Accounting Policies of Unitech Ltd. Company
Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES
I. Nature of operations
M/S Unitech Limited (the "Company"), having CIN:
L74899DL1971 PLC009720, was incorporated on
9th February 1971 with its Registered Office at 6,
Community Centre, Saket, New Delhi-110017. The
Company is a Real Estate Developer in India and also
has interest in the business of Power Transmission and
Hospitality, among others. The Company''s main line
of business is Real Estate Development and related
activities, including Construction and allied Services.
The Company''s equity shares are listed on The Bombay
Stock Exchange Limited (BSE) and The National Stock
Exchange of India Limited (NSE).
The Standalone Financial Statements of the Company
for the year ended March 31, 2023 were authorized
for issue by the Board of Directors in its meeting
held on August 29, 2023. These Financial Statements
have been prepared in accordance with the Indian
Accounting Standards (referred to as "Ind AS") as
notified by Ministry of Corporate Affairs (MCA) under
Section 133 of the Companies Act, 2013, read with
the Companies (Indian Accounting Standards) Rules,
2015, as amended from time to time.
The preparation of the Company''s Financial
Statements, in conformity with Ind AS, requires the
Company to exercise its judgment in the process of
applying the accounting policies. It also requires the
use of accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at
the date of the Financial Statements. These estimates
and assumptions are assessed on an on-going basis
and are based on past experience and relevant factors,
including expectations of future events that are
believed to be reasonable under the circumstances
and presented under the historical cost convention on
accrual basis of accounting. Accounting Policies have
been applied consistently to all periods presented in
these Financial Statements. All assets and liabilities
have been classified as current or non-current as per
the operating cycle of the Company as per the General
Instructions for preparation of Balance Sheet and
Statement of Profit and Loss of a Company set out in
Schedule III to the Companies Act, 2013.
The preparation of Financial Statements, in conformity
with generally accepted Accounting Principles, requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of
the Financial Statements and the result of operations
during the reporting period. Although these estimates
are based on Management''s best knowledge of
current events and actions, actual results could differ
from these estimates. Significant estimates used by
the Management in the preparation of these Financial
Statements include project revenue, project cost,
saleable area, economic useful lives of fixed assets,
accrual of allowance for bad and doubtful receivables,
loans and advances and current and deferred taxes.
Any revision to accounting estimates is recognized
prospectively in accordance with the applicable
Accounting Standards.
Significant management judgments
Recognition of Deferred Tax Assets - The extent to
which deferred tax assets can be recognized is based
on an assessment of the probability of future taxable
income against which the deferred tax assets can be
utilized.
Evaluation of indicators for impairment of assets - The
evaluation of applicability of indicators of impairment
of assets requires determination of cash generating
units and assessment of several external and
internal factors, which could result in deterioration of
recoverable amount of assets.
Impairment of financial assets - At each Balance Sheet
date, based on historical default rates observed over
expected life, the Management assesses the expected
credit loss on outstanding financial assets.
Provisions - At each Balance Sheet date based on
the Management''s judgment, changes in facts and
legal aspects, the Company assesses the requirement
of provisions against the outstanding contingent
liabilities. However, the actual future outcome may be
different from this judgment.
Revenue and Inventories - Inventory recognition
requires forecasts to be made of the total Real Estate
Development Costs with the outcomes of underlying
construction and service contracts which require
assessment and judgment to be made on changes in
Scope of Work, claims (compensation, rebates, etc.)
and other payments to the extent they are probable
and they are capable of being reliably measured.
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 the assets.
Defined Benefit Obligations (DBO) - Management''s
estimates of the DBO is based on a number of
underlying assumptions, such as, standard rates of
inflation, 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.
Fair value measurements - Management applies
valuation techniques to determine the fair market value
of financial instruments (where active market quotes are
not available). This involves developing estimates and
assumptions consistent with how market participants
would price the instrument.
IV. Property,plant andequipment &depreciation
Transition to Ind AS
The Company has elected to use a previous Generally
Accepted Accounting Principles (GAAP) cost {Cost (-)
accumulated depreciation and impairment losses, if
any,} of an item of property, plant and equipment at or
before the date of transition to Ind AS as deemed cost
at the date of transition in accordance with the option
provided under Ind AS-101.
Property, plant and equipment (PPE) are stated at cost,
net of accumulated depreciation and accumulated
impairment losses, if any. The initial cost of PPE is the
cost of acquisition or construction, inclusive of freight,
erection & commissioning charges and any directly
attributable costs of bringing an asset to working
condition and location for its intended use, including
borrowing costs relating to the qualified asset over the
period up to the date the asset is ready to commence
commercial production. The carrying amount of a PPE
is de-recognized when no future economic benefits are
expected from its use or on disposal.
The Property, plant and equipment are subsequently
measured at cost net of accumulated depreciation and
accumulated impairment losses, if any. Depreciation
on property, plant and equipment is provided on a
straight-line basis over the estimated useful lives of
the assets, as prescribed in Part C of Schedule II of the
Companies Act, 2013.
The PPE acquired under finance leases, if any, is
depreciated over the asset''s useful life or over the
shorter of the asset''s useful life and the lease term, if
there is no reasonable certainty that the Company will
obtain ownership at the end of the lease term. Freehold
land is not depreciated. Borrowing costs relating to
acquisition of PPE which takes 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. Depreciation on PPE is provided
based on useful lives of the assets assigned to each
asset in accordance with Schedule II to the Companies
Act, 2013 on straight-line method. Fixtures and lease
hold improvements installed in leased buildings are
amortized over the initial period of lease.
V. Intangible assets under development
''Intangible assets under development'' represents
expenditure incurred in respect of intangible assets
under development and are carried at cost less
accumulated impairment loss, if any. Cost includes
land, related acquisition expenses, development/
construction costs, borrowing costs and other direct
expenditure.
VI. Intangibles and amortization
Intangible assets are recognized when it is probable
that future economic benefits attributable to asset will
flow to the Company and the cost of the asset can
be measured reliably. Intangible assets (acquired or
developed in-house) are measured on initial recognition
at cost. The cost of an intangible asset includes
purchase cost (net of rebates and discounts), including
any import duties and non-refundable taxes, and any
directly attributable costs on making the asset ready for
its intended use. Following initial recognition, intangible
assets are carried at cost less accumulated amortization
and accumulated impairment losses, if any. Internally
generated intangible assets, excluding capitalized
development costs, which meet capitalization criteria,
are not capitalized and expenditure is reflected in the
statement of profit and loss in the year in which the
expenditure is incurred. Cost of software is amortized
over a period of 05 years, being the estimated useful
life as per the Management''s estimates.
The amortization period and method are reviewed at least
at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates,
the amortization period is changed accordingly.
Management at each Balance Sheet date assesses
using external and/ or internal sources whether there
is an indication that an asset or group of assets or a
cash generating unit, as the case may be, may become
impaired. Impairment exists where the carrying amount
exceeds the fair market value of the asset, represented
by the present value of future cash flows expected
to arise from the continuing use of the asset and its
realizable value. The impairment loss, if any, is charged
off to statement of profit and loss.
An intangible asset is derecognized on disposal, or
when no future economic benefits are expected from
use. Gains and 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 the asset is de-recognized or on
disposal.
At the inception of a contract, the Company assesses
whether a contract is or it contains a lease agreement or
a contract is or it contains a lease if the contract conveys
the right to control the use of an identified asset for a
period of time in exchange of consideration. To assess
whether a contract conveys the right to control the use
of an asset the Company assesses whether:
(i) The contract involves the use of an identified asset
- this may be specified explicitly or implicitly,
and should be physically distinct or represent
substantially all of the capability of a physical
distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
(ii) The Company has the right to substantially obtain
all of the economic benefits from use of the asset
throughout the period of use; and
(iii) The Company has the right to direct the use of
the asset. The Company has this right when it has
the decision-making rights that are most relevant
to changes how and for what purpose the asset is
used.
(i) Right of use Asset
The Company recognizes a right-of-use asset
and a lease liability at the lease commencement
date. At the commencement date, a lessee shall
measure the right-of-use asset at cost which
comprises initial measurement of the lease
liability, any lease payments made at or before the
commencement date, less any lease incentives
received, any initial direct costs incurred by the
lessee, and an estimate of costs to be incurred
by the lessee in dismantling and removing the
underlying asset, restoring the site on which it is
located or restoring the underlying asset to the
condition required by the terms and conditions of
the lease.
(ii) Lease Liability
At the commencement date, a lessee shall
measure the lease liability at the present value of
the lease payments that are not paid at that date.
The lease payments shall be discounted using
the interest rate implicit in the lease, if that rate
can be readily determined. If that rate cannot
be readily determined, the lessee shall use the
lessee''s incremental borrowing rate.
(iii) Short-term lease and leases of low-value assets
The Company has elected not to recognize right-
of-use assets and lease liabilities for short-term
leases that have a lease term of less than 12
months or less and leases of low-value assets,
including IT Equipment. The Company recognizes
the lease payments associated with these leases
as an expense on a straight-line basis over the
lease term.
The election for short-term leases shall be made
by class of underlying asset to which the right
of use relates. A class of underlying asset is a
grouping of underlying assets of a similar nature
and use in Company''s operations. The election
for leases, for which the underlying asset is of low
value, can be made on a lease-by-lease basis.
Leases in which the Company does not substantially
transfer all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income
from operating lease is recognized on a straight¬
line basis over the term of the relevant lease. Initial
direct costs incurred by lessors in negotiating and
arranging an operating lease shall be added to the
carrying amount of the leased asset and recognized
as an expense over the lease term on the same basis
as the lease income. Leases are classified as finance
leases when substantially all of the risks and rewards
of ownership transfer from the Company to the lessee.
(i) Recognition and initial measurement
Investment properties are properties held to
earn rentals or for capital appreciation, or both.
Investment properties are measured initially at
their cost of acquisition, including transaction
costs. On transition to IND AS, the Company
had elected to measure all of its investment
properties at the previous GAAP carrying value
(deemed cost). 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. 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. 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 the
statement of profit or loss as incurred.
(i) The cost of inventories comprises the cost of
purchase, cost of conversion and other costs
incurred in bringing the inventories to their
present location and condition. Inventories are
valued at cost or net realizable value, whichever
is lower on the basis of first-in-first-out method,
average cost method or specific identification, as
the case may be.
(ii) Finished stock of completed Real Estate Projects,
land and land development rights are valued at
lower of the cost or net realizable value on the
basis of actual identified units.
Project in progress disclosed as at reporting date
in respect of Real Estate development and related
activities includes aggregate amount of project costs
incurred and recognized profit (less recognized losses)
including unbilled revenue and project costs that relate
to future activity on the contract where it is probable
that these costs will be recovered in future upto the
reporting date less amount received from customers,
for all projects.
Project costs include cost of land, land development
rights, construction costs, job work, allocated
borrowing costs and other incidental costs including
the cost of any delayed penalty, already committed
to the customers that are attributable to project and
such other costs as are specifically chargeable to the
customer being costs incurred upto the reporting date.
Unbilled revenue represents revenue recognized on
percentage of completion method to the extent not
billed to customers as per contractual payment plan/
milestones. The application of IND AS 115 has impact
on Projects in Progress and must be read along with
''Significant accounting policy no. XII below.
Borrowing cost relating to acquisition/ construction
development of qualifying assets of the Company are
not capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their
intended use are complete. A qualifying asset is the
one that necessarily takes substantial period of time to
get ready for its intended use/ sale. Borrowing costs
that are attributable to the project in progress and
qualifying land advances as well as any capital work
in progress are charged to respective qualifying asset.
Borrowing costs incurred/ proportioned on projects,
otherwise qualified for capitalization, where ultimate
expected profitability is expected to be negative, is
not capitalized, and is charged to statement of profit
and loss. All other borrowing costs, not eligible for
capitalization, are charged to the statement of profit
and loss.
The Company derives revenues primarily from the
business of Real Estate development and related
activities including construction, consultancy and
rentals etc. Further, most of the business conducted is
within the geographical boundaries of India.
Revenue is recognized in accordance with the principles
laid down under IND AS-115.
The Company recognizes revenue using
Percentage of Completion Method (POCM),
where performance obligation is satisfied over a
period of time.
Performance obligations are satisfied over time
when the Company transfers control of goods
over time and, therefore, satisfies a performance
obligation and recognizes revenue over time,
if (i) the Company''s performance creates or
enhances the asset, viz. projects in progress, that
the customer controls as the asset is created or
enhanced, or (ii) the Company''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.
Revenues in excess of invoicing are classified
as contract assets (also referred to as unbilled
revenue) while invoicing in excess of revenues
are classified as contract liabilities (also referred
to as unearned revenues).
The amount of contract revenue may increase or
decrease from one period to the next on account of:
(i) Variations or claims contractually agreed
that increase or decrease contract revenue
in a period subsequent to that in which
the contract with customers was initially
agreed; and
(ii) Penalties arising from delays caused by the
Company in the completion of the contract
where such penalties are certain. These
penalties do not include those which have
not yet been committed to the customers
where the possession of the unit has not
been handed over.
Further, the Company recognizes revenue on
Percentage of Completion Method (POCM) on
completion of the following events:
(i) All critical approvals necessary for
commencement of the project have been
obtained including, wherever applicable -
environmental & other clearances, approval
of plans, designs etc., title to land or other
rights of development/ construction &
change in land use;
(ii) The expenditure incurred on construction
& development is not less than 25% of the
construction and development costs;
(iii) At least 25% of the saleable project area is
secured by contracts or agreements with
buyers;
(iv) The Company starts giving possession
in that project and has qualified for the
criterion as stated in IND AS 115; and
(v) At least 10% of the total revenue as per
the agreements of sale or any other legally
enforceable document are realized at the
reporting date in respect of each of the
contracts & it is reasonable to expect that
the parties to such contracts will comply
with the payment terms as defined in the
contracts.
