Directors on 29 May 2017. Amendments to the financial statements are permitted after approval.
b. Overall considerations
The financial statements have been prepared using the significant accounting policies and measurement bases that are in effect as at 31 March 2017, as summarized below.
In accordance with Ind AS 101,''First-time Adoption of Indian Accounting Standards'' the Company presents three balance sheets, two statement of profit and loss, two statements of cash flows and two statements of changes in equity and related notes, including comparative information for all statements presented, in its first Ind AS financial statements. In future periods, Ind AS 1, ''Presentation of Financial Statements'' requires two comparative periods to be presented for the balance sheet only in certain circumstances.
c. Basis of preparation of financial statements
The financial statements have been prepared on going concern basis under the historical cost basis except for certain financial assets and liabilities which are measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes in to account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share based payment transactions that are within the scope of Ind AS 102, ''Share-based Payment'', leasing transactions that are within the scope of Ind AS 17, ''Leases, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 ''Inventories'', or value in use in Ind AS 36 ''Impairment of assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:
Level 1: Quoted prices (unadjusted) in active markets for financial instruments.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data rely as little as possible on entity specific estimates.
Level 3: Inputs for the assets or liabilities that are not based on the observable marked data (unobservable inputs)
d. Use of estimates
The preparation of financial statements is in conformity with generally accepted accounting principles which require the management of the Company to make judgments, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future period. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Application of accounting policies that require significant accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note 1.3 and 1.4.
e. Standards, not yet effective and have not been adopted early by the Company
Information on new standards, amendments and interpretations that are expected to be relevant to the financial statements is provided below.
Amendment to Ind AS 7 ''Statement of Cash Flows''
The amendments to Ind AS 7, ''Statement of cash flows'' inter-alia require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The effective date of the amendment is 01 April 2017. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
f. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
(i) An asset is classified as current when it is:
-Expected to be realized or intended to sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
(ii) All other assets are classified as non-current.
(iii) A liability is classified as current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
(iv) All other liabilities are classified as non-current.
(v) Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Based on the nature of service and the time between the acquisition of assets for development and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as four years for the purpose of current and non-current classification of assets and liabilities which pertain to the project and for all other assets and liabilities the Company has considered twelve months.
g. Foreign currency transactions Functional and presentation currency
The financial statements are presented in Indian Rupee (''Rs.'') which is also the functional and presentation currency of the Company. All amounts have been rounded-off to the nearest crores, unless otherwise indicated.
(a) Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
(b) Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or any other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
h. Revenue recognition Revenue from projects
Revenue from sale of properties is recognized when it is probable that the economic benefits will flow to the Company and it can be reliably measured, which coincides with entering into a legally binding agreement. Revenue is measured at the fair value of the consideration received/receivable net of rebate and taxes.
Revenue from sale of undivided share of land (UDS) in qualifying projects where the risks and rewards on the sale of the UDS are separable from the risks and rewards on the construction contract is recognized upon the transfer of all significant risks and rewards of ownership of such real estate, as per the terms of the contracts entered into with the buyers, which coincides with the firming of the sales contracts/agreements and a minimum level of collection of dues from the customer.
Revenue from the sale of UDS on other projects where the risk and rewards on the sale of the UDS are not separable from the construction contracts and therefore do not qualify above are recognized on the percentage of completion method.
In accordance with the "Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable)" (guidance note) all projects where revenue is recognized for the first time, construction revenue on such projects have been recognized on percentage of completion method provided the following thresholds have been met:
(a) all critical approvals necessary for the commencement have been obtained;
(b) the expenditure incurred on construction and development costs is not less than 25 percent of the total estimated construction and development costs;
(c) at least 25 percent of the saleable project area is secured by agreements with buyers; and
(d) at least 10 percent of the agreements are realized at the reporting date in respect of such contracts.
Contract revenues represent the aggregate amounts of fair value of sale price for agreements entered into and are accrued based on the percentage that the actual construction costs incurred until the reporting date bears to the total estimated construction costs to completion. For projects where the risks and rewards on the sale of the UDS are separable from the risks and rewards on the construction contract, land costs are excluded for the purpose of computing the percentage of completion.
Contract costs include the estimated construction, development, proportionate land cost and other directly attributable costs of the projects under construction. Losses expected to be incurred on projects in progress, are charged to the statement of profit and loss in the period in which these losses are known.
For projects executed through joint development arrangements, which represent barter transactions, whereby the Company gives up a defined percentage of constructed area in lieu of payment for its share in the land, the Company accounts for such developmental rights acquired on a gross basis on the estimated amount to be spent on development or construction of built-up area to be surrendered in lieu of the above rights.
The estimates for saleable area and contract costs are reviewed by the management periodically and the cumulative effect of the changes in these estimates, if any, are recognized in the period in which these changes may be reliably measured.
Unbilled revenue disclosed under other financial assets represents revenue recognized over and above the amount due as per payment plans agreed with the customers. Progress billings which exceed the costs and recognized profits to date on projects under construction are disclosed as unearned revenue under other current liabilities. Any billed amount that has not been collected is disclosed under trade receivables and is net of any provisions for amounts doubtful of recovery.
Revenue from the sale of land is recognized in the period in which the agreement to sell is entered into. Where there is a remaining substantial obligation under the agreement, revenue is recognized on the fulfillment of such obligation.
Rental income
Income from rentals are recognized as an income in the statement of profit and loss on a straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
Interior income
Interior income is recognized on the basis of percentage of completion method.
Dividend income
Income from dividends are recognized when the Company''s right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Interest income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss. The expected cash flows are revisited on a yearly basis.
Interest on delayed receipts, cancellation/forfeiture income and transfer fees from customers are recognized on accrual basis except in cases where ultimate collection is considered doubtful.
Share in profits of LLP investment
The Company''s share in profits from a LLP where the Company is a partner, is recognized as income in the statement of profit and loss as and when the right to receive its profit share is established which coincides with the same being credited to the Company''s current account on the basis of such LLP''s audited accounts, as per terms of the LLP agreement.
i. Inventories Raw materials
Inventory includes raw materials used for the construction activity of the Company. Raw materials are valued at the lower of cost and net realizable value with the cost being determined on a ''First In First Out'' basis.
Properties under development
Properties under development represents construction work in progress which are stated at the lower of cost and net realizable value. This comprises of cost of land, construction related overhead expenditure, borrowing costs and other net costs incurred during the period of development.
Properties held for sale
Completed properties held for sale are stated at the lower of cost and net realizable value. Cost includes cost of land, construction related overhead expenditure, borrowing costs and other costs incurred during the period of development.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.
Properties held for development
Properties held for development represents land acquired for future development and construction, and is stated at cost including the cost of land, the related costs of acquisition and other costs incurred to get the properties ready for their intended use.
l. Property, Plant and Equipment (PPE)
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met, any expected costs of decommissioning and any 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 measurement
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.
Depreciation and useful lives
Depreciation/amortization on fixed assets is provided on the straight-line method, based on the useful life of asset specified in Schedule II to the Companies Act, 2013. The Management estimates the useful lives of the assets as per the indicative useful life prescribed in Schedule II to the Companies Act, 2013, except shuttering materials whose life is estimated as 7 years. Residual values, useful lives and method of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
k. Intangible assets
Recognition and initial measurement
Intangible assets (software) are stated 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 measurement (amortization)
The cost of capitalized software is amortized over a period of 6 years from the date of its acquisition on a straight line basis. l. Investment Properties
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. Cost comprises the purchase price and any cost attributable to bringing the asset to its working condition for its intended use.
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.
Though the Company measures investment properties using cost based measurement, the fair value of investment properties are disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognized and relevant professional qualification and has recent experience in the location and category of the investment properties being valued. m. Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
All other borrowing costs are recognized in the Statement of Profit and Loss in the period in which they are incurred.
The Company determines the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any interest income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets, to the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset. In case if the Company borrows generally and uses the funds for obtaining a qualifying asset, borrowing costs eligible for capitalization are determined by applying a capitalization rate to the expenditures on that asset.
The Company suspends capitalization of borrowing costs during extended periods in which it suspends active development of a qualifying asset.
n. Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
o. Leases
Finance leases
Assets acquired on lease which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the assets, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
p. Employee benefits
Defined contribution plan
The Company''s contribution to provident fund is charged to the statement of profit and loss or inventorized as a part of project under development, as the case may be. The Company''s contributions towards provident fund are deposited with the Regional Provident Fund Commissioner under a defined contribution plan, in accordance with Employees'' Provident Funds and Miscellaneous Provisions Act, 1952.
Defined benefit plan
The Company has funded gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee''s length of service and final salary. The liability recognized in the balance sheet for defined benefit plans as the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets. Management estimates the DBO annually with the assistance of independent actuaries who use the projected unit credit method to calculate the defined benefit obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss or inventorized as a part of project under development, as the case may be.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost or inventorized as a part of project under development, as the case may be.
Actuarial gain or loss arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income in the year in which such gain or loss arise.
Vacation pay
The Company also provides benefit of vacation pay to its employees. Liability in respect of vacation pay becoming due and expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of profit and loss or inventorized as a part of project under development, as the case may be in the year in which such gains or losses arise.