When it is probable that total costs will exceed
total project revenue, the expected loss is
recognized as an expense immediately.
An entity shall account for a contract with a
customer that is within the scope of this Standard
only when all of the following criteria are met:
(i) The parties to the contract have approved
the contract (in writing, orally or in
accordance with other customary business
practices) and are committed to perform
their respective obligations;
(ii) The entity can identify each party''s rights
regarding the goods or services to be
transferred;
(iii) The entity can identify the payment terms
for the goods or services to be transferred;
(iv) The contract has commercial substance (i.e.
the risk, timing or amount of the entity''s
future cash flows is expected to change as a
result of the contract); and
(v) It is probable that the entity will conduct
the consideration to which it will be entitled
in exchange for the goods or services
that will be transferred to the customer.
In evaluating whether collectability of an
amount of consideration is probable, an
entity shall consider only the customer''s
ability and intention to pay that amount of
consideration when it is due. The amount
of consideration to which the entity will be
entitled may be less than the price stated in
the contract if the consideration is variable
because the entity may offer the customer a
price concession.
The Company recognizes revenue from
construction contracts using Percentage of
Completion Method (POCM), where performance
obligation is satisfied over a period of time.
Performance obligations are satisfied over time
when the Company transfers control of goods
over time and, therefore, satisfies a performance
obligation and recognizes revenue over time,
if (a) the Company''s performance creates or
enhances an asset, viz. projects in progress, that
the customer controls as the asset is created or
enhanced, or (b) the Company''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) The stage of completion under the POC
method is measured on the basis of
percentage that actual costs incurred on
construction contracts to the total estimated
cost of the contract.
(ii) Revenue on account of contract variations,
claims and incentives are recognized/
adjusted upon settlement or when it
becomes reasonably certain that such
variations, claims and incentives are
both measurable and recoverable/
adjustable.
Contract revenue is measured at fair value of
the consideration received or receivable. The
measurement of contract revenue is affected
by a variety of uncertainties that depend on
the outcome of future events. The estimates
often need to be revised as events occur and
uncertainties are resolved. Therefore, the amount
of contract revenue may increase or decrease
from one period to the next.
(3) Accounting of projects with co-developers (JVs)
All the development expenses and sale proceeds
booked during the year are transferred to the
co-developer at the year-end as per the mutual
agreement with each such co-developer.
(4) Sale of land and land development rights
Revenue from sale of land and development rights
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.
(5) Sale of construction material
Revenue from sale of construction material is
recognized when transfer of significant risk and
rewards of such material takes place. Such sale is
recognized net of taxes.
Net sale proceeds of the investments including
the investment in subsidiaries, joint ventures
and associates developing real estate projects,
are recognized on completion of sale of such
investment.
Consultancy income is recognized on accrual
basis based on contractual terms on the
performance of such services. Revenue is
recognized proportionately by reference to the
performance of acts defined contractually. The
revenue is recognized when it is reasonably sure
that the Company has completed its performance
obligation and the revenue shall ultimately be
realized. The revenue recognized is determined
on the basis of contract value, associated costs,
number of acts or other suitable basis. .
Interest income is recognized only when no
significant uncertainty as to measurability or
collectability exists. Income is recognized on
a time proportion basis taking into account the
amount outstanding and the rate applicable.
Interest income from financial Assets is
recognized using E.I.R. method.
Dividend income is recognized when the right to
receive the same is established.
(10) Income from interest on delayed payment by
customers
The revenue on account of interest on delayed
payment by customers is accounted for at the
time of acceptance/ settlement with customers
due to uncertainties with regard to determination
of amount receivable until then.
XIV. Foreign currency transactions
These Financial Statements are presented in Indian
Rupees (INR), which is the Company''s functional
currency. A foreign currency transaction is recorded,
on initial recognition in the reporting currency, by
applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign
currency on the date of the transaction. Monetary
items denominated in a foreign currency are reported
using the closing rate or at the amount which is likely
to be realized from, or required to disburse such items
at the balance sheet date as the situation demands.
Non-monetary items carried in term of historical cost
denominated in foreign currency, are reported using
exchange rate at the date of transaction. Exchange
differences arising on the settlement of monetary
items or on reporting an enterprise''s monetary items
at rates different from those at which they were initially
recorded during the period, or reported in previous
financial statements, are recognized as income or as
expenses in the period in which they arise. Exchange
differences arising on reporting of long term monetary
assets at rates different from those at which they were
initially reported during the period or previous periods
in so far they relate to the acquisition of depreciable
capital asset is added to or deducted from the cost of
assets.
The Financial Statement of an integral operation is
translated using the above principle and procedures.
In translating the Financial Statement of a non-integral
foreign operation for incorporation in its Financial
Statement, the following principles and procedures are
followed:
(i) Assets and liabilities, both monetary and non¬
monetary, of the non-integral foreign operation
are translated at the closing rate.
(ii) Income and expense items of the non-integral
foreign operation are translated at exchange
rates at the date of the transactions.
(iii) All resulting exchange differences are
accumulated in a foreign currency translation
reserve until the disposal of the net investment.
Tax Expenses have been computed as per the
provisions contained in IND AS 12. The tax expense
for the period comprises the sum of current tax and
deferred income tax. Tax is recognized in the statement
of Profit & Loss, except to the extent that it relates to
items recognized in the other comprehensive income
or in equity, in which case, the tax is also recognized in
Other Comprehensive income.
Current tax assets & liabilities are measured at the
amount expected to be recovered from or paid to
the income tax authorities, based on tax rates and
laws that are enacted at balance sheet date.
Deferred tax is recognized on temporary
differences between the carrying amounts of
assets & liabilities in the Financial Statements and
the corresponding tax bases used in computation
of taxable profit.
Deferred tax assets & 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. The carrying
amount of deferred tax liabilities and assets are
reviewed at the end of each reporting period.
Employee benefits have been computed as per the
provisions contained in IND AS 19
(i) Short-term employee benefits
The Company recognizes the undiscounted
amount of short-term employee benefits expected
to be paid in exchange for services rendered by
employees as -
(a) a liability (accrued expense) after deducting
any amount already paid. Excess of amounts
paid over liability incurred is treated as
prepaid expenses; or
(b) an expense unless it is eligible to be charged
to project in progress or capital work in
progress or fixed asset as the case may be.
(ii) Post-employment benefits
(a) Defined contribution plans
The Company, as per details hereunder,
operates defined contribution plans
pertaining to Employees State Insurance
scheme, Government administered
Pension Fund scheme, Provident Fund plan
and Superannuation scheme for eligible
employees.
The above defined contribution plans are
post-employment benefit plans under which
the Company pays fixed contributions into
separate entities (funds) or to financial
institutions or state managed benefit
schemes. The Company''s contribution to
defined contribution plans are recognized
in the statement of profit and loss in the
financial year to which they relate.
? Employees State Insurance/ Pension Fund
scheme:
The Company makes specified monthly
contribution towards Employees State
Insurance scheme and government
administrated pension fund scheme.
? Provident Fund plan:
The Company is obliged to make specified
monthly contributions towards Employee
Provident Fund registered with the Regional
Provident Fund Commissioner.
(b) Defined benefit obligations
The cost of providing benefits i.e. gratuity
and leave encashment is determined using
the projected unit credit method, with
actuarial valuations carried out annually as
at the balance sheet date. Actuarial gains
and losses are recognized immediately in
the statement of profit and loss. The fair
value of the plan assets is reduced from the
gross obligation under the defined benefit
plan, to recognize the obligation on net
basis. Past service cost is recognized as
expense on a straight-line basis over the
average period until the benefits become
vested.
Mar 31, 2017
I. NATURE OF OPERATIONS
Unitech Limited (the company) was incorporated in 1971 and is a leading real estate developer in India. The companyâs main line of business is real estate development and related activities including construction and consultancy services.
II. BASIS OF PREPARATION
The Company has adopted accounting policies that comply with Indian Accounting standards (Ind AS) notified by Ministry of Corporate Affairs vide notification dated 16 February 2015 under section 133 of the Companies Act 2013, as required by the relevant applicability provisions prescribed in the same notification. Accounting policies have been applied consistently to all periods presented in these financial statements. The financial statements referred hereinafter have been prepared in accordance with the requirements and instructions of Schedule III to the Companies Act 2013, amended from time to time applicable to companies to whom Ind AS applies.
The opening financial statements have been prepared in accordance with âIndian Accounting Standard 101â (First time Adoption of Indian Accounting Standards). The opening financial statements comprises Balance Sheet, Statement of Change in Equity and its related notes. It does not include Statement of Profit and Loss and Cash Flow Statement.
The adopted accounting policies comply with each Ind-AS effective at the end of its first Ind-AS reporting period i.e.31st March 2017 except as specified in paragraphs 13-19 and Appendices B-D of Ind AS 101, in the opening financial statements:
(i) All assets and liabilities have been recognised as required by Ind AS.
(ii) All assets and liabilities have been derecognised not permitted by Ind AS.
(iii) All assets, liabilities or components of equity have been reclassified in accordance with Ind AS.
(iv) All assets and liabilities measured in accordance with Ind AS.
The accounting policies used by the Company in its opening financial statement may differ from those previously used in accordance with Indian Generally Acceptable Accounting Principles (IGAAP) or the previous GAAP The resulting adjustments, which have arisen for events and transactions before the date of transition to Ind AS, have been directly recognized in retained earnings at the date of transition to Ind-AS i.e. 1st April 2015
The company estimates in accordance with Ind AS at the date of transition to Ind AS are consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
The company discloses in the financial statements how the transition from previous GAAP to Ind AS has affected its reported Balance Sheet and Statement of Profit & loss. Accordingly, The Companyâs first Ind AS financial statements includes:
(a) Reconciliations of its equity reported in accordance with previous GAAP to its equity in accordance with Ind AS for both of the following dates:
(i) the date of transition to Ind AS; and
(ii) the end of the latest period presented in the companyâs most recent annual financial statements in accordance with previous GAAP
(b) Reconciliation to its total comprehensive income in accordance with Ind AS for the latest period in the Companyâs most recent annual financial statements. The starting point for that reconciliation being the profit or loss under previous GAAP
The Companyâs first Ind AS financial statements includes three Balance Sheets and the related notes (as at 01.04.2015, 31.03.2016 and 31.03.2017) and two Statements of Profit and Loss, two Cash Flow statements, two Statements of Changes in Equity and related notes for the financial year 2015-16 and 2016-17.
The Companyâs financial statements have been prepared in accordance with the Ind AS prescribed. The preparation of the Companyâs financial statements in conformity with Indian Accounting Standard requires the Company to exercise its judgement in the process of applying the accounting policies. It also requires the use of accounting estimates and assumptions that effect the reported amounts of assets and liabilities at the date of the financial statements. These estimates and assumptions are assessed on an ongoing basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances and presented under the historical cost convention on accrual basis of accounting.
All assets and liabilities have been classified as current or non-current as per the operating cycle of the company as per the guidance set out in the Schedule III to the Companies Act, 2013.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates. Significant estimates used by the management in the preparation of these financial statements include project revenue, project cost, saleable area, economic useful lives of fixed assets, accrual of allowance for bad and doubtful receivables, loans and advances and current and deferred taxes. Any revision to accounting estimates is recognized prospectively in accordance with applicable Accounting Standards.
iv. property plant & equipment and depreciation
Transition to Ind AS: The Company has chosen to use a previous GAAP cost (cost less accumulated depreciation and impairment losses (if any)) on items of property, plant and equipment (PPE) at, or before, the date of transition to Ind AS as deemed cost at the date of transition in accordance with accounting policy option available in Ind AS 101.
PPE are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
The initial cost of PPE is cost of acquisition or construction inclusive of freight, erection & commissioning charges and any directly attributable costs of bringing an asset to working condition and location for its intended use, including borrowing costs relating to the qualified asset over the period upto the date the asset is ready to commence commercial production.
The carrying amount of a property, plant and equipment is de-recognised when no future economic benefits are expected from its use or on disposal.
Depreciation on property, plant and equipment is provided on straight line method based on estimated useful life of assets as prescribed in Part C of Schedule II to the Companies Act, 2013.
The property, plant and equipment acquired under finance leases, if any, is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
Freehold land is not depreciated.
Fixed assets including capital work in progress are stated at cost (gross block) less accumulated depreciation and impairment losses, if any. Cost comprises, the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. It excludes refundable taxes. Borrowing costs relating to acquisition of fixed assets 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. Depreciation on fixed assets is provided based on useful lives of the assets assigned to each asset in accordance with Schedule II to the Companies Act, 2013 on straight-line method.
Fixtures and lease hold improvements installed in leased buildings are amortized over the initial period of lease.
v. intangibles and amortization
Intangible assets are recognized when it is probable that future economic benefits that are attributable to asset will flow to the company and the cost of the asset can be measured reliably.
Intangible assets (acquired or developed in house) are measured on initial recognition at cost. The cost of an intangible asset includes purchase cost (net of rebates and discounts), including any import duties and non-refundable taxes, and any directly attributable costs on making the asset ready for its intended use. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs which meet capitalization criteria, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
Cost of software is amortized over a period of 5 years, being the estimated useful life as per the management estimates.
vi. impairment of assets
Transition to Ind AS: The company has chosen to use a previous GAAP cost (cost less accumulated depreciation and impairment losses (if any)) of intangible assets at, or before, the date of transition to Ind AS as deemed cost at the date of transition in accordance with accounting policy option in Ind AS 101.
The amortisation period and method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly.
Management at each balance sheet date assesses using external and internal sources whether there is an indication that an asset or group of assets or a cash generating unit as the case may be impaired. Impairment occurs where the carrying value exceeds the higher of value in use represented by the present value of future cash flows expected to arise from the continuing use of the asset and its realizable value. The impairment loss (if any) is charged off to statement of profit and loss.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use. Gains and 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 are recognised in the statement of profit and loss when the asset is de-recognised or on disposal.
vii. lease accounting
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of the ownership to the lessee. All other leases are classified as operating leases.
Company as a lessee
Asset held under finance leases are initially recognised as assets at its fair value at the inception of the lease 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 immediately 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 Contingent rentals are recognised as expenses in the periods in which they are incurred.
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 estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term unless either:
(a) another systematic basis is more representative of the time pattern of the userâs benefit even if the payments to the lessors are not on that basis; or
(b) the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. If payments to the lessor vary because of factors other than general inflation, then this condition is not met.
Company as a lessor
Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease unless either:
(a) another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished, even if the payments to the lessors are not on that basis; or
(b) the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. If payments to the lessor vary according to factors other than inflation, then this condition is not met.
Lease hold land is considered as operating lease and amortised over the lease term.
viii. investments
Long term investments are stated at cost. However, provision for diminution is made to recognise any decline, other than temporary, in the value of long term investments.
Current investments are stated at the fair value.
IX. INVENTORIES
a) The cost of inventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories are valued at cost or net realizable value, whichever is lower on the basis of first in first out method or specific identification, as the case may be.
b) Finished stock of completed real estate projects, land and land development rights are valued at lower of cost or net realizable value on the basis of actual identified units.
X. PROJECTS IN PROGRESS
Project in progress disclosed as at reporting date in respect of real estate development and related activities includes aggregate amount of project costs incurred and recognized profit (less recognized losses) including unbilled revenue and project costs that relate to future activity on the contract where it is probable that these costs will be recovered in future up to the reporting date less advances received from customers, for all projects.
Project costs include cost of land, land development rights, construction costs, job work, allocated borrowing costs and other incidental costs that are attributable to project and such other costs as are specifically chargeable to the customer being costs incurred upto the reporting date.
Unbilled revenue represents revenue recognized on percentage of completion method to the extent not billed to customers as per contractual payment plan/milestones.
XI. BORROWING COST
Borrowing cost relating to acquisition/construction development of qualifying assets of the company are capitalized until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use/sale. Borrowing cost that are attributable to the project in progress and qualifying land advances as well as any capital work in progress are charged to respective qualifying asset . All other borrowing costs, not eligible for inventorisation /capitalization, are charged to statement of profit and loss.
XII. revenue recognition
A) Real estate projects
Revenue from real estate under development/sale of developed property is recognized upon transfer of all significant risks and rewards of ownership of such real estate/ property, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the sales contracts/ agreements, except for contracts where the company still has obligations to perform substantial acts even after the transfer of all significant risks and rewards. Accordingly, revenue is recognized on the following basis:-
a) Real estate projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts and installments fallen due during the year towards booking of plots/ constructed properties, subject to final adjustment, on the completion of the respective project.
b) Real estate projects undertaken on and after 1st April, 2004.
Revenue from real estate projects is recognized on the âpercentage of completion methodâ (POC) of accounting.
Revenue under the POC method is recognized on the basis of percentage of actual costs incurred including construction and development cost of projects under execution and proportionate land subject to such actual cost incurred being twenty percent or more of the total estimated cost of projects.
The stage of completion under the POC method is measured on the basis of percentage that actual costs incurred on real estate projects including construction and development cost and proportionate land bears to the total estimated cost of the project. The estimates including those of technical nature in respect of the projected revenues, projected profits, projected costs, cost to completion and the foreseeable loss are reviewed periodically by the management and any effect of changes in estimates is recognized in the period such changes are determined. Revenue including variations in contract work, claims and incentive payments to the extent that it is probable is recognized by reference to the stage of completion as explained above attributed to the work completed during the year.
c) Real estate projects which have commenced on or after April 1, 2012 and also to projects which have already commenced but where revenue is being recognized for the first time on or after April 1, 2012.
Revenue from real estate projects is recognized when all significant risks & rewards of ownership by way of a legally enforceable agreement to sale have been transferred to the buyer & subject to the satisfaction of contractual conditions mentioned herein after which signify transferring of significant risks & rewards even though the legal title may not be transferred or the possession of the real estate may not be given to the buyer. Consequently, any act on the real estate project performed by the company is, in substance on behalf of the buyer in the manner similar to a contractor.
Accordingly, Revenue on real estate projects including variations in contract work, claims and incentive payments to the extent that it is probable is recognized on the âpercentage of completion methodâ (POC) of accounting, when:-
i. The outcome of the real estate project can be estimated reliably;
ii. It is probable that the economic benefits associated with the project will flow to the enterprise;
iii. The project costs to complete the project and the stage of project completion at the reporting date can be measured reliably;
iv. The project costs attributable to the project can be clearly identified & measured reliably so that actual project costs incurred can be compared with prior estimates.
The amount of contract revenue may increase or decrease from one period to the next on account of:-
i. Variations or claims contractually agreed that increase or decrease contract revenue in a period subsequent to that in which the contract with customers was initially agreed;
ii. Penalties arising from delays caused by the company in the completion of the contract, where such penalties are reasonably certain. These penalties are accounted for net of any increase/decrease that is due as described under âKâ below; penalties which are not certain/probable are disclosed as contigent liability.
Further, the company recognizes revenue on POC on completion of the following events:-
i. All critical approvals necessary for commencement of the project have been obtained including, wherever applicable:-environmental & other clearances, approval of plans, designs etc., title to land or other rights of development / construction & change in land use.
Ii. The expenditure incurred on construction & development is not less than 25% of the construction and development costs.
iii. At least, 25% of the saleable project area is secured by contracts or agreements with buyers.
iv. At least, 10% of the total revenue as per the agreements of sale or any other legally enforceable document are realized at the reporting date in respect of each of the contracts & it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts.
When it is probable that total costs will exceed total project revenue, the expected loss is recognized as an expense immediately.
B) Construction contracts
a) In construction contracts, income is recognized on percentage of completion method. The stage of completion under the POC method is measured on the basis of percentage that actual costs incurred on construction contracts to the total estimated cost of the contract.
b) Revenue on account of contract variations, claims and incentives are recognized/ adjusted upon settlement or when it becomes reasonably certain that such variations, claims and incentives are both measurable and recoverable/adjustable.
C) Accounting of projects with Co-developer
All the development expenses and sale proceeds booked during the year are transferred to the codeveloper at the year end in proportion to share of actual land pooled by each developer.
D) Sale of land and land development rights
Revenue from sale of land and development rights 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.
E) Sale of construction material
Revenue from sale of construction material is recognized when transfer of significant risk and rewards of such material takes place. Such sale is recognized net of taxes.
F) Sale of investment
Net sale proceeds of the investments held in subsidiaries, joint ventures and associates developing real estate projects are included in real estate revenue and is recognized on completion of sale of such investment.
G) Revenue from lease rentals and related income
Lease income is recognized in the statement of profit and loss on straight line basis over the lease term unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rental is disclosed net of indirect taxes, if any.
H) Consultancy income
Consultancy income is recognized on accrual basis based on contractual terms on the performance of such services. Revenue is recognized proportionately by reference to the performance of acts defined contractually. The revenue recognized is determined on the basis of contract value, associated costs, number of acts or other suitable basis.
I) Interest income
Interest income is recognized only when no significant uncertainty as to measurability or collectability exists. Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
J) Dividend income
Dividend income is recognized when the right to receive the same is established.
K) Income from interest on delayed payment by customers
The revenue on account of interest on delayed payment by customers is accounted for at the time of acceptance / settlement with customers due to uncertainties with regard to determination of amount receivable until then.
xiii. foreign currency transactions
These financial statements are presented in Indian âs (INR) which is the companyâs functional currency. A foreign currency transaction is recorded, on initial recognition 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.
Monetary items denominated in a foreign currency are reported using the closing rate or at the amount which is likely to be realized from, or required to disburse such items at the balance sheet date as the situation demands.
Non-monetary items carried in term of historical cost denominated in foreign currency, are reported using exchange rate at the date of transaction.
Exchange differences arising on the settlement of monetary items or on reporting an enterpriseâs monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, are recognized as income or as expenses in the period in which they arise.
Exchange differences arising on reporting of long term monetary assets at rates different from those at which they were initially reported during the period or previous periods in so far they relate to the acquisition of depreciable capital asset is added to or deducted from the cost of assets.
The financial statement of an integral operation is translated using the above principle and procedures. In translating the financial statement of a non-integral foreign operation for incorporation in its financial statement, the following principles and procedures are followed:
(a) the assets and liabilities, both monetary and nonmonetary, of the non-integral foreign operation are translated at the closing rate.
(b) Income and expense items of the non-integral foreign operation are translated at exchange rates at the date of the transactions.
(c) All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.
xiv. taxes on income
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws that are enacted or substantially enacted.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each balance sheet date the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
XV. EMPLOYEE BENEFITS
A. Short term employee benefits:
The company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees as
(i) a liability (accrued expense) after deducting any amount already paid. Excess of amounts paid over liability incurred is treated as prepaid expenses; or
(ii) an expense unless it is eligible to be charged to project in progress or capital work in progress or fixed asset as the case may be.
B. Post-employment benefits:
i) Defined contribution plans
The company, as per detail hereunder, operates defined contribution plans pertaining to employees state insurance scheme, government administered pension fund scheme, provident fund plan and superannuation scheme for eligible employees.
The above defined contribution plans are postemployment benefit plans under which the company pays fixed contributions into separate entities (funds) or to financial institutions or state managed benefit schemes. The companyâs contribution to defined contribution plans are recognized in the statement of profit and loss in the financial year to which they relate.
(a) Employees state insurance/ pension fund scheme:
The company makes specified monthly contribution towards employees state insurance scheme and government administrated pension fund scheme.
(b) Provident fund plan
The Company makes specified monthly contributions towards employee provident fund registered with Regional Provident Fund Commissioner.
(c) Superannuation insurance plan:
The company has taken group superannuation policy with Life Insurance Corporation of India for superannuation payable to the eligible employees.
ii) Defined benefit obligations
The cost of providing benefits i.e. gratuity and leave encashment is determined using the projected unit credit method, with actuarial valuations carried out annually as at the balance sheet date. Actuarial gains and losses are recognized immediately in the statement of profit and loss. The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on net basis. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.
XVI. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized in respect of liabilities which can be measured only by using a substantial degree of estimates when
a) the company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits will be required to settle the obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.
Contingent liability is disclosed in the case of:
a) a present obligation arising from a past event, when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
b) a possible obligation, that arises out of past events and the existence of which will be confirmed only by one or more uncertain future events unless the probability of outflow of resources is remote.
Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
XVII. CASH & CASH EQUIVALENTS
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less. Cash flow statement is prepared using the indirect method.
XVIII. EARNING PER SHARE
Basic earning per share is 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. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue, a share split and share warrants conversion.
Diluted earnings per share is calculated by adjusting net profit or loss for the period attributable to equity shareholders and the weighted number of shares outstanding during the period for the effect of all dilutive potential equity shares.
Further where the statement of profit and loss includes extraordinary items, the company discloses basic and diluted earnings per share computed on the basis of earnings excluding extraordinary items (net of tax expenses).
XIX. EXTRAORDINARY ITEM
Extraordinary item comprises event or transaction that is clearly distinct from the ordinary activities of the company and is determined by the nature of the event or transaction in relation to the business ordinarily carried on by the company. Such items are disclosed in the statement of profit and loss as a part of net profit or loss for the period in a manner that its impact on current profit or loss is perceived.
xx. FAIR VALUE MEASUREMENT
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
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: Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level
Input that is significant to the fair value measurement is directly or indirectly observable
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets & liabilities on the basis of the nature, characteristics and the risks of the asset or liability and the level of the fair value hierarchy as explained above.
XXI. FINANCIAL INSTRUMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets includes Trade receivable, loan to body corporate, loan to employees, security deposits and other eligible current and non-current assets.
Financial liabilities includes Loans, trade payable and eligible current and non-current liabilities.
i. Transitional Provisions in opening balance sheet per Ind AS 101:-
The Company designates a previously recognised financial asset/financial liability as a financial asset/ financial liability measured at fair value on the basis of the facts and circumstances that exist at the date of transition to Ind ASs.
The Company designate an investment in an equity instrument other than investment in subsidiary, associates and Joint venture as at fair value through other comprehensive income on the basis of the facts and circumstances that exist at the date of transition to Ind ASs.
The Company has assessed whether a financial asset meets the conditions w.r.t classification criteria on the basis of the facts and circumstances that exist at the date of transition to Ind ASs, practically feasible.
ii. Classification:-
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
- the entityâs business model for managing the financial assets and
- the contractual cash flow characteristics of the financial asset.
A financial asset is measured at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial assets 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.
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
- the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or fair value through profit or loss.
iii. Initial recognition and measurement:-
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value at initial recognition, plus or minus, any transaction cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss.
iv. Financial assets subsequent measurement:-
Financial assets are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) as the case may be.