The Company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
Other short-term benefits
Short-term employee benefits comprising employee costs including performance bonus is recognized in the statement of profit and loss or inventorized as a part of project under development, as the case may be on the basis of the amount paid or payable for the period during which services are rendered by the employee.
q. Tax expense Income taxes
Income tax expense represents the sum of the tax currently payable and deferred tax Current tax
Current tax is the amount of tax payable based on the taxable profit for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act,1961 and other applicable tax laws in the countries where the Company operates and generates taxable income.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Current and deferred tax for the period
Current and deferred tax are recognized in profit or loss, except when they are relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
r. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
s. Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
t. Financial instruments Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.
Subsequent measurement Debt Instruments
Debt instruments at amortized cost
A ''Debt instruments'' is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order 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.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized 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 amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the statement of profit and loss.
Debt Instruments at fair value through other comprehensive income (FVTOCI)
A debt instrument is subsequently measured at fair value through other comprehensive income if it 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 asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Fair value movements are recognized in other comprehensive income (OCI).
Debt instruments at Fair value through profit and loss (FVTPL)
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity investments
All equity investments in the scope of Ind AS 109,'' Financial Instruments'', are measured at fair value. Equity instruments which are held for trading and contingent consideration has been recognized by an acquirer in a business combination to which Ind AS 103,'' Business Combinations'' applies, are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in OCI with subsequent changes in the fair value.
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, impairment gains or losses and foreign exchange gains and losses, are recognized in the OCI.
There is no recycling of the amounts from OCI to the statement of profit and loss, even on sale of investment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
De-recognition of financial assets
A financial asset is primarily de-recognized when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Investment in subsidiaries:
The Company''s investment in equity instruments of subsidiaries and joint venture are accounted for at cost.
u. Financial liabilities Initial recognition
All financial liabilities are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortized cost.
Subsequent measurement
These liabilities include are borrowings and deposits. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
v. Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the twelve month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the statement of profit and loss.
w. Impairment of financial assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the statement of profit and loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
x. Investment in subsidiaries, associates and jointly controlled entities
The Company''s investment in instruments of subsidiaries, associates and jointly controlled entities are accounted for at cost.
y. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of construction, development and sale of all or any part of housing project which is the only reportable segment. The Company operates primarily in India and there is no other significant geographical segment.
1.3 Significant estimates in applying accounting policies
a. Revenue and inventories - The Company recognizes revenue using the percentage of completion method. This requires forecasts to be made of the outcomes of long-term construction and service contracts, which require assessments and judgments to be made on changes in work scopes, claims and incentive payments to the extent they are probable and they are capable of being reliably measured.
b. Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
c. Useful lives of depreciable/amortizable assets - Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software and other assets.
d. Defined Benefit Obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
e. Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
1.4 Critical judgments in applying accounting policies
a. Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
b. Recognition of deferred tax liability on undistributed profits - The extent to which the Company can control the timing of reversal of deferred tax liability on undistributed profits of its subsidiaries requires judgment.
c. Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment
of several external and internal factors which could result in deterioration of recoverable amount of the assets.
d. Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgment.
e. Classification of leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
f. Investment property - The Company classifies a property as investment property if the property (land or building) is held to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business.
g. Control over Sobha Puravankara Aviation Private Limited (SPAPL)
The Company holds 49.95% of the ordinary shares and voting rights in SPAPL. The remaining 50.05% is held by unrelated investors. There are no arrangements for the other shareholders to consult one another or act collectively and past experience indicates that few of the other owners actually exercise their voting rights at all. The Company has appointed one of SPAPL''s Board of Directors out of the two directors.
Management has reassessed its involvement in SPAPL in accordance with Ind AS 110''s ''Consolidated Financial Statements'' revised "control" definition and guidance. It has concluded that it has significant influence but not outright control. In making its judgment, management considered the Company''s voting rights, the relative size and dispersion of the voting rights held by other shareholders and the extent of participation by those shareholders in general meetings. The same demonstrates that sufficient of the other shareholders participate such that they prevent the Company from having the practical ability to direct the relevant activities of SPAPL unilaterally.
h. Control over Pune Projects LLP (PP LLP)
The Company has entered into a LLP with other investors named Pune Projects LLP. The Company is a partner contributing 32% of the total capital. The remaining 68% is held by unrelated investors.
Management has reassessed its involvement in PP LLP in accordance with Ind AS 110''s ''Consolidated Financial Statements'' revised "control" definition and guidance. As the Company does not have the rights to make decisions around all the relevant activities of the PP LLP''s principal purpose and the relevant decisions would require the consent of all other investors jointly, the management has concluded that the agreement gives all parties control of the arrangement collectively and relevant activities require the unanimous consent of the parties.
Mar 31, 2015
A. Basis of preparation
The financial statements of the company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
b. Use of estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which require the management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting periods. Although these estimates are
based upon the management's best knowledge of current events and
actions, actual results could differ from those estimates. Significant
estimates used by management in the preparation of these financial
statements include the percentage completion for projects in progress,
estimates of the economic useful lives of the fixed assets, provisions
for bad and doubtful debts and accruals for employee benefits.
c. Revenue recognition Revenue from projects
Revenue from the sale of properties is recognized when significant
risks and rewards of ownership have been transferred to the customer,
which coincides with entering into a legally binding agreement.
Revenue from sale of undivided share of land (UDS) in qualifying
projects where the risks and rewards on the sale of the UDS are
separable from the risks and rewards on the construction contract is
recognized upon the transfer of all significant risks and rewards of
ownership of such real estate, as per the terms of the contracts
entered into with the buyers, which coincides with the firming of the
sales contracts/agreements and a minimum level of collection of dues
from the customer.
Revenue from the sale of UDS on other projects where the risk and
rewards on the sale of the UDS are not separable from the construction
contracts and therefore do not qualify above are recognized on the
percentage of completion method.
Effective 01 April 2012, in accordance with the "Guidance Note on
Accounting for Real Estate Transactions (Revised 2012)" (Guidance note)
all projects commencing on or after the said date or projects where
revenue is recognized for the first time on or after the above date,
construction revenue on such projects have been recognized on
percentage of completion method provided the following thresholds have
been met:
(a) all critical approvals necessary for the commencement have been
obtained;
(b) the expenditure incurred on construction and development costs is
not less than 25 percent of the total estimated construction and
development costs;
(c) at least 25 percent of the saleable project area is secured by
agreements with buyers; and
(d) at least 10 percent of the agreements are realized at the reporting
date in respect of such contracts.
Contract revenues represent the aggregate amounts of sale price for
agreements entered into and are accrued based on the percentage that
the actual construction costs incurred until the reporting date bears
to the total estimated construction costs to completion. Land costs are
not included for the purpose of computing the percentage of completion.
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the Statement of Profit and Loss in the
period in which these losses are known.
For projects executed through joint development arrangements prior to
01 April 2012, which represent barter transactions, whereby the company
gives up a defined percentage of constructed area in lieu of payment
for its share in the land, the company accounts for such transactions
on net basis and does not ascribe any value to the share of land
acquired on such basis. Effective 01 April 2012, in accordance with the
Guidance Note, developmental rights acquired through joint development
arrangement are recorded on a gross basis on the estimated amount to be
spent on development or construction of built-up area to be surrendered
in lieu of the above rights.
The estimates for saleable area and contract costs are reviewed by the
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognized in the period in which these
changes may be reliably measured.
Unbilled revenue disclosed under other assets represents revenue
recognized over and above the amount due as per payment plans agreed
with the customers. Progress billings which exceed the costs and
recognized profits to date on projects under construction are disclosed
as advance received from customers under other current liabilities. Any
billed amount that has not been collected is disclosed under trade
receivables and is net of any provisions for amounts doubtful of
recovery.
Revenue from the sale of land is recognized in the period in which the
agreement to sell is entered into. Where there is a remaining
substantial obligation under the agreement, revenue is recognized on
the fulfilment of such obligation.
Rental income
Income from rentals is recognized on a straight line basis over the
primary, non-cancellable, period of the arrangement.
Interior income
Interior income is recognized as and when the services are rendered, at
rates agreed upon with customers. Share in profits of LLP investment
The Company's share in profits from a LLP where the Company is a
partner, is recognised when the same is credited to the Company's
current account on the basis of such LLP's audited accounts, as per
terms of the LLP agreement.
d. Properties under development
Properties under development represents construction work in progress
which are stated at the lower of cost and net realizable value. This
comprises of cost of land, construction related overhead expenditure,
borrowing costs and other net costs incurred during the period of
development.
e. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realizable value. Cost includes cost of land, construction related
overhead expenditure, borrowing costs and other costs incurred during
the period of development.
f. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost, where
applicable and other costs incurred to get the properties ready for
their intended use.
g. Fixed assets
Fixed assets are stated at cost less accumulated
depreciation/amortization and impairment losses. Cost comprises the
purchase price and any cost attributable to bringing the asset to its
working condition for its intended use. Fixed assets purchased in
foreign currency are recorded at the actual rupee cost incurred.