Financial liabilities are subsequently measured at amortised cost or fair value through profit or loss.
v. Effective interest method :-
The effective interest method is a method of calculating the amortised cost of a debt instrument and allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the âOther incomeâ line item.
vi. Trade Receivables:-
Trade receivables are the contractual right to receive cash or other financial assets and recognized initially at fair value. Subsequently measured at amortised cost (Initial fair value less expected credit loss). Expected credit loss is the difference between all contractual cash flows that are due to the company and all that the company expects to receive (i.e. all cash shortfall), discounted at the effective interest rate.
vii. Equity investments:-
All equity investments in scope of Ind AS 109 are measured at fair value other than investment in subsidiary, Associates and Joint venture. For all other equity instruments, the company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument by- instrument basis
viii. 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 an insignificant risk of changes in value.
ix. 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 12-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 recognised is recognized as an impairment gain or loss in profit or loss.
x. Financial liabilities:-
Financial liabilities are recognized initially at fair value less any directly attributable transaction costs. These are subsequently carried at amortized cost using the effective interest method or fair value through profit or loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments
xi. Trade payables :-
Trade payables represent liabilities for goods and services provided to the Company prior to the end of financial year and which are unpaid. Trade payables are presented as current liabilities unless payment is not due within 12 months after the reporting period or not paid/payable within operating cycle. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
xii. Borrowings:-
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the company does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
xiii. Equity Instruments:-
An equity instrument is any contract that evidences a residual interest in the assets of company after deducting all of its liabilities. Equity instruments are recognised at the proceeds received, net of direct issue costs.
xiv. Derecognition of financial instrument:-
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 derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the companyâs balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
xv. 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 recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously
xvi. Financial guarantee:-
Financial guarantee contracts issued by the entities are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined asper impairment requirements of Ind AS 109 and the amount recognised less cumulative amortization.
xvii. Derivative Financial Instruments:-
Derivatives are initially recognised at fair value at the date the derivative contracts are entered and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of hedging relationship and the nature of the hedged item.
Mar 31, 2015
I. NATURE OF OPERATIONS
Unitech Limited ('the Company') was incorporated in 1971 and is a
leading real estate developer in India. The Company's main line of
business is real estate development and related activities including
construction and consultancy services.
II. BASIS OF PREPARATION
The financial statements have been prepared under historical cost
convention on an accrual basis in accordance with the requirements of
schedule III and accounting standards prescribed in section 133 of the
Companies Act,2013 ('the Act') read with the Rule 7 of the Companies (
Accounts) Rules, 2014 as amended from time to time and the provisions
of "the Act" to the extent notified.
All assets and liabilities have been classified as current or
non-current as per the operating cycle of the Company as per the
guidance set out in the Schedule III to the Companies Act, 2013.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the result of operations during the reporting period.
Although these estimates are based upon management's best knowledge of
current events and actions, actual results could differ from these
estimates. Significant estimates used by the management in the
preparation of these financial statements include project revenue,
project cost, saleable area, economic useful lives of fixed assets,
accrual of allowance for bad and doubtful receivables, loans and
advances and current and deferred taxes. Any revision to accounting
estimates is recognized prospectively in accordance with applicable
Accounting Standards.
IV. FIXED ASSETS AND DEPRECIATION
Fixed assets including capital work in progress are stated at cost
(gross block) less accumulated depreciation and impairment losses, if
any. Cost comprises, the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use. It
excludes refundable taxes. Borrowing costs relating to acquisition of
fixed assets 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. Depreciation on fixed
assets is provided based on useful lives of the assets assigned to each
asset in accordance with Schedule II of the Companies Act, 2013 on
straight-line method.
Fixtures and lease hold improvements installed in leased buildings are
amortized over the initial period of lease.
As on the commencement of Schedule II of the Companies Act, 2013 on 1st
April, 2014, the carrying amount of the assets outstanding as on that
date: (a) has been depreciated over the remaining useful life of the
assets either as per this schedule or revised rates as explained above;
(b) after retaining the residual value, has been recognized/ adjusted in
the retained earnings where useful life of the assets is NIL.
V. INTANGIBLES AND AMORTIZATION
Intangible assets are recognized when it is probable that future
economic benefits that are attributable to asset will flow to the
Company and the cost of the asset can be measured reliably.
Intangible assets (acquired or developed in house) 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. Internally generated intangible
assets, excluding capitalized development costs which meet
capitalization criteria, are not capitalized and expenditure is
reflected in the statement of profit and loss in the year in which the
expenditure is incurred.
Cost of software is amortized over a period of 5 years, being the
estimated useful life as per the management estimates
VI. IMPAIRMENT OF ASSETS
Management at each balance sheet date assesses using external and
internal sources whether there is an indication that an asset or group
of assets or a cash generating unit as the case may be impaired.
Impairment occurs where the carrying value exceeds the higher of value
in use represented by the present value of future cash flows expected
to arise from the continuing use of the asset and its realizable value.
The impairment loss is charged off to Statement of Profit and Loss .
VII. LEASE Accounting
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased asset,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are recognized as borrowing costs in the
Statement of Profit and Loss.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term unless there is a more systematic basis which is more
representative of the time pattern of the lease expenses.
VIII. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current investments are stated at the lower of cost and fair value.
IX. INVENTORIES
a) The cost of inventories comprises all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Inventories are valued at cost or
net realizable value, whichever is lower on the basis of first in first
out method or specific identification, as the case may be.
b) Finished stock of completed real estate projects, land and land
development rights are valued at lower of cost or net realizable value
on the basis of actual identified units.
X. PROJECTS IN PROGRESS
Project in progress disclosed as at reporting date in respect of real
estate development and related activities includes aggregate amount of
project costs and recognized profit (less recognized losses) including
unbilled revenue up to the reporting date less advances received from
customers.
Project costs include cost of land, land development rights,
construction costs, job work, allocated borrowing costs and other
incidental costs that are attributable to project and such other costs
as are specifically chargeable to the customer being costs incurred
upto the reporting date.
Project contract costs that relate to future activity on the contract
are recognised as project in progress as it is probable that these
costs will be recovered in future.
XI. BORROWING COST
Borrowing cost relating to acquisition/construction development of
qualifying assets of the Company are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use/sale. Borrowing cost that are attributable to the project
in progress and qualifying land advances as well as any capital work in
progress are charged to respective qualifying asset. All other
borrowing costs, not eligible for inventorisation/capitalization, are
charged to Statement of Profit and Loss.
XII. REVENUE RECOGNITION
A) Real estate projects
Revenue from real estate under development/sale of developed property
is recognized upon transfer of all significant risks and rewards of
ownership of such real estate/ property, as per the terms of the
contracts entered into with buyers, which generally coincides with the
firming of the sales contracts/ agreements, except for contracts where
the Company still has obligations to perform substantial acts even
after the transfer of all significant risks and rewards. Accordingly,
revenue is recognized on the following basis:-
a) Real estate projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of
plots/constructed properties, subject to final adjustment, on the
completion of the respective project.
b) Real estate projects undertaken on and after 1st April, 2004.
Revenue from real estate projects is recognized on the 'percentage of
completion method' (POC) of accounting.
Revenue under the POC method is recognized on the basis of percentage
of actual costs incurred including construction and development cost of
projects under execution and proportionate land subject to such actual
cost incurred being twenty percent or more of the total estimated cost
of projects.
The stage of completion under the POC method is measured on the basis
of percentage that actual costs incurred on real estate projects
including construction and development cost and proportionate land
bears to the total estimated cost of the project. The estimates
including those of technical nature in respect of the projected
revenues, projected profits, projected costs, cost to completion and
the foreseeable loss are reviewed periodically by the management and
any effect of changes in estimates is recognized in the period such
changes are determined. Revenue including variations in contract work,
claims and incentive payments to the extent that it is probable is
recognized by reference to the stage of completion as explained above
attributed to the work completed during the year.
c) Real estate projects which have commenced on or after April 1, 2012
and also to projects which have already commenced but where revenue is
being recognized for the first time on or after April 1,2012.
Revenue from real estate projects is recognized when all significant
risks & rewards of ownership by way of a legally enforceable agreement
to sale have been transferred to the buyer & subject to the
satisfaction of contractual conditions mentioned herein after which
signify transferring of significant risks & rewards even though the
legal title may not be transferred or the possession of the real estate
may not be given to the buyer. Consequently, any act on the real estate
project performed by the Company is, in substance on behalf of the
buyer in the manner similar to a contractor.
Accordingly, Revenue on real estate projects including variations in
contract work, claims and incentive payments to the extent that it is
probable is recognized on the 'percentage of completion method' (POC)
of accounting, when:-
i. The outcome of the real estate project can be estimated reliably;
ii. It is probable that the economic benefits associated with the
project will flow to the enterprise;
iii. The project costs to complete the project and the stage of project
completion at the reporting date can be measured reliably;
iv. The project costs attributable to the project can be clearly
identified & measured reliably so that actual project costs incurred
can be compared with prior estimates.
Further, the Company recognizes revenue on POC on completion of the
following events:-
I. All critical approvals necessary for commencement of the project
have been obtained including, wherever applicable Environmental & other
clearances, approval of plans, designs etc., title to land or other
rights of development / construction & change in land use.
II. The expenditure incurred on construction & development is not less
than 25% of the construction and development costs.
III. At least, 25% of the saleable project area is secured by contracts
or agreements with buyers.
IV. At least, 10% of the total revenue as per the agreements of sale
or any other legally enforceable document are realized at the reporting
date in respect of each of the contracts & it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
When it is probable that total costs will exceed total project revenue,
the expected loss is recognized as an expense immediately.
B) Construction contracts
a) In construction contracts, income is recognized on percentage of
completion method. The stage of completion under the POC method is
measured on the basis of percentage that actual costs incurred on
construction contracts to the total estimated cost of the contract.
b) Revenue on account of contract variations, claims and incentives are
recognized/ adjusted upon settlement or when it becomes reasonably
certain that such variations, claims and incentives are both measurable
and recoverable/adjustable.
C) Accounting of projects with Co-developer
All the development expenses and sale proceeds booked during the year
are transferred to the co-developer at the year end in proportion to
share of actual land pooled by each developer.
D) Sale of land and Land Development Rights
Revenue from sale of land and development rights 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.
E) Sale of construction material
Revenue from sale of construction material is recognized when transfer
of significant risk and rewards of such material takes place. Such sale
is recognized net of taxes.
F) Sale of investment
Net sale proceeds of the investments held in subsidiaries, joint
ventures and associates developing real estate projects are included in
real estate revenue and is recognized on completion of sale of such
investment.
G) Revenue from lease rentals and related income
Lease income is recognized in the Statement of Profit and Loss on
straight line basis over the lease term unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
H) Consultancy income
Consultancy income is recognized on accrual basis based on contractual
terms on the performance of such services. Revenue is recognized
proportionately by reference to the performance of acts defined
contractually. The revenue recognized is determined on the basis of
contract value, associated costs, number of acts or other suitable
basis.
I) Interest income
Interest income is recognized only when no significant uncertainty as
to measurability or collectability exists. Income is recognized on a
time proportion basis taking into account the amount outstanding and
the rate applicable.
J) Dividend income
Dividend income is recognized when the right to receive the same is
established.
XIII. FOREIGN CURRENCY TRANSACTIONS
A foreign currency transaction is recorded, on initial recognition 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.
Monetary items denominated in a foreign currency are reported using the
closing rate or at the amount which is likely to be realized from, or
required to disburse such items at the balance sheet date as the
situation demands.
Non-monetary items carried in term of historical cost denominated in
foreign currency, are reported using exchange rate at the date of
transaction.
Exchange differences arising on the settlement of monetary items or on
reporting an enterprise's monetary items at rates different from those
at which they were initially recorded during the period, or reported in
previous financial statements, are recognized as income or as expenses
in the period in which they arise.
Exchange differences arising on reporting of long term monetary assets
at rates different from those at which they were initially reported
during the period or previous periods in so far they relate to the
acquisition of depreciable capital asset is added to or deducted from
the cost of assets.
The financial statement of an integral operation is translated using
the above principle and procedures. In translating the financial
statement of a non-integral foreign operation for incorporation in its
financial statement, the following principles and procedures are
followed:
(a) the assets and liabilities, both monetary and non- monetary, of the
non-integral foreign operation are translated at the closing rate.
(b) Income and expense items of the non-integral foreign operation are
translated at exchange rates at the date of the transactions.
(c) All resulting exchange differences are accumulated in a foreign
currency translation reserve until the disposal of the net investment.
XIV. TAXES ON INCOME
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws that are
enacted or substantially enacted.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets, subject to consideration of prudence, are
recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year-end based on the tax rates and laws enacted or substantially
enacted on the balance sheet date. In situations where the Company has
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable
profits. At each balance sheet date the Company re-assesses
unrecognized deferred tax assets. It recognizes unrecognized deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be
realized.
XV. EMPLOYEE BENEFITS
A. Short term employee benefits:
The Company recognizes the undiscounted amount of short term employee
benefits expected to be paid in exchange for services rendered by
employees as
(i) a liability (accrued expense) after deducting any amount already
paid. Excess of amounts paid over liability incurred is treated as
prepaid expenses; or
(ii) an expense unless it is eligible to be charged to project in
progress or capital work in progress or fixed asset as the case may be.
B. Post-employment benefits:
(i) Defined contribution plans
The Company, as per detail hereunder, operates defined contribution
plans pertaining to employees state insurance scheme, government
administered pension fund scheme and superannuation scheme for eligible
employees.
The above defined contribution plans are post- employment benefit plans
under which the Company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The Company's contribution to defined contribution plans are recognized
in the statement of profit and loss in the financial year to which they
relate.
(a) Employees state insurance/ pension fund scheme:
The Company makes specified monthly contribution towards employees
state insurance scheme and government administrated pension fund scheme
(b) Superannuation insurance plan:
The Company has taken group superannuation policy with Life Insurance
Corporation of India for superannuation payable to the eligible
employees.
ii) Defined benefit obligations
The cost of providing benefits i.e. gratuity and leave encashment is
determined using the projected unit credit method, with actuarial
valuations carried out annually as at the balance sheet date. Actuarial
gains and losses are recognized immediately in the statement of profit
and loss. The fair value of the plan assets is reduced from the gross
obligation under the defined benefit plan, to recognize the obligation
on net basis. Past service cost is recognized as expense on a
straight-line basis over the average period until the benefits become
vested.
Provident fund contributions are made to the Company's Provident Fund
Trust or Regional Provident Fund Commissioner, Delhi (South), as the
case may be. Deficits, if any, based on the actuarial valuation
performed on balance sheet date between the funds and estimated
statutory or contractual obligation for funds contributed to the trust
in this regard is recognized as additional liability.
XVI. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized in respect of liabilities which can be
measured only by using a substantial degree of estimates when:
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits will be
required to settle the obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent liability is disclosed in the case of:
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation;
b) a possible obligation, that arises out of past events and the
existence of which will be confirmed only by one or more uncertain
future events unless the probability of outflow of resources is remote.
Contingent assets are neither recognized nor disclosed. However, when
realization of income is virtually certain, related asset is
recognized.
XVII. CASH & CASH EQUIVALENTS
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less. Cash flow statement is
prepared using the indirect method.
xviii.earning per share
Basic earning per share is 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. The
weighted average numbers of equity shares outstanding during the period
are adjusted for events of bonus issue, a share split and share
warrants conversion.
Diluted earnings per share is calculated by adjusting net profit or
loss for the period attributable to equity shareholders and the
weighted number of shares outstanding during the period for the effect
of all dilutive potential equity shares.
Further where the statement of profit and loss includes extraordinary
items (within the meaning of AS 5, net profit and loss for the period,
prior period items and changes in accounting policies), the Company
discloses basic and diluted earnings per share computed on the basis of
earnings excluding extraordinary items (net of tax expenses).
XIX. EXTRAORDINARY ITEM
Extraordinary item comprises event or transaction that is clearly
distinct from the ordinary activities of the Company and is determined
by the nature of the event or transaction in relation to the business
ordinarily carried on by the Company. Such items are disclosed in the
statement of profit and loss as a part of net profit or loss for the
period in a manner that its impact on current profit or loss is
perceived.
Mar 31, 2014
I. NATURE OF OPERATIONS
Unitech Limited (''the company'') was incorporated in 1971 and is a
leading real estate developer in India. The company''s main line of
business is real estate development and related activities including
construction and consultancy services.
II. BASIS OF PREPRATION
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by Companies Accounting
Standards Rules, 2006 as amended from time to time and the relevant
provisions of the Companies Act, 1956 (''The Act'') read with the General
Circular 15/2013 dated 13 September 2013 and 8/2014 dated 4th April
2014 of the Ministry of Corporate Affairs in respect of section 133 of
the Companies Act, 2013. The financial statements have been prepared in
accordance with revised Schedule VI requirements including previous
year comparatives. The financial statements have been prepared under
historical cost convention on an accrual basis in accordance with
accounting principles generally accepted in India. The accounting
policies have been consistently applied by the company and are
consistent with those used in previous year.
All assets and liabilities have been classified as current or
non-current, wherever applicable as per the operating cycle of the
Company as per the guidance as set out in the Revised Schedule VI to
the Companies Act, 1956.
Companies Act 2013 has made certain provision therein effected from 12
September 2013 and certain other provisions have become effective only
from 1 April 2014. Pursuant to General circular 08/2014 dated 4 April
2014, financial statements, Auditor''s report and Board''s report in
respect of current financial year ended 31 March 2014 of the company,
shall be governed by the relevant provisions/ Schedules/rules of the
Companies Act 1956.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the result of operations during the reporting period.
Although these estimates are based upon management''s best knowledge of
current events and actions, actual results could differ from these
estimates. Significant estimates used by the management in the
preparation of these financial statements include project revenue,
project cost, saleable area, economic useful lives of fixed assets,
accrual of allowance for bad and doubtful receivables, loans and
advances and current and deferred taxes. Any revision to accounting
estimates is recognized prospectively in accordance with applicable
Accounting Standards.
IV. FIXED ASSETS AND DEPRECIATION
Fixed assets including capital work in progress are stated at cost
(gross block) less accumulated depreciation and impairment losses, if
any. Cost comprises, the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use. It
excludes refundable taxes. Borrowing costs relating to acquisition of
fixed assets 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. Depreciation on fixed
assets is provided at the rates and in the manner prescribed in
Schedule XIV of the Companies Act, 1956 on straight-line method. These
rates in the opinion of the management reflect the economic useful life
of the assets.
Fixtures and lease hold improvements installed in leased buildings are
amortized over the initial period of lease.
V. INTANGIBLES AND AMORTIZATION
Intangible assets are recognized when it is probable that future
economic benefits that are attributable to asset will flow to the
company and the cost of the asset can be measured reliably.
Intangible assets (acquired or developed in house) 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. Internally generated intangible
assets, excluding capitalized development costs which meet
capitalization criteria, are not capitalized and expenditure is
reflected in the statement of profit and loss in the year in which the
expenditure is incurred.
Cost of software is amortized over a period of 5 years, being the
estimated useful life as per the management estimates.
VI. IMPAIRMENT OF ASSETS
Management at each balance sheet date assesses using external and
internal sources whether there is an indication that an asset or group
of assets or a cash generating unit as the case may be impaired.
Impairment occurs where the carrying value exceeds the higher of value
in use represented by the present value of future cash flows expected
to arise from the continuing use of the asset and its realizable value.
The impairment loss is charged off to statement of profit and loss .
VII. LEASE ACCOUNTING
Finance leases, which effectively transfer to the company substantially
all the risks and benefits incidental to ownership of the leased asset,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are recognized as borrowing costs in the
statement of profit and loss.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term unless there is a more systematic basis which is more
representative of the time pattern of the lease expenses.
VIII. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current investments are stated at the lower of cost and fair value.
Ix. INVENTORIES
a) The cost of inventories comprises all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Inventories are valued at cost or
net realizable value, whichever is lower on the basis of first in first
out method.
b) Finished stock of completed real estate projects, land and land
development rights are valued at lower of cost or net realizable value
on the basis of actual identified units.
X. PROJECTS IN PROGRESS
Project in progress disclosed as at reporting date in respect of real
estate development and related activities includes aggregate amount of
costs and recognized profitless recognized losses) up to the reporting
date less advances received from customers.
Project Costs include cost of land, land development rights,
construction costs, job work, allocated borrowing costs and other
incidental costs that are attributable to project and such other costs
as are specifically chargeable to the customer being costs incurred
upto the reporting date.
Project contract costs that relate to future activity on the contract
are recognised as project in progress as it is probable that these
costs will be recovered in future.
XI. BORROWING COST
Borrowing cost relating to acquisition/construction development of
qualifying assets of the company are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use/sale. Borrowing cost that are attributable to the project
in progress and qualifying land advances as well as any capital work in
progress are charged to respective qualifying asset . All other
borrowing costs, not eligible for inventorisation /capitalization, are
charged to revenue.
XII. REVENUE RECOGNITION
A) Real Estate Projects
Revenue from real estate under development/sale of developed property
is recognized upon transfer of all significant risks and rewards of
ownership of such real estate/ property, as per the terms of the
contracts entered into with buyers, which generally coincides with the
firming of the sales contracts/ agreements, except for contracts where
the company still has obligations to perform substantial acts even
after the transfer of all significant risks and rewards.
Accordingly, revenue is recognized on the following basis.
a) Real estate projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of
plots/constructed properties, subject to final adjustment, on the
completion of the respective project.
b) Real estate projects undertaken on and after 1st April, 2004.
Revenue from real estate projects is recognized on the ''percentage of
completion method'' (POC) of accounting.
Revenue under the POC method is recognized on the basis of percentage
of actual costs incurred including construction and development cost of
projects under execution and proportionate land subject to such actual
cost incurred being twenty percent or more of the total estimated cost
of projects.
The stage of completion under the POC method is measured on the basis
of percentage that actual costs incurred on real estate projects
including construction and development cost and proportionate land
bears to the total estimated cost of the project. The estimates
including those of technical nature in respect of the projected
revenues, projected profits, projected costs, cost to completion and
the foreseeable loss are reviewed periodically by the management and
any effect of changes in estimates is recognized in the period such
changes are determined. Revenue including variations in contract work,
claims and incentive payments to the extent that it is probable is
recognized by reference to the stage of completion as explained above
attributed to the work completed during the year.
c) Real estate projects which have commenced on or after April 1, 2012
and also to projects which have already commenced but where revenue is
being recognized for the first time on or after April 1, 2012.
Revenue from real estate projects is recognized when all significant
risks & rewards of ownership by way of a legally enforceable agreement
to sale have been transferred to the buyer & subject to the
satisfaction of contractual conditions mentioned herein after which
signify transferring of significant risks & rewards even though the
legal title may not be transferred or the possession of the real estate
may not be given to the buyer. Consequently, any act on the real estate
project performed by the company is, in substance on behalf of the
buyer in the manner similar to a contractor.
Accordingly, Revenue on real estate projects including variations in
contract work, claims and incentive payments to the extent that it is
probable is recognized on the ''percentage of completion method.'' (POC)
of accounting, when:-
i. The outcome of the real estate project can be estimated reliably;
ii. It is probable that the economic benefits associated with the
project will flow to the enterprise;
iii. The project costs to complete the project and the stage of project
completion at the reporting date can be measured reliably;
iv. The project costs attributable to the project can be clearly
identified & measured reliably so that actual project costs incurred
can be compared with prior estimates.
Further, the company recognizes revenue on POC on completion of the
following events:-
i. All critical approvals necessary for commencement of the project
have been obtained including, wherever applicable:- Environmental &
other clearances, approval of plans, designs etc., title to land or
other rights of development / construction & change in land use.
ii. The expenditure incurred on construction & development is not less
than 25% of the construction and development costs.
iii. At least, 25% of the saleable project area is secured by contracts
or agreements with buyers.
iv. At least, 10% of the total revenue as per the agreements of sale
or any other legally enforceable document are realized at the reporting
date in respect of each of the contracts & it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
When it is probable that total costs will exceed total project revenue,
the expected loss is recognized as an expense immediately.
B) Construction contracts
a) In construction contracts, income is recognized on percentage of
completion method. The stage of completion under the POC method is
measured on the basis of percentage that actual costs incurred on
construction contracts to the total estimated cost of the contract.
b) Revenue on account of contract variations, claims and incentives are
recognized/ adjusted upon settlement or when it becomes reasonably
certain that such variations, claims and incentives are both measurable
and recoverable/adjustable.
C) Sale of land and land development rights
Revenue from sale of land and development rights 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.
D) Sale of investment
Net sale proceeds of the investments held in subsidiaries, joint
ventures and associates developing real estate projects are included in
real estate revenue and is recognized on completion of sale of such
investment.
E) Revenue from lease rentals and related income
Lease income is recognized in the statement of profit and loss on
straight line basis over the lease term unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any
F) Consultancy income
Consultancy income is recognized on accrual basis based on contractual
terms on the performance of such services. Revenue is recognized
proportionately by reference to the performance of acts defined
contractually. The revenue recognized is determined on the basis of
contract value, associated costs, number of acts or other suitable
basis.
G) Interest income
Interest income is recognized only when no significant uncertainty as
to measurability or collectability exists. Income is recognized on a
time proportion basis taking into account the amount outstanding and
the rate applicable.
H) Dividend Income
Dividend income is recognized when the right to receive the same is
established.
XIII. FOREIGN CURRENCY TRANSACTIONS
A foreign currency transaction is recorded, on initial recognition 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.
Monetary items denominated in a foreign currency are reported using the
closing rate or at the amount which is likely to be realized from, or
required to disburse such items at the balance sheet date as the
situation demands.
Non-monetary items carried in term of historical cost denominated in
foreign currency, are reported using exchange rate at the date of
transaction.
Exchange differences arising on the settlement of monetary items or on
reporting an enterprise''s monetary items at rates different from those
at which they were initially recorded during the period, or reported in
previous financial statements, are recognized as income or as expenses
in the period in which they arise.
Exchange differences arising on reporting of long term monetary assets
at rates different from those at which they were initially reported
during the period or previous periods in so far they relate to the
acquisition of depreciable capital asset is added to or deducted from
the cost of assets.
The financial statement of an integral operation is translated using
the above principle and procedures. In translating the financial
statement of a non-integral foreign operation for incorporation in its
financial statement, the following principles and procedures are
followed:
(a) the assets and liabilities, both monetary and non- monetary, of the
non-integral foreign operation are translated at the closing rate.
(b) Income and expense items of the non-integral foreign operation are
translated at exchange rates at the date of the transactions.
(c) All resulting exchange differences are accumulated in a foreign
currency translation reserve until the disposal of the net investment.
XIV. TAxES ON INCOME
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws that are
enacted or substantially enacted.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets, subject to consideration of prudence, are
recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year-end based on the tax rates and laws enacted or substantially
enacted on the balance sheet date. In situations where the company has
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable
profits. At each balance sheet date the Company re-assesses
unrecognized deferred tax assets. It recognizes unrecognized deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be
realized.
XV. EMPLOYEE BENEFITS
A. Short term employee benefits:
The company recognizes the undiscounted amount of short term employee
benefits expected to be paid in exchange for services rendered by
employees as
(i) a liability (accrued expense) after deducting any amount already
paid. Excess of amounts paid over liability incurred is treated as
prepaid expenses; or
(ii) an expense unless it is eligible to be charged to project in
progress or capital work in progress or fixed asset as the case may be.
B. Post-employment benefits:
(i) Defined contribution plans
The company, as per detail hereunder, operates defined contribution
plans pertaining to employees state insurance scheme, government
administered pension fund scheme and superannuation scheme for eligible
employees.
The above defined contribution plans are post- employment benefit plans
under which the company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The company''s contribution to defined contribution plans are recognized
in the statement of profit and loss in the financial year to which they
relate.
(a) Employees state insurance/ pension fund scheme:
The company makes specified monthly contribution towards employees
state insurance scheme and government administrated pension fund scheme
(b) Superannuation insurance plan:
The company has taken group superannuation policy with Life Insurance
Corporation of India for superannuation payable to the eligible
employees.
ii) Defined benefit obligations
The cost of providing benefits i.e. gratuity and leave encashment is
determined using the projected unit credit method, with actuarial
valuations carried out annually as at the balance sheet date. Actuarial
gains and losses are recognized immediately in the statement of profit
and loss. The fair value of the plan assets is reduced from the gross
obligation under the defined benefit plan, to recognize the obligation
on net basis. Past service cost is recognized as expense on a
straight-line basis over the average period until the benefits become
vested.