Expenditure directly relating to expansion is capitalized only if it
increases the life or functionality of an asset beyond its original
standard of performance.
h. Depreciation/amortization
Depreciation/amortization on fixed assets is provided on the
straight-line method, based on the useful life of asset specified in
Schedule II to the Companies Act, 2013. The Management estimates the
useful lives of the assets as per the indicative useful life prescribed
in Schedule II to the Companies Act, 2013, except shuttering materials
whose life is estimated as 7 years. Assets individually costing less
than Rs. 5,000 are fully depreciated in the period of purchase.
i. Borrowing cost
Borrowing costs that are attributable to the acquisition and/or
construction of qualifying assets are capitalized as part of the cost
of such assets, in accordance with Accounting Standard 16 - "Borrowing
Costs". A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to the Statement of Profit and Loss as incurred.
j. Advertisement and promotional expenses
Advertisement and promotional expense in respect of projects currently
being developed and for general corporate purposes are expensed to the
Statement of Profit and Loss as incurred.
k. Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss. If at the Balance Sheet
date there is an indication that a previously assessed impairment loss
no longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
historical cost.
l. Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the long-term investments.
m. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less.
n. Inventory
Inventory includes raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realizable value with the cost being determined on a 'First In First
Out' basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
o. Foreign currency transactions
(a) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
Exchange differences arising on a monetary item that, in substance,form
part of Company's net investment in a non-integral foreign operation is
accumulated in a foreign currency translation reserve in the financial
statements until the disposal of the net investment, at which time they
are recognized as income or as expenses.
p. Leases Finance leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
assets, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
income. Lease management fees, legal charges and other initial direct
costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term unless other systematic basis is more representative of the
time pattern of the benefit.
q. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15- "Employee Benefits".
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees' Provident
Funds and Miscellaneous Provisions Act, 1952. The plan is a defined
contribution plan and contribution paid or payable is recognized as an
expense in the period in which the employee renders service.
Gratuity
Gratuity is a post employment benefit and is a defined benefit plan.
The liability recognized in the Balance Sheet represents the present
value of the defined benefit obligation at the Balance Sheet date less
the fair value of plan assets (if any), together with adjustments for
unrecognized past service costs. Independent actuaries use the
projected unit credit method to calculate the defined benefit
obligation.
Actuarial gain or loss arising from experience adjustments and changes
in actuarial assumptions are credited or charged to the Statement of
Profit and Loss in the year in which such gain or loss arise.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the Balance Sheet date is recognized on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of benefit expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the Balance Sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefits
Expense in respect of other short-term benefits including performance
bonus is recognized on the basis of amount paid or payable for the
period during which the employees render service.
r. Tax expense
Tax expense comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes reflect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted as at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred tax assets are recognized on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable
profits.
Unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized.
Minimum alternate tax (MAT) paid in a year is charged to the Statement
of Profit and Loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e, the period for which MAT credit is allowed to be
carried forward. In the year in which the company recognizes MAT credit
as an asset in accordance with the Guidance Note on Accounting for
Credit Available in respect of Minimum Alternate Tax under the
Income-tax Act, 1961, the said asset is created by way of credit to the
Statement of Profit and Loss and shown as "MAT Credit Entitlement". The
company reviews the "MAT Credit Entitlement" asset at each reporting
date and writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
s. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares.
t. Provisions and contingent liabilities
The Company creates 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 in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.
Mar 31, 2014
A. Basis of preparation
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with the applicable
accounting standards prescribed by Companies (Accounting Standards),
Rules 2006, the provisions of the Companies Act, 1956 (to the extent
applicable) and the Companies Act, 2013 (to the extent applicable). The
accounting policies have been consistently applied unless otherwise
stated.
b. Use of estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which require the management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting periods. Although these estimates are
based upon the management''s best knowledge of current events and
actions, actual results could differ from those estimates. Significant
estimates used by management in the preparation of these financial
statements nclude the percentage completion for projects in progress,
estimates of the economic useful lives of the fixed assets, provisions
for bad and doubtful debts and accruals for employee benefits.
c. Revenue recognition Revenue from projects
Revenue from the sale of properties is recognized when significant
risks and rewards of ownership have been transferred to the customer,
which coincides with entering into a legally binding agreement.
Revenue from sale of undivided share of land (UDS) in qualifying
projects where the risks and rewards on the sale of the UDS are
separable from the risks and rewards on the construction contract is
recognized upon the transfer of all significant risks and rewards of
ownership of such real estate, as per the terms of the contracts
entered into with the buyers, which coincides with the firming of the
sales contracts/agreements and a minimum level of collection of dues
from the customer.
Revenue from the sale of UDS on other projects where the risk and
rewards on the sale of the UDS are not separable from the construction
contracts and therefore do not qualify above are recognized on the
percentage of completion method Effective 1 April 2012, in accordance
with the "Guidance Note on Accounting for Real Estate Transactions
(Revised 2012)" (Guidance note) all projects commencing on or after
the said date or projects where revenue is recognized for the first
time on or after the above date, construction revenue on such projects
have been recognized on percentage of completion method provided the
following thresholds have been met:
(a) all critical approvals necessary for the commencement have been
obtained,
(b) the expenditure incurred on construction and development costs is
not less than 25 percent of the total estimated construction and
development costs,
(c) at least 25 percent of the saleable project area is secured by
agreements with buyers; and
(d) at least 10 percent of the agreements are realized at the reporting
date in respect of such contracts.
Contract revenues represent the aggregate amounts of sale price for
agreements entered into and are accrued based on the percentage that
the actual construction costs incurred until the reporting date bears
to the total estimated construction costs to completion. Land costs are
not included for the purpose of computing the percentage of completion
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the Statement of Profit and Loss in the
period in which these losses are known
For projects executed through joint development arrangements prior to 1
April 2012, which represent barter transactions, whereby the company
gives up a defined percentage of constructed area in lieu of payment
for its share in the land, the company accounts for such transactions
on net basis and does not ascribe any value to the share of land
acquired on such basis. Effective 1 April 2012, in accordance with the
Guidance Note, developmental rights acquired through joint development
arrangement are recorded on a gross basis on the estimated amount to be
spent on development or construction of built-up area to be surrendered
in lieu of the above rights.
The estimates for saleable area and contract costs are reviewed by the
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognized in the period in which these
changes may be reliably measured
Unbilled revenue disclosed under other assets represents revenue
recognized over and above the amount due as per payment plans agreed
with the customers. Progress billings which exceed the costs and
recognized profits to date on projects under construction are disclosed
as advance received from customers under other current liabilities. Any
billed amount that has not been collected is disclosed under trade
receivables and is net of any provisions for amounts doubtful of
recovery.
Revenue from the sale of land is recognized in the period in which the
agreement to sell is entered into Where there is a remaining
substantial obligation under the agreement, revenue is recognized on
the fulfilment of such obligation
Rental income
ncome from rentals is recognized on a straight line basis over the
primary, non-cancellable, period of the arrangement.
Interior income
nterior income is recognized as and when the services are rendered, at
rates agreed upon with customers.
d. Properties under development
Properties under development represents construction work in progress
which are stated at the lower of cost and net realizable value. This
comprises of cost of land, construction related overhead expenditure,
borrowing costs and other net costs incurred during the period of
development.
e. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realizable value. Cost includes cost of land, construction related
overhead expenditure, borrowing costs and other costs incurred during
the period of development.
f. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost, where
applicable and other costs incurred to get the properties ready for
their intended use.
g. Fixed assets
Fixed assets are stated at cost less accumulated
depreciation/amortization and impairment losses. Cost comprises the
purchase price and any cost attributable to bringing the asset to its
working condition for its ntended use. Fixed assets purchased in
foreign currency are recorded at the actual rupee cost incurred
Expenditure directly relating to expansion is capitalized only if it
increases the life or functionality of an asset beyond its original
standard of performance.
h. Depreciation/amortization
Depreciation/amortization on fixed assets is provided on the
straight-line method, using the rates specified in Schedule XIV to the
Companies Act, 1956, except in the case of shuttering and scaffolding
items where the estimated useful life has been determined as seven
years. Assets individually costing less than Rs. 5,000 are fully
depreciated in the period of purchase.
i. Borrowing cost
Borrowing costs that are attributable to the acquisition and/or
construction of qualifying assets are capitalized as part of the cost
of such assets, in accordance with Accounting Standard 16 - "Borrowing
Costs". A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its ntended use. All other borrowing
costs are charged to the Statement of Profit and Loss as incurred
j. Advertisement and promotional expense
Advertisement and promotional expense in respect of projects currently
being developed and for general corporate purposes are expensed to the
Statement of Profit and Loss as incurred
k. Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be
mpaired. If any such indication exists, the Company estimates the
recoverable amount of the asset. If such recoverable amount of the
asset or the recoverable amount of the cash-generating unit to which
the asset belongs is less than its carrying amount, the carrying amount
is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the Statement of Profit and Loss.