Provident fund contributions are made to the company''s provident fund
trust. Deficits, if any, based on the actuarial valuation performed on
balance sheet date between the funds and estimated statutory or
contractual obligation in this regard is recognized as additional
liability.
XVI. PROVISIONS, CONTINGENT LIABILITIES ANDCONTINGENT ASSETS
Provisions are recognized in respect of liabilities which can be
measured only by using a substantial degree of estimates when
a) the company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits will be
required to settle the obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent liability is disclosed in the case of:
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation;
b) a possible obligation, that arises out of past events and the
existence of which will be confirmed only by one or more uncertain
future events unless the probability of outflow of resources is remote.
Contingent assets are neither recognized nor disclosed. However, when
realization of income is virtually certain, related asset is
recognized.
XVII. CASH & CASH EQUIVALENTS
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less. Cash flow statement is
prepared using the indirect method.
XVIII.EARNING PER SHARE
Basic earning per share is 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. The
weighted average numbers of equity shares outstanding during the period
are adjusted for events of bonus issue, a share split and share
warrants conversion.
Diluted earnings per share is calculated by adjusting net profit or
loss for the period attributable to equity shareholders and the
weighted number of shares outstanding during the period for the effect
of all dilutive potential equity shares.
Further where the statement of profit and loss includes extraordinary
items (within the meaning of AS 5, net profit and loss for the period,
prior period items and changes in accounting policies), the company
discloses basic and diluted earnings per share computed on the basis of
earnings excluding extraordinary items (net of tax expenses).
Mar 31, 2013
I. NATURE OF OPERATIONS
Unitech Limited (''the Company'') was incorporated in 1971 and is a
leading real estate developer in India. The Company''s main line of
business is real estate development and related activities including
construction and consultancy services.
II. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the notified Accounting Standards by the Companies
(Accounting Standards) Rules, 2006 as amended from time to time and the
relevant provisions of the Companies Act, 1956 (''The Act''). The
financial statements have been prepared in accordance with Revised
Schedule VI requirements including previous year comparatives. The
financial statements have been prepared under historical cost
convention on an accrual basis in accordance with accounting principles
generally accepted in India. The accounting policies have been
consistently applied by the Company and are consistent with those used
in previous year.
All assets and liabilities have been classified as current or non-
current, wherever applicable as per the operating cycle of the Company
as per the guidance note as set out in the Revised Schedule VI to the
Companies Act, 1956.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the result of operations during the reporting period.
Although these estimates are based upon management''s best knowledge of
current events and actions, actual results could differ from these
estimates. Significant estimates used by the management in the
preparation of these financial statements include project revenue,
project cost, saleable area, economic useful lives of fixed assets,
accrual of allowance for bad and doubtful receivables, loans and
advances and current and deferred taxes. Any revision to accounting
estimates is recognized prospectively in accordance with applicable
Accounting Standards.
IV. FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at cost (gross block) less accumulated
depreciation and impairment losses, if any. Cost comprises, the
purchase price and any attributable cost of bringing the asset to its
working condition for its intended use. It excludes refundable taxes.
Borrowing costs relating to acquisition of fixed assets 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. Depreciation on fixed assets is provided at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956 on straight-line method. These rates in the opinion of the
management reflect the economic useful life of the assets.
Fixtures and lease hold improvements installed in leased buildings are
amortized over the initial period of lease.
V. INTANGIBLES AND AMORTIZATION
Intangible assets are recognized when it is probable that future
economic benefits that are attributable to asset will flow to the
Company and the cost of the asset can be measured reliably.
Intangible assets (acquired or developed in house) 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. Internally generated intangible
assets, excluding capitalized development costs which meet
capitalization criteria, are not capitalized and expenditure is
reflected in the Statement of Profit and Loss in the year in which the
expenditure is incurred.
Cost of software is amortized over a period of 5 years, being the
estimated useful life as per the management estimates.
VI. IMPAIRMENT OF ASSETS
Management at each Balance Sheet date assesses using external and
internal sources whether there is an indication that an asset or group
of assets or a cash generating unit as the case may be impaired.
Impairment occurs where the carrying value exceeds the higher of value
in use represented by the present value of future cash flows expected
to arise from the continuing use of the asset and its realizable value.
The impairment loss is charged off to Statement of Profit and Loss.
VII. LEASE ACCOUNTING
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased asset,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are recognized as borrowing costs in the
Statement of Profit and Loss.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight- line basis over the
lease term unless there is a more systematic basis which is more
representative of the time pattern of the lease expenses.
VIII. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current investments are stated at the lower of cost and fair value.
IX. INVENTORIES
a) The cost of inventories comprises all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition. Inventories are valued at cost
or net realizable value, whichever is lower on the basis of first in
first out method.
b) Finished stock of completed real estate projects, land and land
development rights are valued at lower of cost or net realizable value
on the basis of actual identified units.
X. PROJECTS IN PROGRESS
Project in progress disclosed as at reporting date in respect of real
estate development and related activities includes aggregate amount of
costs and recognized profit (less recognized losses) up to the
reporting date less advances received from customers.
Project Costs include cost of land, land development rights,
construction costs, job work, allocated borrowing costs and other
incidental costs that are attributable to project and such other costs
as are specifically chargeable to the customer.
XI. BORROWING COST
Borrowing cost relating to acquisition/construction development of
qualifying assets of the Company are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use/sale. Borrowing cost that are attributable to the projects
in progress and qualifying land advances as well as any capital work in
progress are charged to respective qualifying asset . All other
borrowing costs, not eligible for inventorisation / capitalization, are
charged to revenue.
XII. REVENUE RECOGNITION
A) Real Estate Projects
Revenue from real estate under development/sale of developed property
is recognized upon transfer of all significant risks and rewards of
ownership of such real estate/ property, as per the terms of the
contracts entered into with buyers, which generally coincides with the
firming of the sales contracts/ agreements, except for contracts where
the Company still has obligations to perform substantial acts even
after the transfer of all significant risks and rewards. Accordingly,
revenue is recognized on the following basis:
a) Real estate projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of
plots/constructed properties, subject to final adjustment, on the
completion of the respective project.
b) Real estate projects undertaken on and after 1st April, 2004.
Revenue from real estate projects is recognized on the ''percentage of
completion method'' (POC) of accounting.
Revenue under the POC method is recognized on the basis of percentage
of actual costs incurred including construction and development cost of
projects under execution and proportionate land subject to such actual
cost incurred being twenty percent or more of the total estimated cost
of projects.
The stage of completion under the POC method is measured on the basis
of percentage that actual costs incurred on real estate projects
including construction and development cost and proportionate land
bears to the total estimated cost of the project. The estimates
including those of technical nature in respect of the projected
revenues, projected profits, projected costs, cost of completion and
the foreseeable loss are reviewed periodically by the management and
any effect of changes in estimates is recognized in the period such
changes are determined. Revenue is recognized by reference to the stage
of completion as explained above attributed to the work completed
during the year.
c) Real estate projects which have commenced on or after April 1, 2012
and also to projects which have already commenced but where revenue is
being recognized for the first time on or after April 1, 2012.
Revenue from real estate projects is recognized when all significant
risks & rewards of ownership by way of a legally enforceable agreement
to sale have been transferred to the buyer & subject to the
satisfaction of contractual conditions mentioned herein after which
signify transferring of significant risks & rewards even though the
legal title may not be transferred or the possession of the real estate
may not be given to the buyer. Consequently, any act on the real estate
project performed by the Company is, in substance on behalf of the
buyer in the manner similar to a contractor.
Accordingly, Revenue on real estate projects is recognized on the
''percentage of completion method.'' (POC) of accounting, when:-
i. The outcome of the real estate project can be estimated reliably;
ii. It is probable that the economic benefits associated with the
project will flow to the enterprise;
iii. The project costs to complete the project and the stage of project
completion at the reporting date can be measured reliably;
iv. The project costs attributable to the project can be clearly
identified & measured reliably so that actual project costs incurred
can be compared with prior estimates.
Further, the Company recognizes revenue on (POC) on completion of the
following events:-
i. All critical approvals necessary for commencement of the project
have been obtained including, wherever applicable:- Environmental &
other clearances, approval of plans, designs etc., title to land or
other rights of development / construction & change in land use.
ii. The expenditure incurred on construction & development is not less
than 25% of the construction and development costs.
iii. At least, 25% of the saleable project area is secured by contracts
or agreements with buyers.
iv. At least, 10% of the total revenue as per the agreements of sale
or any other legally enforceable document are realized at the reporting
date in respect of each of the contracts & it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
When it is probable that total costs will exceed total project revenue,
the expected loss is recognized as an expense immediately.
B) Construction contracts
a) In construction contracts, income is recognized on percentage of
completion method. The stage of completion under the POC method is
measured on the basis of percentage that actual costs incurred on
construction contracts to the total estimated cost of the contract.
b) Revenue on account of contract variations, claims and incentives are
recognized upon settlement or when it becomes reasonably certain that
such variations, claims and incentives are both measurable and
recoverable.
C) Sale of land and land development rights
Revenue from sale of land and development rights 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.
D) Sale of investment
Net sale proceeds of the investments held in subsidiaries, joint
ventures and associates developing real estate projects are included in
real estate revenue and is recognized on completion of sale of such
investment.
E) Revenue from lease rentals and related income
Lease income is recognized in the Statement of Profit and Loss on
straight line basis over the lease term unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
F) Consultancy income
Consultancy income is recognized on accrual basis based on contractual
terms on the performance of such services. Revenue is recognized
proportionately by reference to the performance of acts defined
contractually. The revenue recognized is determined on the basis of
contract value, associated costs, number of acts or other suitable
basis.
G) Interest income
Interest income is recognized only when no significant uncertainty as
to measurability or collectability exists. Income is recognized on a
time proportion basis taking into account the amount outstanding and
the rate applicable.
H) Dividend Income
Dividend income is recognized when the right to receive the same is
established.
XIII. FOREIGN CURRENCY TRANSACTIONS
A foreign currency transaction is recorded, on initial recognition 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.
Monetary items denominated in a foreign currency are reported using the
closing rate or at the amount which is likely to be realized from, or
required to disburse such items at the Balance Sheet date as the
situation demands.
Non-monetary items carried in term of historical cost denominated in
foreign currency, are reported using exchange rate at the date of
transaction.
Exchange differences arising on the settlement of monetary items or on
reporting an enterprise''s monetary items at rates different from
those at which they were initially recorded during the period, or
reported in previous financial statements, should be recognized as
income or as expenses in the period in which they arise.
Exchange differences arising on reporting of long term monetary assets
at rates different from those at which they were initially reported
during the period or previous periods in so far they relate to the
acquisition of depreciable capital asset is added to or deducted from
the cost of assets.
The financial statement of an integral operation is translated using
the above principle and procedures. In translating the financial
statement of a non-integral foreign operation for incorporation in its
financial statement, the following principles and procedures are
followed:
(a) The assets and liabilities, both monetary and non- monetary, of the
non-integral foreign operation are translated at the closing rate.
(b) I ncome and expense items of the non-integral foreign operation are
translated at exchange rates at the date of the transactions.
(c) All resulting exchange differences are accumulated in a foreign
currency translation reserve until the disposal of the net investment.
XIV. TAXES ON INCOME
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws that are
enacted or substantially enacted.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets, subject to consideration of prudence, are
recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year- end based on the tax rates and laws enacted or substantially
enacted on the Balance Sheet date. In situations where the Company has
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable
profits. At each Balance Sheet date the Company re-assesses
unrecognized deferred tax assets. It recognizes unrecognized deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be
realized.
XV. EMPLOYEE BENEFITS
A. Short term employee benefits:
The Company recognizes the undiscounted amount of short term employee
benefits expected to be paid in exchange for services rendered by
employees as
(i) a liability (accrued expense) after deducting any amount already
paid. Excess of amounts paid over liability incurred is treated as
prepaid expenses; or
(ii) an expense unless it is eligible to be charged to project in
progress or capital work in progress or fixed asset as the case may be.
B. Post-employment benefits:
(i) Defined contribution plans
The Company, as per detail hereunder, operates defined contribution
plans pertaining to employees state insurance scheme, government
administered pension fund scheme and superannuation scheme for eligible
employees.
The above defined contribution plans are post- employment benefit plans
under which the Company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The Company''s contribution to defined contribution plans are recognized
in the Statement of Profit and Loss in the financial year to which they
relate.
(a) Employees state insurance/ pension fund scheme:
The Company makes specified monthly contribution towards employees
state insurance scheme and government administrated pension fund scheme
(b) Superannuation insurance plan:
The Company has taken group superannuation policy with Life Insurance
Corporation of India for superannuation payable to the eligible
employees.
ii) Defined benefit obligations
The cost of providing benefits i.e. gratuity and leave encashment is
determined using the projected unit credit method, with actuarial
valuations carried out annually as at the Balance Sheet date. Actuarial
gains and losses are recognized immediately in the Statement of Profit
and Loss. The fair value of the plan assets is reduced from the gross
obligation under the defined benefit plan, to recognize the obligation
on net basis. Past service cost is recognized as expense on a
straight-line basis over the average period until the benefits become
vested.
Provident fund contributions are made to the Company''s provident fund
trust. Deficits, if any, based on the actuarial valuation performed on
Balance Sheet date between the funds and estimated statutory or
contractual obligation in this regard is recognized as additional
liability.
XVI. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized in respect of liabilities which can be
measured only by using a substantial degree of estimates when
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits will be
required to settle the obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent liability is disclosed in the case of:
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation;
b) a possible obligation, that arises out of past events and the
existence of which will be confirmed only by one or more uncertain
future events unless the probability of outflow of resources is remote.
Contingent assets are neither recognized nor disclosed. However, when
realization of income is virtually certain, related asset is
recognized.
XVII. CASH & CASH EQUIVALENTS
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less. Cash flow statement is
prepared using the indirect method.
XVIII. EARNINGS PER SHARE
Basic earnings per share is 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. The
weighted average numbers of equity shares outstanding during the period
are adjusted for events of bonus issue, a share split and share
warrants conversion.
Diluted earnings per share is calculated by adjusting net profit or
loss for the period attributable to equity shareholders and the
weighted number of shares outstanding during the period for the effect
of all dilutive potential equity shares.
Further where the Statement of Profit and Loss includes extraordinary
items (within the meaning of AS 5, net profit and loss for the period,
prior period items and changes in accounting policies), the Company
discloses basic and diluted earnings per share computed on the basis of
earnings excluding extraordinary items (net of tax expenses).
Mar 31, 2012
I. NATURE OF OPERATIONS
Unitech Limited (the Company) was incorporated in 1971 and is a leading
real estate developer in India. The Company's main line of business is
real estate development and related activities including construction
and consultancy services.
II. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by Companies Accounting
Standard Rules, 2006 as amended from time to time and the relevant
provisions of the Companies Act, 1956 ('The Act'). The financial
statements have been prepared in accordance with revised Schedule VI
requirements including previous year comparatives. The financial
statements have been prepared under historical cost convention on an
accrual basis in accordance with accounting principles generally
accepted in India. The accounting policies have been consistently
applied by the Company and are consistent with those used in previous
year.
During the year ended 31st March, 2012 the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed by the Company for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the result of operations during the reporting period.
Although these estimates are based upon management's best knowledge of
current events and actions, actual results could differ from these
estimates. Significant estimates used by the management in the
preparation of these financial statements include project revenue,
project cost, saleable area, economic useful lives of fixed assets,
accrual of allowance for bad and doubtful receivables and loans and
advances. Any revision to accounting estimates is recognized
prospectively in accordance with applicable Accounting Standards.
IV. FIXED ASSETS AND DEPRECIATION
Fixed assets are stated at cost (Gross block) less accumulated
depreciation and impairment losses, if any. Cost comprises, the
purchase price and any attributable cost of bringing the asset to its
working condition for its intended use. It excludes refundable taxes.
Borrowing costs relating to acquisition of fixed assets 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. Depreciation on fixed assets held in India is
provided at the rates and in the manner prescribed in Schedule XIV of
the Companies Act, 1956 on straight-line method. These rates in the
opinion of the management reflect the economic useful life of the
assets.
Fixtures and lease hold improvements installed in leased buildings are
amortized over the initial period of lease.
V. INTANGIBLES AND AMORTIZATION
Intangible assets are recognized when it is probable that future
economic benefits that are attributable to asset will flow to the
company and the cost of the asset can be measured reliably.
Intangible assets (acquired or developed in house)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. Internally generated intangible
assets, excluding capitalized development costs which meet
capitalization criteria, are not capitalized and expenditure is refl-
ected in the statement of profit and loss in the year in which the
expenditure is incurred.
Cost of software is amortized over a period of 5 years, being the
estimated useful life as per the management estimates.
VI. IMPAIRMENT OF ASSETS
Management at each balance sheet date assesses using external and
internal sources whether there is an indication that an asset or group
of assets or a cash generating unit as the case may be impaired.
Impairment occurs where the carrying value exceeds the higher of value
in use represented by the present value of future cash flows expected
to arise from the continuing use of the asset and its realizable value.
The impairment loss is charged of to statement of profit and loss .
VII. LEASE ACCOUNTING
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased asset,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are recognized as borrowing costs in the
statement of profit and loss.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term unless there is a more systematic basis which is more
representative of the time pattern of the lease expenses.
VIII. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current Investments are stated at the lower of cost and fair value.
IX. INVENTORIES
a) The cost of inventories should comprise all cost of purchase, cost
of conversion and other costs incurred in bringing the inventories to
their present location and condition.
Inventories are valued at cost or net realisable value, whichever is
lower on the basis of first in first out method.
b) Finished stock of completed real estate projects, land and land
development rights are valued at lower of cost or net realisable value
on the basis of actual identified units.
X. PROJECTS IN PROGRESS
Project in progress disclosed as at reporting date in respect of real
estate development and related activities includes aggregate amount of
costs and recognized profit (less recognized losses) up to the
reporting date less advances received from customers.
Costs generally include cost of land, land development rights,
construction costs, job work, allocated borrowing costs and other costs
that are attributable to project and such other costs as are specifi-
cally chargeable to the customer.
XI. BORROWING COST
Borrowing cost relating to acquisition/ construction/development of
qualifying assets of the company are capitalized until the time all
substantial activities necessary to prepare the qualifying assets for
their intended use are complete. A qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use/sale. Borrowing cost that are attributable to the project
in progress and qualifying land advances as well as any capital work in
progress are charged to respective qualifying asset . All other
borrowing costs, not eligible for inventorisation / capitalization, are
charged to revenue.
XII. REVENUE RECOGNITION
A) Real Estate Projects
Revenue from real estate under development/sale of developed property
is recognized upon transfer of all significant risks and rewards of
ownership of such real estate/ property, as per the terms of the
contracts entered into with buyers, which generally coincides with the
firming of the sales contracts/ agreements, except for contracts where
the Company still has obligations to perform substantial acts even
after the transfer of all significant risks and rewards. Accordingly,
revenue is recognized on the following basis.
a) Real Estate Projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of plots/
constructed properties, subject to final adjustment, on the completion
of the respective project.
b) Real Estate Projects undertaken on and after 1st April, 2004.
Revenue from real estate projects is recognized on the 'Percentage of
Completion method' (POC) of accounting.
Revenue under the POC method is recognized on the basis of percentage
of actual costs incurred including construction
and development cost of projects under execution and proportionate land
subject to such actual cost incurred being twenty percent or more of
the total estimated cost of projects.
The stage of completion under the POC method is measured on the basis
of percentage that actual costs incurred on real estate projects
including construction and development cost and proportionate land
bears to the total estimated cost of the project. The estimates
including those of technical nature in respect of the projected
revenues, projected profits, projected costs, cost to completion and
the foreseeable loss are reviewed periodically by the management and
any effect of changes in estimates is recognized in the period such
changes are determined. Revenue is recognized by reference to the
stage of completion as explained above attributed to the work completed
during the year. When it is probable that total costs will exceed
total project revenue, this expected loss is recognized as an expense
immediately.
B) Construction contracts
i. In Construction Contracts income is recognized on percentage of
completion method. The stage of completion under the POC method is
measured on the basis of percentage that actual costs incurred on
construction contracts to the total estimated cost of the contract.
ii. Revenue on account of contract variations, claims and incentives
are recognized upon settlement.
C) Sale of land and land development rights
Revenue from sale of land and development rights is recognised upon
transfer of all significant risks and rewards of ownership of such real
estate/ property, as per the terms of the contracts entered into with
buyers, which generally coincides with the firming of the sales
contracts/ agreements.
D) Sale of investment
Net sale proceeds of the investments held in subsidiaries, joint
ventures and associates developing real estate projects are included in
real estate revenue.
E) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
F) Consultancy income Consultancy income is recognsied on accrual basis
based on contractual terms on the performance of such services. Revenue
is recognized proportionately by reference to the performance of acts
defined contractually. The revenue recognized is determined on the
basis of contract value, associated costs, number of acts or other
suitable basis.
G) Interest income
Interest income is recognized only when no significant under taint y as
to measurability or collectability exists. Income is recognized on a
time proportion basis taking into account the amount outstanding and
the rate applicable.
H) Dividend income
Dividend income is recognized when the right to receive the same is
established.
XIII. FOREIGN CURRENCY TRANSACTIONS
A foreign currency transaction should be recorded, on initial
recognition 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.
Monetary items denominated in a foreign currency should be reported
using the closing rate or at the amount which is likely to be realized
from, or required to disburse such items at the balance sheet date as
the situation demands.
Non-monetary items carried in term of historical cost denominated in
foreign currency, should be reported using exchange rate at the date of
transaction.
Exchange differences arising on the settlement of monetary items or on
reporting an enterprise's monetary items at rates different from those
at which they were initially recorded during the period, or reported in
previous financial statements, should be recognised as income or as
expenses in the period in which they arise.
Exchange differences arising on reporting of long term monetary assets
at rates different from those at which they were initially reported
during the period or previous periods in so far they relate to the
acquisition of depreciable capital asset is added to or deducted from
the cost of assets.
The financial statement of an integral operation is translated using
the above principle and procedures.
XIV. TAXES ON INCOME
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws that are
enacted or substantially enacted.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets, subject to consideration of prudence, are
recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. The
tax effect is calculated on the accumulated timing difference at the
year-end based on the tax rates and laws enacted or substantially
enacted on the balance sheet date. In situations where the Company has
unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognised only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable
profits. At each balance sheet date the Company re-assesses
unrecognised deferred tax assets. It recognises unrecognised deferred
tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be
realised.
XV. EMPLOYEE BENEFITS
A. Short term employee benefits:
The Company recognizes the undiscounted amount of short term employee
benefits expected to be paid in exchange for services rendered by
employees as
(i) a liability (accrued expense) after deducting any amount already
paid. Excess of amounts paid over liability incurred is treated as
prepaid expenses; or
(ii) an expense unless it is eligible to be charged to project in
progress or capital work in progress or fixed asset as the case may be.
B. Post-employment benefits:
(i) Defined contribution plans
The company, as per detail hereunder, operates defined contribution
plans pertaining to employees state insurance scheme, government
administered pension fund scheme and superannuation scheme for eligible
employees.
The above defined contribution plans are post- employment benefit plans
under which the company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The Company's contribution to defined contribution plans are recognised
in the profit and loss account in the financial year to which they
relate.
(a) Employees state insurance/ pension fund scheme:
The Company makes specified monthly contribution towards employees
state insurance scheme and government administered pension fund scheme
(b) Superannuation Insurance Plan:
The Company has taken group superannuation policy with Life Insurance
Corporation of India for superannuation payable to the eligible
employees.
ii) Defined benefit obligations
The cost of providing benefits i.e. gratuity and leave encashment is
determined using the projected unit credit method, with actuarial
valuations carried out annually as at the balance sheet date.
Actuarial gains and losses are recognized immediately in the statement
of profit and loss. The fair value of the plan assets is reduced from
the gross obligation under the defined benefit plan, to recognize the
obligation on net basis. Past service cost is recognized as expense on
a straight-line basis over the average period until the benefits become
vested.
Provident fund contributions are made to the company's provident fund
trust. Def cit, if any, between the funds and estimated obligations in
this regard is recognized as additional liability.
XVI. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized in respect of liabilities which can be
measured only by using a substantial degree of estimates when:
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources embodying economic benefits will be
required to settle the obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent Liability is disclosed in the case of:
a) a present obligation arising from a past event, when it is not
probable that an outflow of resources embodying economic benefits will
be required to settle the obligation;
b) a possible obligation, that arises out of past events and the
existence of which will be confirmed only by one or more uncertain
future events unless the probability of outflow of resources is remote.
Contingent Assets are neither recognized nor disclosed. However, when
realization of income is virtually certain, related asset is
recognised.
XVII. CASH & CASH EQUIVALENT
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less. Cash flow statement is
prepared using the indirect method.
XVIII. EARNING PER SHARE
Basic earning per share is 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. The
weighted average numbers of equity shares outstanding during the period
are adjusted for events of bonus issue, a share split and share
warrants conversion.
Diluted earnings per share is calculated by adjusting net profit or
loss for the period attributable to equity shareholders and the
weighted number of shares outstanding during the period for the effect
of all dilutive potential equity shares.
Mar 31, 2011
1. NATURE OF OPERATIONS
Unitech Limited (the 'Company') was incorporated in 1971. The Company's
main business is real estate development, construction and consultancy.
2. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the accounting standards notified by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956 ('the Act'). The financial statements have been prepared under
historical cost convention on an accrual basis in accordance with
accounting principles generally accepted in India. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require the management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the result of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates. Significant estimates used by the management in
the preparation of these financial statements include computation of
percentage completion for projects in progress, project cost, revenue
and saleable area, estimates of the economic useful lives of fixed
assets and provisions for bad and doubtful debts. Any revision to
accounting estimates is recognized prospectively.
4. FIXED ASSETS AND DEPRECIATION
a) Fixed Assets are stated at cost (Gross Block) less accumulated
depreciation and impairment losses, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working
condition for its intended use. Borrowing costs relating to
acquisition of fixed assets 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.
Depreciation on fixed assets held in India is provided at the rates and
in the manner prescribed in Schedule XIV of the Companies Act, 1956 on
straight-line method. In respect of assets held outside India,
depreciation has been provided in accordance with the laws prevailing
in that country.
b) Fixtures installed in Leased Buildings are amortized over a period
of lease from the date of capitalization.
5. IMPAIRMENT OF ASSETS
Management periodically assesses using external and internal sources
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of the carrying amount over the higher of the
asset's net sale price or present value as determined above.
6. LEASE ACCOUNTING
In respect of operating lease, lease rentals are accounted on accrual
basis in accordance with the respective lease agreements.
7. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current Investments are stated at the lower of cost and fair value.
8. INVENTORIES
a) Materials, stores & spares, tools and consumable are valued at cost
or market value, which ever is lower on the basis of first in first out
method reflecting the fairest possible approximation to the cost
incurred in bringing the items of inventory to their present location
and condition.
b) Finished stock of completed real estate projects is valued at lower
of cost or net realisable value on the basis of actual identified
units.
c) Scrap is valued at net realisable value.
d) Work in Progress in respect of construction activities is valued at
estimated cost.
e) Shuttering and tools is valued at amortised cost, spread over a
period of three year.