If at the Balance Sheet date there is an indication that a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount subject
to a maximum of depreciated historical cost.
l. Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the long-term investments.
m. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid nvestments with original maturity
of three months or less.
n. Inventory
Inventory includes raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realizable value with the cost being determined on a ''First In First
Out'' basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
o. Foreign currency transactions
(a) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction
Exchange differences arising on a monetary item that, in substance,
form part of Company''s net investment in a non-integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses
p. Leases
Finance leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefits ncidental to ownership of the
assets, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
income. Lease management fees, legal charges and other initial direct
costs are capitalized
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term unless other systematic basis is more representative of the
time pattern of the benefit.
q. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15- "Employee Benefits"
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees'' Provident
Funds and Miscellaneous Provisions Act, 1952. The plan is a defined
contribution plan and contribution paid or payable is recognized as an
expense in the period in which the employee renders service.
Gratuity
Gratuity is a post employment benefit and is a defined benefit plan.
The liability recognized in the Balance Sheet represents the present
value of the defined benefit obligation at the Balance Sheet date less
the fair value of plan assets (if any), together with adjustments for
unrecognized past service costs. Independent actuaries use the
projected unit credit method to calculate the defined benefit
obligation
Actuarial gain or loss arising from experience adjustments and changes
in actuarial assumptions are credited or charged to the Statement of
Profit and Loss in the year in which such gain or loss arise.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the Balance Sheet date is recognized on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of benefit expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the Balance Sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefits
Expense in respect of other short-term benefits including performance
bonus is recognized on the basis of amount paid or payable for the
period during which the employees render service.
r. Tax expense
Tax expense comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes reflect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted as at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred tax assets are recognized on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable profits
Unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized
s. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares.
t. Provisions and contingent liabilities
The Company creates 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 in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.
Mar 31, 2013
A. Basis of preparation
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with the applicable
accounting standards prescribed by Companies (Accounting Standards),
Rules 2006. The accounting policies have been consistently applied
unless otherwise stated.
b. Use of estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which require the management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting periods. Although these estimates are
based upon the management''s best knowledge of current events and
actions, actual results could differ from those estimates. Significant
estimates used by management in the preparation of these financial
statements include the percentage completion for projects in progress,
estimates of the economic useful lives of the fixed assets, provisions
for bad and doubtful debts and accruals for employee benefits
c. Revenue recognition Revenues from projects
Revenue from the sale of properties is recognized when significant
risks and rewards of ownership have been transferred to the customer,
which coincides with entering into a legally binding agreement.
Revenue from sale of undivided share of land (UDS) in qualifying
projects where the risks and rewards on the sale of the UDS are
separable from the risks and rewards on the construction contract is
recognized upon the transfer of all significant risks and rewards of
ownership of such real estate, as per the terms of the contracts
entered into with the buyers, which coincides with the firming of the
sales contracts/agreements and a minimum level of collection of dues
from the customer.
Revenue from the sale of UDS on other projects where the risk and
rewards on the sale of the UDS are not separable from the construction
contracts and therefore do not qualify above are recognized on the
percentage of completion method
Effective 1 April 2012, in accordance with the "Guidance Note on
Accounting for Real Estate Transactions (Revised 2012)" (Guidance note)
all projects commencing on or after the said date or projects where
revenue is recognized for the first time on or after the above date,
construction revenue on such projects have been recognized on
percentage of completion method provided the following thresholds have
been met:
(a) all critical approvals necessary for the commencement have been
obtained,
(b) the expenditure incurred on construction and development costs is
not less than 25 percent of the total estimated construction and
development costs,
(c) at least 25 percent, of the saleable project area is secured by
agreements with buyers; and
(d) at least 10 percent, of the agreements are realized at the
reporting date in respect of such contracts
Contract revenues represent the aggregate amounts of sale price for
agreements entered into and are accrued based on the percentage that
the actual construction costs incurred until the reporting date bears
to the total estimated construction costs to completion. Land costs are
not included for the purpose of computing the percentage of completion
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the Statement of Profit and Loss in the
period in which these osses are known
For projects executed through joint development arrangements prior to 1
April 2012, which represent barter transactions, whereby the company
gives up a defined percentage of constructed area in lieu of payment
for its share in the land, the company accounts for such transactions
on net basis and does not ascribe any value to the share of land
acquired on such basis. Effective 1 April 2012, in accordance with the
Guidance Note, developmental rights acquired through joint development
arrangement are recorded on a gross basis on the estimated amount to be
spent on development or construction of builtup area to be surrendered
in lieu of the above rights
The estimates for saleable area and contract costs are reviewed by the
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognized in the period in which these
changes may be reliably measured
Unbilled revenue disclosed under other assets represents revenue
recognized over and above the amount due as per payment plans agreed
with the customers. Progress billings which exceed the costs and
recognized profits to date on projects under construction are disclosed
as advance received from customers under other current liabilities. Any
billed amount that has not been collected is disclosed under trade
receivables and is net of any provisions for amounts doubtful of
recovery.
The application of the Guidance note did not have a material impact on
the Statement of Profit and Loss for the year ended 31 March 2013.
However, properties under development is higher by Rs.275.80 and advance
received from customers is also higher by the same amount.
Rental income
ncome from rentals is recognized on a straight line basis over the
primary, non-cancellable, period of the arrangement.
Interior income
nterior income is recognized as and when the services are rendered, at
rates agreed upon with customers
d. Properties under development
Properties under development represents construction work in progress
which are stated at the ower of cost and net realizable value. This
comprises of cost of land, construction related overhead expenditure,
borrowing costs and other net costs incurred during the period of
development.
e. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realizable value. Cost ncludes cost of land, construction related
overhead expenditure, borrowing costs and other costs ncurred during
the period of development.
f. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost and other
costs incurred to get the properties ready for their intended use.
g. Fixed assets
Fixed assets are stated at cost less accumulated
depreciation/amortization and impairment losses Cost comprises the
purchase price and any cost attributable to bringing the asset to its
working condition for its intended use. Fixed assets purchased in
foreign currency are recorded at the actua rupee cost incurred
Expenditure directly relating to expansion is capitalized only if it
increases the life or functionality of an asset beyond its original
standard of performance.
h. Depreciation/amortization
Depreciation/amortization on fixed assets is provided on the
straight-line method, using the rates specified in Schedule XIV to the
Companies Act, 1956, except in the case of shuttering and scaffolding
items where the estimated useful life has been determined as seven
years. Assets individually costing less than Rs.5,000 are fully
depreciated in the period of purchase.
i. Borrowing cost
Borrowing cost that are attributable to the acquisition and/or
construction of qualifying assets are capitalized as part of the cost
of such assets, in accordance with Accounting Standard 16 - "Borrowing
Costs". A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to the Statement of Profit and Loss as incurred
j. Advertisement and promotional expense
Advertisement and promotional expense in respect of projects currently
being developed and for general corporate purposes are expensed to the
Statement of Profit and Loss as incurred
k. Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss. If at the Balance Sheet
date there is an indication that a previously assessed impairment loss
no longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
historical cost.
I. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less
m. Inventory
nventory includes raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realizable value with the cost being determined on a ''First In First
Out'' basis
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
n. Foreign currency transactions (a) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction
Exchange differences arising on a monetary item that, in substance,
form part of Company''s net nvestment in a non-integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses
o. Leases
Finance leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
assets, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
ncome. Lease management fees, legal charges and other initial direct
costs are capitalized
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term unless other systematic basis is more representative of the
time pattern of the benefit
p. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15- "Employee Benefits"
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees'' Provident
Funds and Miscellaneous Provisions Act, 1952. The plan is a defined
contribution plan and contribution paid or payable is recognized as an
expense in the period in which the employee renders service.
Gratuity
Gratuity is a post employment benefit and is a defined benefit plan.
The liability recognized in the Balance Sheet represents the present
value of the defined benefit obligation at the Balance Sheet date less
the fair value of plan assets (if any), together with adjustments for
unrecognized past service costs. Independent actuaries use the
projected unit credit method to calculate the defined benefit
obligation
Actuarial gain or loss arising from experience adjustments and changes
in actuarial assumptions are credited or charged to the Statement of
Profit and Loss in the year in which such gain or loss arise.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the Balance Sheet date is recognized on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of benefit expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the Balance Sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefits
Expense in respect of other short-term benefits including performance
bonus is recognized on the basis of amount paid or payable for the
period during which the employees render service.
q. Tax expense
Tax expense comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes reflect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted as at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized
Deferred tax assets are recognized on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable profits
Unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized
r. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period For the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares
s. Provisions and contingent liabilities
The Company creates 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 in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.
t. Investments
Long term investments are stated at cost less provision for permanent
diminution in value, if any.
Mar 31, 2012
A. Basis of preparation
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with the applicable
accounting standards prescribed by Companies (Accounting Standards),
Rules 2006. The accounting policies have been consistently applied
unless otherwise stated.
b. Use of estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which require the management of the
Group to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of
operations during the reporting periods. Although these estimates are
based upon the management's best knowledge of current events and
actions, actua results could differ from those estimates. Significant
estimates used by management in the preparation of these financial
statements include the percentage completion for projects in progress,
estimates of the economic useful lives of the fixed assets, provisions
for bad and doubtful debts and accruals for employee benefits.
c. Revenue recognition Revenues from projects
Revenue from the sale of properties is recognized when the significant
risks and rewards of ownership have been transferred to the customer,
which coincides with the entering into a legally binding agreement.
Revenue from sale of undivided share of land (UDS) in qualifying
projects where the risks and rewards on sale of UDS are separable from
the risks and rewards on the construction contract is recognised upon
the transfer of all significant risks and rewards of ownership of such
real estate, as per the terms of the contracts entered into with the
buyers, which coincides with the firming of the sales
contracts/agreements and a minimum level of collection of dues from the
customer.
Revenue from the sale of UDS on other projects where the risk and
rewards on the sale of the UDS are not separable from the construction
contracts and therefore do not qualify above are recognised on the
percentage of completion method.
Contract revenues represent the aggregate amounts of sale price for
agreements entered into and are accrued based on the percentage that
the actual construction costs incurred until the reporting date bears
to the total estimated construction costs to completion. Land costs are
not included for the purposes of computing the percentage of
completion.
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the Statement of Profit and Loss in the
period in which these losses are known.
The estimates for saleable area and contract costs are reviewed by
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognized in the period in which these
changes may be reliably measured.
Unbilled revenue disclosed under other assets represents revenue
recognised over and above amount due as per payment plans agreed with
the customers. Progress billings which exceed the costs and recognized
profits to date on projects under construction, the same is disclosed
as advance received from customers under other current liabilities. Any
billed amount that has not been collected is disclosed under trade
receivables and is net of any provisions for amounts doubtful of
recovery.
Rental income
Income from rentals is recognized on a straight line basis over the
primary, non-cancellable, period of the arrangement.
Interior income
Interior income is recognized as the services are rendered, at rates
agreed upon with customers.
d. Properties under development
Properties under development represents construction work in progress
which are stated at the lower of cost and net realisable value. This
comprises of cost of land, construction related overhead expenditure
and borrowing costs and other net costs incurred during the period of
development.
e. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realisable value. Cost includes cost of land, construction related
overhead expenditure and borrowing costs and other net costs incurred
during the period of development.
f. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost and other
costs incurred to get the properties ready for their intended use.
g. Fixed assets
Fixed assets are stated at cost less accumulated
depreciation/amortization and impairment losses. Cost comprises the
purchase price and any cost attributable to bringing the asset to its
working condition for its intended use. Advances paid towards
acquisition of fixed assets before the period end are classified as
capital work in progress. Fixed assets purchased in foreign currency
are recorded at the actual rupee cost incurred.
Expenditure directly relating to expansion is capitalized only if it
increases the life or functionality of an asset beyond its original
standard of performance.
h. Depreciation/amortization
Depreciation/amortization on fixed assets is provided on the
straight-line method, using the rates specified in Schedule XIV to the
Companies Act, 1956, except in the case of shuttering and scaffolding
items where the estimated useful life has been determined as seven
years. Assets individually costing less than Rs. 5,000 are fully
depreciated in the year of purchase.
i. Borrowing costs
Borrowing costs that are attributable to the acquisition and/or
construction of qualifying assets are capitalized as part of the cost
of such assets, in accordance with Accounting Standard 16 - "Borrowing
Costs". A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to the Statement of Profit and Loss as incurred.
j. Advertisement and promotional expenses
Advertisement and promotional costs in respect of projects currently
being developed and for general corporate purposes are expensed to the
Statement of Profit and Loss as incurred.
k. Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss. If at the Balance Sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost.
I. Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less.
m. Inventory
Inventory includes raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realizable value with the cost being determined on a 'First In First
Out' basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
n. Foreign currency transactions
(a) Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
Exchange differences arising on a monetary item that, in substance,
form part of company's net investment in a non- integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses.
o. Leases
Finance leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
assets, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
income. Lease management fees, legal charges and other initial direct
costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term.
p. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 "Employee Benefits".
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees' Provident
Funds and Miscellaneous Provisions Act, 1952. The plan is a defined
contribution plan and contribution paid or payable is recognized as an
expense in the period in which the employee renders services.
Gratuity
Gratuity is a post employment benefit and is a defined benefit plan.
The liability recognized in the Balance Sheet represents the present
value of the defined benefit obligation at the Balance Sheet date less
the fair value of plan assets (if any), together with adjustments for
unrecognized past service costs. Independent actuaries using the
projected unit credit method calculate the defined benefit obligation
annually.
Actuarial gains or losses arising from experience adjustments and
changes in actuarial assumptions are credited or charged to the
Statement of Profit and Loss in the year in which such gains or losses
arises.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the Balance Sheet date is recognized on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of benefit expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the Balance Sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefits
Expense in respect of other short-term benefits including performance
bonus is recognized on the basis of amount paid or payable for the
period during which the employees render services.
q. Stock based compensation
The Company accounts for stock based compensation based on the
intrinsic value method. Option discount representing the excess of the
fair value or the market value of the underlying shares at the date of
the grant over the exercise price of the option is amortized on a
straight-line basis over the vesting period of the shares issued under
the Company's Employee Stock Option Plan (ESOP).
r. Taxes expenses
Tax expenses comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes reflect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred tax assets are recognized on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable
profits.
Unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized.
s. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares.
t. Provisions and contingent liabilities
The Company creates 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 in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.
u. Investments
Long term investments are stated at cost less provision for permanent
diminution in value, if any.
Mar 31, 2011
A. Basis of preparation
The financial statements have been prepared on accrual basis under the
historical cost convention and in accordance with the applicable
accounting standards prescribed by Companies (Accounting Standards),
Rules 2006. The accounting policies have been consistently applied
unless otherwise stated.
b. Use of estimates
The preparation of financial statements is in conformity with generally
accepted accounting principles which require the management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the results
of operations during the reporting periods. Although these estimates
are based upon the management's best knowledge of current events and
actions, actual results could differ from those estimates. Significant
estimates used by management in the preparation of these financial
statements include the percentage completion for projects in progress,
estimates of the economic useful lives of the fixed assets, provisions
for bad and doubtful debts and accruals for employee benefits.
c. Revenue recognition
Revenues from projects
Revenue from the sale of properties is recognized when the significant
risks and rewards of ownership have been transferred to the customer,
which coincides with the entering into a legally binding agreement.
Revenues from such contracts are recognized under the percentage of
completion method. Contract revenues represent the aggregate amounts of
sale price for agreements entered into and are accrued based on the
percentage that the actual construction costs incurred until the
reporting date bears to the total estimated construction costs to
completion. Land costs are not included for the purposes of computing
the percentage of completion.
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the Profit and Loss Account in the period
in which these losses are known.
The estimates for saleable area and contract costs are reviewed by
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognized in the period in which these
changes may be reliably measured.
Cost and recognized profits to date in excess of progress billings on
construction projects in progress are disclosed under Properties Under
Development (a current asset). Where the progress billings exceed the
costs and recognized profits to date on projects under construction,
the same is disclosed as Advances Received From Customers, (a current
liability). Any billed amount that has not been collected is disclosed
under Trade Debtors and is net of any provision for amounts doubtful of
recovery.
Revenue from the sale of land is recognized in the period in which the
agreement to sell is entered into. Where there is a remaining
substantial obligation under the agreement, revenue is recognized on
the fulfilment of such obligation.
Rental income
Income from rentals is recognized on a straight line basis over the
primary, non-cancellable, period of the arrangement.
Interior Income
Interior income is recognized as the services are rendered, at rates
agreed upon with customers.
d. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realizable value. Cost includes cost of land, construction related
overhead expenditure and borrowing costs and other net costs incurred
during the period of development.
e. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost and other
costs incurred to get the properties ready for their intended use.
f. Fixed assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchase price and any cost
attributable to bringing the asset to its working condition for its
intended use. Advances paid towards acquisition of fixed assets before
the period end are classified as capital work in progress. Fixed assets
purchased in foreign currency are recorded at the actual rupee cost
incurred.
Expenditure directly relating to expansion is capitalized only if it
increases the life or functionality of an asset beyond its original
standard of performance.
g. Depreciation
Depreciation on fixed assets is provided on the straight-line method,
using the rates specified in Schedule XIV to the Companies Act, 1956,
except in the case of shuttering and scaffolding items where the
estimated useful life has been determined as seven years. Assets
individually costing less than Rs5,000 are fully depreciated in the year
of purchase.
h. Borrowing Costs
Borrowing costs that are attributable to the acquisition and/or
construction of qualifying assets are capitalized as part of the cost
of such assets, in accordance with Accounting Standard 16 - "Borrowing
Costs". A qualifying asset is one that necessarily takes a substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to the Profit and Loss Account as incurred.
i. Advertisement and Promotional expenses
Advertisement and promotional costs in respect of projects currently
being developed and for general corporate purposes are expensed to the
Profit and Loss Account as incurred.
j. Impairmentof Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any
such indication exists, the Company estimates the recoverable amount of
the asset. If such recoverable amount of the asset or the recoverable
amount of the cash-generating unit to which the asset belongs is less
than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and
is recognized in the Profit and Loss Account. If at the Balance Sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost.
k. Cash and cash equivalents
Cash comprises cash on hand and balances with banks. Cash equivalents
are short term, highly liquid investments that are readily convertible
into cash and which are subject to insignificant risks of changes in
value.
I. Inventory
Inventory comprises raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realizable value with the cost being determined on a 'First In First
Out' basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
m. Foreign currency transactions
(a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction.
Exchange differences arising on a monetary item that, in substance,
form part of company's net investment in a non- integral foreign
operation is accumulated in a foreign currency translation reserve in
the financial statements until the disposal of the net investment, at
which time they are recognized as income or as expenses.
n. Leases
Finance Leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
assets, are capitalized at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the finance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
income. Lease management fees, legal charges and other initial direct
costs are capitalized.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the esti mated useful life of the asset
or the lease term.
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
o. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 Employee Benefits "AS 15".
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees providentfund
and Miscellaneous Provision Act, 1952. The plan is a defined
contribution plan and contribution paid or payable is recognized as an
expense in the period in which the employee renders services.
Gratuity
Gratuity is a post employment benefit and is a defined benefit plan.
The liability recognized in the Balance Sheet represents the present
value of the defined benefit obligation at the Balance Sheet date less
the fair value of plan assets (if any), together with adjustments for
unrecognized actuarial gains or losses and past service costs.
Independent actuaries using the projected unit credit method calculate
the defined benefit obligation annually.
Actuarial gains or losses arising from experience adjustments and
changes in actuarial assumptions are credited or charged to the Profit
and Loss Account in the year in which such gains or losses arises.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the Balance Sheet date is recognized on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of benefit expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the Balance Sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefits
Expense in respect of other short-term benefits including performance
bonus is recognized on the basis of amount paid or payable for the
period during which the employees render services.
p. Stock based compensation
The Company accounts for stock based compensation based on the
intrinsic value method. Option discount representing the excess of the
fair value or the market value of the underlying shares at the date of
the grant over the exercise price of the option is amortized on a
straight-line basis over the vesting period of the shares issued under
the Company's Employee Stock Option Plan(ESOP).
q. Taxes on income
Tax expense comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes reflect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred tax assets are recognized on carryforward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized againstfuture taxable profits.
Unrecognized deferred tax assets of earlier years are re-assessed and
recognized to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realized.
r. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares.
s. Provisions and contingent liabilities
The Company creates 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 in respect of which the likelihood of outflow
of resources is remote, no provision or disclosure is made.
t. Investments
Long term investments are stated at cost less provision for
permanentdiminution in value, if any.
(a) Term loans from banks
i. On 3 June 2008, the Company entered into an agreement with ICICI
Bank for a term loan facility up to a maximum of Rs1,250 million. This
facility is secured by mortgage of the properties together with all
buildings and structures thereon, both present and future, scheduled
receivables of Purva Venezia and Purva Highlands, lands at Uganavadi
village and Kaikondanahalli village and is also backed by the personal
guarantee of Mr. Ravi Puravankara, Chairman and Managing Director,
Mr.Nani R Choksey, Deputy Managing Director and Mr. Ashish Puravankara,
Joint Managing Director of the Company. The loan is repayable in 12
monthly instalments starting from 15 March 2011. The outstanding as on
31 March 2011 was Rs1,145.83 million. Another term loan of Rs750 million
was sanctioned by ICICI Bank Limited on 04 March 2011 considering the
same security. Company has entered into a facility agreement on 05
March 2011 with ICICI Bank Limited and drawn a sum of Rs400 million out
of it. This loan is repayable in 16 monthly instalments starting from
March 2012. Outstanding balance of this additional term loan from ICICI
Bank Limited as on 31 March 2011 was Rs400 million.
ii. On 16 June 2010 the Company was sanctioned a loan of Rs2,000 million
by Standard Chartered Bank towards the refinancing of existing debt on
Purva Skywood and construction cost of Purva Skywood, out of which Rs
1,200 million has been drawn as of 31 March 2011. This facility is
secured by mortgage of the properties together with all buildings and
structures thereon, both present and future and scheduled receivables
of certain specified projects and is also backed by the personal
guarantee of Mr. Ravi Puravankara, Chairman and Managing Director of
the Company and Mr. Ashish Puravankara, Joint Managing Director of the
Company. The loan is repayable in 18 monthly instalments commencing
from July 2012. The outstanding as on 31 March 2011 was Rs1,200 million.
(b) Term loan from financial institution
On 4 December 2008 the Company entered into an agreement with Life
Insurance Corporation of India for a loan of Rs2,000 million. This
facility is secured by mortgage of land at Marine Drive, Kochi, the
receivables and is also backed by the personal guarantee of Mr. Ravi
Puravankara, Chairman and Managing Director of the Company. The loan is
repayable in 14 equal quarterly instalments commencing from January
2010. The outstanding as on 31 March 2011 was Rs1,285.71 million.
(c) Term loans from others
i. On 30 May 2008 the Company entered into a term loan agreement with
ICICI Home Finance Company Limited for a term loan of Rs1,250 million.
Out of the sanctioned limit, the Company had drawn Rs1,130 million as on
31 March 2009 and the balance of Rs120 million in April 2009. This
facility is secured by mortgage of the properties together with all
buildings and structures thereon, both present and future and scheduled
receivables of Purva Venezia and Purva Highlands and is also backed by
the personal guarantee of Mr. Ravi Puravankara, Chairman and Managing
Director, Mr.Nani R Choksey, Deputy Managing Director and Mr. Ashish
Puravankara, Joint Managing Director of the Company, repayable in 16
monthly instalments commencing 15 June 2009. However, this loan was
restructured in July 2009 such that it is repayable in 16 monthly
instalments commencing 15 October 2010 including Rs78.1 million due on
15 June 2009. The outstanding as on 31 March 2011 was Rs781.25 million.
ii. On 11 May 2010 the Company and Mr. Ravi Puravankara, Chairman and
Managing Director of the Company entered into an agreement with India
Bulls Financial Services Limited for a loan of Rs900 million. This
facility is secured by mortgage of land at Marine Drive Kochi. The loan
is repayable in 54 equated monthly instalments commencing from January
2011. The outstanding as on 31 March 2011 was Rs866.90 million.
iii. On 10 August 2010, Puravankara Projects Ltd and Centurions Housing
and Constructions Private Limited entered into an agreement with
Reliance Home Finance Private Limited for a term loan of Rs450 million.
This facility is secured by mortgage of the property together with all
buildings and structures thereon, both present and future at Marine
Drive, Kochi, present and future scheduled receivables of the project
and the personal guarantee of Mr. Ravi Puravankara, Chairman and
Managing Director of the Company. The loan is repayable in 18 equated
monthly instalments commencing from February 2011. The outstanding as
on 31 March 2011 was Rs400 million.
iv. On 10 August 2010, Puravankara Projects Ltd and Centurions Housing
and Constructions Private Limited entered into an agreement with
Reliance Consumer Finance Private Limited for a term loan of Rs300
million. This facility is secured by mortgage of the property together
with all buildings and structures there on, both present and future at
Marine Drive, Kochi, present and future scheduled receivables of the
project and the personal guarantee of Mr. Ravi Puravankara, Chairman
and Managing Director of the Company. The loan is repayable in 21
equated monthly instalments commencing from November 2010. The
outstanding as on 31 March 2011 was Rs228.57 million.
v. On 22 September 2010, the Company entered into an agreement with
Kotak Mahindra Prime Limited for a loan of Rs250 million. This facility
is secured by mortgage of lands at Chengalpet taluk, Kancheepuram
district, the receivables and is also backed by the personal guarantee
of Mr. Ravi Puravankara, Chairman and Managing Director of the Company
and Mr. Ashish Puravankara, Joint Manager Director of the Company. The
loan is repayable in 27 monthly instalments commencing from September
2011. The outstanding as on 31 March 2011 was Rs250 million.
vi. On 26 October 2010, term loan facility of Rs350 million was
sanctioned by HDFC Limited. The Company entered into a term loan
facility agreement with HDFC Limited on 01 January 2011 and drawn Rs220
Million out of it. This facility is secured by mortgages of land at
Kakanad, Kochi with building constructed thereupon, present and future
receivable of sold and unsold units and backed by personal guarantee of
Mr. Ravi Puravankara, Chairman and Managing Director and Mr. Ashish
Puravankara Joint Managing Director of the Company. Loan is repayable
in 21 monthly instalments starting from October 2011. Outstanding
balance as on 31 March 2011 was Rs220 Million.
vii. On 26 October 2010, term loan facility of Rs340 million was
sanctioned by HDFC Limited. The Company entered into a term loan
facility agreement with HDFC Limited on 02 February 2011 and drawn Rs170
Million out of it. This facility is secured by mortgages of land at
Ernakulam Marine Drive with building constructed thereupon, present and
future receivables of sold and unsold units and backed by personal
guarantee of Mr. Ravi Puravankara, Chairman and Managing Director and
Mr. Ashish Puravankara Joint Managing Director of the Company . Loan is
repable in 21 monthly instalments starting from November 2011.
Outstanding balance as on 31 March 2011 was Rs170 Million.
(d) Debentures
Company issued 150 secured redeemable non convertible debentures of Rs10
million each, 75 on 31 January 2011 and 75 on 31 March 2011. These
debentures are secured by Mortgage of land & building constructed/to be
constructed thereon situated at Medavakkam & Pallikaranai village,
Tamilnadu, receivables of sold and unsold units and backed by personal
guarantee of Mr. Ravi Puravankara, Chairman and Managing Director and
Mr. Ashish Puravankara Joint Managing Director of the Company. These
debentures are due for redemption at Rs250 million every quarter
starting from 01 November2012.
(e) Cash Credit & Other Loans from banks
i. On 19August2004, the Company entered into an agreement with Andhra
Bank for a cash credit facility of Rs150 million which was
furtherenhanced to Rs200 million in the month of October 2008 and Rs500
million in the month of March 2010. This facility is secured against
the properties of the Company. The outstanding as on 31 March 2011 was
Rs500.70 million.
ii. On 20 June 2008, the Company entered into an agreement with IDBI
Bank for a working capital facility of Rs1,000 million which is secured
against the properties of the Company and personal guarantee of Mr.
Ravi Puravankara, Chairman and Managing Director of the Company. The
outstanding as on 31 March 2011 was Rs944.03 million.
iii. On 20 November 2008, the Company has availed a Secured Overdraft
facility from Andhra Bank for Rs800 million which is secured against the
land together with the buildings and structure thereon at Geddalahalli,
Bengaluru and is also backed by the personal guarantee of Mr. Ravi
Puravankara, Chairman and Managing Director, Mr. Nani R Choksey, Deputy
Managing Director and Mr. Ashish Puravankara, Joint Managing Director
of the Company. The outstanding as on 31 March 2011 was Rs801.19
million.
iv. On 8 January 2008, the Company entered into a term loan agreement
with HSBC for Rs1,350 million which was originally payable in quarterly
instalments from October 2008 till October 2009 and Rs350 million was
payable in quarterly instalments, from January 2009 till October 2009.
However, this loan was restructured in June 2009 such that the
instalments due as of 29 June 2009 and also remaining amounts were
migrated into overdraft on the due dates of the instalments as per the
earlier repayment schedule.The resultant overdraft is repayable in 13
monthly instalments after a moratorium of 14 months. From June 2009 to
December 2009 an amount of Rs832.5 million has been migrated from term
loan to overdraft which is secured by mortgage of the land and building
of Purva Swanlake project and receivables of Purva Swanlake and Purva
Moneto. The outstanding as on 31 March 2011 on this overdraft account
wasRsl5.12 million.
v. Other loans represent loans taken for purchase of vehicles. These
loans are secured by a charge against respective vehicles. The
outstanding as on 31 March 2011 was Rs19.27 million.
Principal amounts due for repayment within one year from the Balance
Sheet date
On 12 March 2009 Deutsche Bank has sanctioned a short term working
capital facility of Rs400 million to the Company. This facility is
secured by the personal assets of Mr. Ravi Puravankara, Chairman and
Managing Director of the Company. In October 2010 an amount of Rs236.40
million has been migrated from term loan to overdraft. The outstanding
in overdraft account as on 31 March 2011 was Rs369.50 million.
The Company has claimed a tax deduction of X213 million till date under
section 801B of the Income tax act, 1961 resulting in tax benefit of
Rs78 million in one of the project which was due for completion as of 31
March 2011. Management has applied for the completion certificate with
the local authorities and the same is pending till date. However, based
on the architect's certificate obtained in lieu of the completion
certificate, management believes that the deduction underthesaid
section would beallowed.
Mar 31, 2010
A. Basis of preparation
The fnancial statements have been prepared on accrual basis under the
historical cost convention and in accordance with the applicable
accounting standards prescribed by Companies (Accounting Standards),
Rules 2006. The accounting policies have been consistently applied
unless otherwise stated.
b. Use of estimates
The preparation of fnancial statements is in conformity with generally
accepted accounting principles which require the management of the
Group to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the fnancial statements and the results
of operations during the reporting periods. Although these estimates
are based upon the managementÃs best knowledge of current events and
actions, actual results could differ from those estimates. significant
estimates used by management in the preparation of these fnancial
statements include the percentage completion for projects in progress,
estimates of the economic useful lives of the fxed assets, provisions
for bad and doubtful debts and accruals for employee benefts.
c. Revenue recognition
Revenues from projects
Revenue from the sale of properties is recognised when the significant
risks and rewards of ownership have been transferred to the customer,
which coincides with the entering into a legally binding agreement.
Revenues from such contracts are recognised under the percentage of
completion method. Contract revenues represent the aggregate amounts of
sale price for agreements entered into and are accrued based on the
percentage that the actual construction costs incurred until the
reporting date bears to the total estimated construction costs to
completion. Land costs are not included for the purposes of computing
the percentage of completion.
Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects
in progress, are charged to the profit and loss account in the period
in which these losses are known.
The estimates for saleable area and contract costs are reviewed by
management periodically and the cumulative effect of the changes in
these estimates, if any, are recognised in the period in which these
changes may be reliably measured.
Cost and recognised profits to date in excess of progress billings on
construction projects in progress are disclosed under Properties Under
Development (a current asset). Where the progress billings exceed the
costs and recognised profits to date on projects under construction,
the same is disclosed as Advances Received From Customers, (a current
liability). Any billed amount that has not been collected is disclosed
under Trade Debtors and is net of any provision for amounts doubtful of
recovery.
Revenue from the sale of land is recognised in the period in which the
agreement to sell is entered into. Where there is a remaining
substantial obligation under the agreement, revenue is recognised on
the fulflment of such obligation.
Rental income
Income from rentals is recognised on a straight line basis over the
primary, non-cancellable, period of the arrangement.
d. Properties held for sale
Completed properties held for sale are stated at the lower of cost and
net realisable value. Cost includes cost of land, construction related
overhead expenditure and borrowing costs and other net costs incurred
during the period of development.
e. Properties held for development
Properties held for development represents land acquired for future
development and construction, and is stated at cost including the cost
of land, the related costs of acquisition, borrowing cost and other
costs incurred to get the properties ready for their intended use.
f. Fixed assets
Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchase price and any cost
attributable to bringing the asset to its working condition for its
intended use. Advances paid towards acquisition of fxed assets before
the period end are classifed as capital work in progress.
Borrowing costs directly attributable to acquisition or construction of
those fxed assets which necessarily take a substantial period of time
to get ready for their intended use are capitalised. Fixed assets
purchased in foreign currency are recorded at the actual rupee cost
incurred.
Expenditure directly relating to expansion is capitalised only if it
increases the life or functionality of an asset beyond its original
standard of performance.
g. Depreciation
Depreciation on fxed assets is provided on the straight-line method,
using the rates specifed in Schedule XIV to the Companies Act, 1956,
except in the case of shuttering and scaffolding items where the
estimated useful life has been determined as seven years. Assets
individually costing less than Rs 5,000 are fully depreciated in the
year of purchase.
h. Advertisement and Promotional expenses
Advertisement and promotional costs in respect of projects currently
being developed and for general corporate purposes are expensed to the
profit and loss account as incurred.
i. Impairment of Assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
refected at the recoverable amount subject to a maximum of depreciated
historical cost.
j. Cash and cash equivalents
Cash comprises cash on hand and balances with banks. Cash equivalents
are short term, highly liquid investments that are readily convertible
into cash and which are subject to insignificant risks of changes in
value.
k. Inventory
Inventory comprises raw materials used for the construction activity of
the Company. Raw materials are valued at the lower of cost and net
realisable value with the cost being determined on a ÃFirst In First
Outà basis.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and costs
required to make the sale.
l. Foreign currency transactions
(a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
respective transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
Exchange differences arising on a monetary item that, in substance,
form part of CompanyÃs net investment in a non-integral foreign
operation is accumulated in a foreign currency translation reserve in
the fnancial statements until the disposal of the net investment, at
which time they are recognised as income or as expenses.
m. Leases
Finance Leases
Assets acquired on lease which effectively transfer to the Company
substantially all the risks and benefts incidental to ownership of the
assets, are capitalised at the lower of the fair value and present
value of the minimum lease payments at the inception of the lease term
and disclosed as leased assets. Lease payments are apportioned between
the fnance charges and reduction of the lease liability based on the
implicit rate of return. Finance charges are charged directly against
income. Lease management fees, legal charges and other initial direct
costs are capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Operating leases
Leases where the lessor effectively retains substantially all the risks
and benefts of ownership of the leased assets are classifed as
operating leases. Operating lease payments are recognised as an expense
in the profit and Loss account on a straight-line basis over the lease
term.
n. Employee benefts
Expenses and liabilities in respect of employee benefts are recorded in
accordance with Accounting Standard 15 Employee Benefts ÃAS 15Ã.
Provident fund
The Company contributes to the statutory provident fund of the Regional
Provident Fund Commissioner, in accordance with Employees Provident
Fund and Miscellaneous Provision Act, 1952. The plan is a defned
contribution plan and contribution paid or payable is recognised as an
expense in the period in which the employee renders services.
Gratuity
Gratuity is a post employment beneft and is a defned beneft plan. The
liability recognised in the balance sheet represents the present value
of the defned beneft obligation at the balance sheet date less the fair
value of plan assets (if any), together with adjustments for
unrecognised actuarial gains or losses and past service costs.
Independent actuaries using the projected unit credit method calculate
the defned beneft obligation annually.
Actuarial gains or losses arising from experience adjustments and
changes in actuarial assumptions are credited or charged to the profit
and Loss account in the year in which such gains or losses arises.
Vacation pay
Liability in respect of vacation pay becoming due or expected to be
availed within one year from the balance sheet date is recognised on
the basis of undiscounted value of estimated amount required to be paid
or estimated value of beneft expected to be availed by the employees.
Liability in respect of earned leave becoming due or expected to be
availed more than one year after the balance sheet date is estimated on
the basis of actuarial valuation in a manner similar to gratuity
liability.
Other short-term benefts
Expense in respect of other short-term benefts including performance
bonus is recognised on the basis of amount paid or payable for the
period during which the employees render services.
o. Stock based compensation
The Company accounts for stock based compensation based on the
intrinsic value method. Option discount representing the excess of the
fair value or the market value of the underlying shares at the date of
the grant over the exercise price of the option is amortized on a
straight-line basis over the vesting period of the shares issued under
the CompanyÃs Employee Stock Option Plan (ESOP).
p. Taxes on income
Tax expense comprises both current and deferred taxes. The current
charge for income taxes is calculated in accordance with the relevant
tax regulations. Deferred income taxes refect the impact of current
year timing differences between taxable income and accounting income
for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognised only to the extent that there is
reasonable certainty that suffcient future taxable income will be
available against which such deferred tax assets can be realised.
Deferred tax assets are recognised on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realised against future taxable
profits.
Unrecognised deferred tax assets of earlier years are re-assessed and
recognised to the extent that it has become reasonably certain that
future taxable income will be available against which such deferred tax
assets can be realised.
q. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting attributable taxes) by the weighted average number of equity
shares outstanding during the period. Partly paid equity shares are
treated as a fraction of an equity share to the extent that they were
entitled to participate in dividends relative to a fully paid equity
share during the reporting period. The weighted average numbers of
equity shares outstanding during the period are adjusted for events of
bonus issue; bonus element in a rights issue to existing shareholders;
share split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all potential equity shares.
r. Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outfow 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 outfow of resources. Where there is a possible obligation or
a present obligation in respect of which the likelihood of outfow of
resources is remote, no provision or disclosure is made.
s. Investments
Long term investments are stated at cost less provision for permanent
diminution in value, if any.
(a) Term loans from banks
i. On 8 September 2008, the Company entered into a term loan agreement
with HSBC for Rs.1,100 million, out of which Rs.350 million has been
drawn as of 30 June 2009. This facility is secured by mortgage of the
properties purchased at Mallasandra Village, Bangalore and receivables
of the related project to be developed at the said property and the
personal guarantee of Mr. Ravi Puravankara, the Chairman and Managing
Director of the Company. The loan was originally repayable in 5
quarterly installments from July 2009 until July 2010. However, the
repayment has been restructured in June 2009 such that the installment
due in July 2009 and pending installments from August 2009 as per the
schedule will be migrated to overdraft. The outstanding as on 31 March
2010 was Rs.140 million.
ii. On 3 June 2008, the Company entered into an agreement with ICICI
Bank for a term loan facility up to a maximum of Rs.1,250 million. This
facility is secured by mortgage of the properties together with all
buildings and structures thereon, both present and future, scheduled
receivables of Purva Venezia and Purva Highlands, lands at Uganavadi
village and Kaikondanahalli village and is also backed by the personal
guarantee of Mr. Ravi Puravankara, the Chairman and Managing Director,
Mr. Nani R. Choksey and Mr. Ashish Puravankara, Directors of the
Company. The loan is repayable in 12 monthly installments starting from
15 March 2011. The outstanding as on 31 March 2010 was Rs. 820 million.
(b) Term loan from fnancial institution
On 4 December 2008, the Company entered into an agreement with Life
Insurance Corporation of India for a loan of Rs.2,000 million. This
facility is secured by mortgage of land at Marine Drive, Kochi, the
receivables and is also backed by the personal guarantee of Mr. Ravi
Puravankara, the Chairman and Managing Director of the Company. The
loan is repayable in 14 equal quarterly installments commencing from
January 2010. The outstanding as on 31 March 2010 was Rs. 1,857.14
million.
(c) Term loan from others
On 30 May 2008, the Company entered into a term loan agreement with
ICICI Home Finance Company Limited for a term loan of Rs.1,250 million.
Out of the sanctioned limit, the Company had drawn Rs.1,130 million as
on 31 March 2009 and the balance of Rs.120 million in April 2009. This
facility is secured by mortgage of the properties together with all
buildings and structures thereon, both present and future and scheduled
receivables of Purva Venezia and Purva Highlands and is also backed by
the personal guarantee of Mr. Ravi Puravankara, the Chairman and
Managing Director, Mr. Nani R. Choksey and Mr. Ashish Puravankara,
Directors of the Company, repayable in 16 monthly installments
commencing 15 June 2009. However, this loan was restructured in July
2009 such that it is repayable in 16 monthly installments commencing 15
October 2010 including Rs.78.1 million due on 15 June 2009. The
outstanding as on 31 March 2010 was Rs. 1,250 million.
(d) Debentures
The Company had on 10 September 2008, issued 55 Secured Redeemable
Non-Convertible Debentures of face value of Rs.10,000,000/- each for
cash at par to ICICI Prudential Real Estate Securities Fund. These
debentures are due for redemption on 30 November 2010. Interest is
payable on 10th September of every year till redemption.
(e) Cash credit & other loans from banks
i. On 19 August 2004, the Company entered into an agreement with Andhra
Bank for a cash credit facility of Rs.150 million which was further
enhanced to Rs.200 million in the month of October 2008 and Rs. 500
million in the month of March 2010. This facility is secured against
the properties of the Company. The outstanding as on 31 March 2010 was
Rs. 490.16 million.
ii. On 20 June 2008, the Company entered into an agreement with IDBI
Bank for a working capital facility of Rs.1,000 million which is
secured against the properties of the Company and personal guarantee of
Mr.Ravi Puravankara, the Chairman and Managing Director of the Company.
The outstanding as on 31 March 2010 was Rs. 983.41 million.
iii. On 20 November 2008, the Company has availed a Secured Overdraft
facility from Andhra Bank for Rs 800 million which is secured against
the land together with the buildings and structure thereon at
Geddalahalli, Bangalore and is also backed by the personal guarantee of
Mr. Ravi Puravankara, the Chairman and Managing Director, Mr. Nani R
Choksey and Mr. Ashish Puravankara, Directors of the Company. The
outstanding as on 31 March 2010 was Rs. 535.04 million.
iv. On 5 August 2006, the Company entered into a term loan agreement
with Standard Chartered Bank for Rs. 1,000 million towards construction
and development of its projects and for existing debt repayment,
repayable in 24 monthly installments from the 15th month of the date of
frst drawdown (date of the frst drawdown : 16 November 2006). This
facility is secured by mortgage of the land and building of certain
specifed projects and their project receipts and is also backed by the
personal guarantee of Mr. Ravi Puravankara, the Chairman and Managing
Director of the Company. Additional facility of Rs.200 million was
availed on 5 April 2007 against the same security as above, repayable
in 24 monthly installments starting from 16 February 2008. In June 2009
this term loan has been rescheduled such that the monthly installments
due of Rs.50 million for next 8 months were migrated to overdraft as
and when the installment fell due. The resultant overdraft balance of
Rs.400 million shall be repayable in 12 monthly installments of
Rs.33.33 million starting from 16 May 2010. As a result, from June 2009
to March 2010 an amount of Rs. 400 million has been migrated from term
loan to overdraft. The outstanding as on 31 March 2010 on this
overdraft account was Rs. 356.85 million.
v. On 8 January 2008, the Company entered into a term loan agreement
with HSBC for Rs.1,350 million which was originally payable in
quarterly installments from October 2008 till October 2009 and Rs. 350
million was payable in quarterly installments, from January 2009 till
October 2009. However, this loan was restructured in June 2009 such
that the instalments due as of 29 June 2009 and also remaining amounts
were migrated into overdraft on the due dates of the instalments as per
the earlier repayment schedule.The resultant overdraft is repayable in
13 monthly instalments after a moratorium of 14 months. From June 2009
to December 2009 an amount of Rs.832.5 million has been migrated from
term loan to overdraft which is secured by mortgage of the land and
building of Purva Swanlake project and receivables of Purva Swanlake
and Purva Moneto. The outstanding as on 31 March 2010 on this overdraft
account was Rs. 683.69 million.
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