9. PROJECTS IN PROGRESS
Projects in progress are valued at cost. Cost includes cost of land,
development expenses, materials, construction, services, borrowing
costs, other overhead relating to projects and advance against projects
under execution.
10. BORROWING COST
Borrowing cost relating to acquisition/ construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use/sale. Borrowing cost
that are attributable to the projects are charged to the respective
projects. All other borrowing costs, not eligible for
inventorisation/capitalisation, are charged to revenue.
11. RECOGNITION OF INCOME
a) Real Estate Projects
I. Real Estate Projects undertaken up to 31st March, 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of plots/
constructed properties, subject to final adjustment, on the completion
of the respective project.
II. Real Estate Projects undertaken on and after 1st April, 2004:
(i) Revenue from real estate projects is recognized on 'Percentage of
Completion Method' of accounting. Revenue comprises the aggregate
amounts of sale price in terms of the agreements entered into and is
recognized on the basis of percentage of actual costs incurred thereon,
including proportionate land cost and total estimated cost of projects
under execution, subject to such actual costs being 20 percent or more
of the total estimated cost.
(ii) Where aggregate of the payment received provide insufficient
evidence of buyers' commitment to make the complete payment, revenue is
recognized only to the extent of realization.
(iii) The estimates of the saleable areas and costs are reviewed
periodically by the management and any effect of changes in estimates
is recognized in the period such changes are determined. However, when
the total project cost is estimated to exceed total revenues from the
project, the loss is recognized immediately.
III. The interest on delayed payment and maintenance charges are
accounted for on realization due to uncertainty of recovery of the
same.
IV. The Sale proceeds of the Investments held in the Subsidiaries,
Joint Ventures and Associates developing Real Estate Projects are
included in real estate revenue, net of cost.
b) Revenue from Sale of Land/Land Rights held by the Company itself and
its wholly owned subsidiaries is recognised under the head as 'Sales
and Others Receipts' net of cost.
c) Construction Contracts:
I. In Construction Contracts income is recognized on percentage of
completion method.
II. Revenue on account of contract variations, claims and incentives
are recognized upon settlement.
d) Dividend Income
Dividend Income is recognized when the right to receive is established.
12. TRANSLATION OF FOREIGN CURRENCY TRANSACTIONS
a) In respect of branch, which is integral foreign operations, all
transactions are translated at actual rate at the date of transaction.
Branch monetary assets & liabilities are restated at the year end
rates.
b) Non-monetary branch items are carried at cost.
c) Any income or expense on account of exchange difference on
translation is recognized in the Profit & Loss Account.
13. INTEREST TO/FROM SUBSIDIARY COMPANIES
Interest is charged to/from subsidiary companies (other than wholly
owned subsidiary companies) at average borrowing cost on the loan
advanced. In case of Inter Corporate Deposits to wholly owned
subsidiaries, interest is charged considering commercial expediency and
agreed stipulations.
14. REAL ESTATE, JOB AND CONSTRUCTION EXPENSES
a) The expenses incurred under natural heads of accounts for execution
of works are charged to job and construction expenses.
b) The maintenance and other expenses which are obligatory and are
incurred subsequently, after Completion of project(s), are booked as
expenses under the head "Real Estate Completed Projects".
15. TAXES ON INCOME
a) Provision for tax for the year comprises current Income Tax and
Deferred Tax and is provided as per the Income Tax Act, 1961.
b) Deferred tax resulting from timing differences between the book and
the tax profits is accounted for, at the current rate of tax, to the
extent that the timing differences are expected to crystallize.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in the future;
however where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realization of such assets. Deferred tax
assets/ liabilities are reviewed as at each balance sheet date.
16. EMPLOYEE BENEFITS
A. Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognizes the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
B. Long Term and Post-employment Benefits:
(a) Defined contribution plans
Defined contribution plans are post- employment benefit plans under
which the company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The company's contribution to defined contribution plans are recognized
in the Profit and Loss Account in the financial year to which they
relate.
The company, as detailed hereunder, operates defined contribution plans
pertaining to Provident Fund Scheme, Employee State Insurance Scheme,
Government administered Pension Fund Scheme and Superannuation Scheme
for eligible employees.
(i) Provident Fund Plan:
The Company makes specified monthly contributions towards Employee
Provident Fund to a Trust administered by the Company. The rate
notified by the Government is adopted by the Trust. The Company has an
obligation to make good the shortfall, if any, between the return on
investments of the Trust and the notified interest rate.
(ii) Employees State Insurance/ Pension Fund Scheme:
The Company makes specified monthly contribution towards Employees
State Insurance Scheme and Government administrated Pension Fund Scheme
which are recognized in the Profit and Loss Account in the financial
year to which they relate.
(iii) Superannuation Insurance Plan:
The Company has taken Group Superannuation Policy with Life Insurance
Corporation of India for superannuation payable to the eligible
employees. Contribution towards aforesaid fund is charged to the Profit
& Loss Account in the financial year to which it relates.
(b) Defined Benefit obligations
Gratuity liability & Long term leave encashment are defined obligations
and are provided for on the basis of an actuarial valuation on
projected unit credit method made at the end of each financial year.
17. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of a past event;
b) a probable outflow of resources is expected to settle the
obligation; and
c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent Liability is disclosed in the case of:
a. a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation;
b. a possible obligation, unless the probability of outflow of
resources is remote.
Contingent Assets are neither recognized nor disclosed.
18. CASH & CASH EQUIVALENT
Cash for the purposes of Cash Flow Statement comprise cash in hand and
at bank (including deposits) and cash equivalents and the statement is
prepared on the basis of indirect method.
19. EARNING PER SHARE
Basic earning per share is 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. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus issue and share warrants conversion.
Mar 31, 2010
1. BASIS OF PREPARATION
The financial statements have been prepared to comply in all material
respects with the notified accounting standards by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956 (the Act"). The financial statements have been prepared under the
historical cost convention on an accrual basis in accordance with
accounting principles generally accepted in India. The accounting
policies have been consistently applied by the Company and are
consistent with those used in previous year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the result of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates. Significant estimate used by the management in
the preparation of these financial statements include computation of
percentage completion for projects in progress, project cost, revenue
and saleable area, estimates of the economic useful lives of fixed
assets, provisions for bad and doubtful debts. Any revision to
accounting estimates is recognized prospectively.
3. FIXED ASSETS AND DEPRECIATION
(a) Fixed Assets are stated at cost (Gross Block) less accumulated
depreciation and impairment losses, if any Cost comprise the purchase
price and any attributable cost of bringing the asset to its working
condition for its intended use. Borrowing costs relating to acquisition
of fixed assets 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. Depreciation on
fixed assets held in India is provided at the rates and in the manner
prescribed in Schedule XIV of the Companies Act, 1956 on straight- line
method. In respect of assets held outside India, depreciation has been
provided in accordance with the laws prevailing in that country.
(b) Fixtures installed in Leased Buildings are amortized over a period
of lease from the date of capitalization.
4. IMPAIRMENT OF ASSETS
Management periodically assesses using external and internal sources
whether there is an indication that an asset may be impaired.
Impairment occurs where the carrying value exceeds the present value of
future cash flows expected to arise from the continuing use of the
asset and its eventual disposal. The impairment loss to be expensed is
determined as the excess of the carrying amount over the higher of the
assets net sale price or present value as determined above.
5. LEASE ACCOUNTING
In respect of operating lease, lease rentals are accounted on accrual
basis in accordance with the respective lease agreements.
6. INVESTMENTS
Long term investments are stated at cost. However, provision for
diminution is made to recognise any decline, other than temporary, in
the value of long term investments.
Current Investments are stated at the lower of cost and fair value.
7. INVENTORIES
(a) Materials, stores & spares, tools and consumable are valued at cost
or market value, which ever is lower on the basis of first in first out
method reflecting the fairest possible approximation to the cost
incurred in bringing the items of inventory to their present location
and condition.
(b) Finished stock of completed real estate projects is valued at lower
of cost or net realisable value on the basis of actual identified
units.
(c) Scrap is valued at net realisable value.
(d) Work in Progress in respect of construction activities is valued at
estimated cost.
(e) Shuttering and tools is valued at amortised cost, spread over a
period of three years.
8. PROJECTS IN PROGRESS
Projects in progress are valued at cost. Cost includes cost of land,
development expenses, materials, construction, services, borrowing
costs, other overhead relating to projects and advance against projects
under execution.
9. BORROWING COSTS
Borrowing cost relating to acquisition/ construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use/sale. All other
borrowing costs not eligible for inventorisation /capitalisation are
charged to revenue.
10. RECOGNITION OF INCOME
(a) Real Estate Projects
(i) Real Estate Projects undertaken up to 31st March 2004.
Revenue is recognized to estimate the profit @ 20% of actual receipts
and installments fallen due during the year towards booking of
plots/constructed properties, subject to final adjustment, on the
completion of the respective project.
(ii) Real Estate Projects undertaken on and after 1st April, 2004.
i. Revenue from real estate projects is recognized on the ÃPercentage
of Completion Methodà of accounting. Revenue comprises the aggregate
amounts of sale price in terms of the agreements entered into and is
recognized on the basis of percentage of actual costs incurred thereon,
including proportionate land cost and total estimated cost of projects
under execution, subject to such actual costs being 20 percent or more
of the total estimated cost.
ii. Where aggregate of the payment received provide insufficient
evidence of buyers commitment to make the complete payment, revenue is
recognized only to the extent of realization.
iii. The estimates of the saleable areas and costs are reviewed
periodically by the management and any effect of changes in estimates
is recognized in the period such changes are determined. However, when
the total project cost is estimated to exceed total revenues from the
project, the loss is recognized immediately.
(iii) The interest on delayed payment and maintenance charges are
accounted for on realization due to uncertainty of recovery of the
same.
(iv) The Sale proceeds of the Investments held in the Subsidiaries,
Joint Ventures and Associates developing Real Estate Projects are
included in real estate revenue, net of cost.
(b) Revenue from Sale of Land/Land Rights held by the Company itself
and its wholly owned subsidiaries are recognised under the head as
ÃSales and Others Receiptsà net of cost.
(c) Construction Contracts
(i) In Construction Contracts income is recognized on percentage of
completion method.
(ii) Revenue on account of contract variations, claims and incentives
are recognized upon settlement.
(d) Dividend Income
Dividend Income is recognized when the right to receive is established.
11. TRANSLATION OF FOREIGN
CURRENCY TRANSACTIONS
(a) In respect of branch, which is integral foreign operations, all
transactions are translated at actual rate at the date of transaction.
Branch monetary assets & liabilities are restated at the year end
rates.
(b) Non Monetary branch Items are carried at cost.
(c) Any income or expenses on account of exchange difference on
translation is recognized in the Profit & Loss Account.
12. INTEREST TO / FROM SUBSIDIARY COMPANIES
Interest is charged to/from subsidiary companies (other than wholly
owned subsidiary companies) at average borrowing cost on the loan
advanced. In case of Inter Corporate Deposit to wholly owned
subsidiaries, interest is charged considering commercial expediency and
agreed stipulations.
13. REAL ESTATE, JOB AND CONSTRUCTION EXPENSES
(a) The expenses incurred under natural heads of accounts for execution
of works are charged to job and construction expenses.
(b) The maintenance and other expenses which are obligatory and are
incurred subsequently, after Completion of project(s), are booked as
expenses under the head ÃReal Estate Completed Projects Ã.
14. TAXES ON INCOME
(a) Provision for tax for the year comprises current Income Tax,
Deferred Tax and Fringe Benefit Tax and is provided as per the Income
Tax Act, 1961.
(b) Deferred tax resulting from timing differences between the book and
the tax profits is accounted for, at the current rate of tax, to the
extent that the timing differences are expected to crystallize.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in the future;
however where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realization of such assets. Deferred tax
assets/ liabilities are reviewed as at each balance sheet date.
15. EMPLOYEES BENEFITS
A. Short Term Employee Benefits:
All employees benefits payable wholly within twelve months of
rendering the service are classified as short term employee benefits
and they are recognized in the period in which the employee renders the
related service. The Company recognizes the undiscounted amount of
short term employee benefits expected to be paid in exchange for
services rendered as a liability (accrued expense) after deducting any
amount already paid.
B. Long Term and Post-employment benefits:
(a) Defined contribution plans
Defined contribution plans are post- employment benefit plans under
which the company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The company contributions to defined contribution plans are recognized
in the Profit and Loss Account in the financial year to which they
relate.
The company as per detail hereunder operates defined contribution plans
pertaining to Provident fund schemes, Employee State Insurance Scheme
and Government administered Pension Fund Scheme and Superannuation
Scheme for eligible employees
(i) Provident Fund Plan:
The Company makes specified monthly contributions towards employee
provident fund to a Trust administered by the Company. The Rate
notified by the Government is adopted by the Trust. The Company has an
obligation to make good the shortfall, if any, between the return on
investments of the trust and the notified interest rate.
(ii) Employees State Insurance/ Pension Fund Scheme:
The Company makes specified monthly contribution towards Employees
State Insurance Scheme and Government administrated Pension Fund Scheme
which are recognized in the Profit and Loss Account in the financial
year to which they relate.
(iii) Superannuation Insurance Plan:
The Company has taken group superannuation policy with Life Insurance
Corporation of India for Superannuation payable to the eligible
employees. Contribution towards aforesaid fund is charged to the Profit
& Loss Account in the financial year to which it relates.
(b) Defined Benefit obligation
Gratuity liability & Long term leave encashment are defined obligations
and are provided for on the basis of an actuarial valuation on
projected unit credit method made at the end of each financial year.
16. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
(a) the Company has a present obligation as a result of a past event.
(b) a probable outflow of resources is expected to settle the
obligation and
(c) the amount of the obligation can be reliably estimated.
Reimbursement expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursement will be received.
Contingent Liability is disclosed in the case of
(a) a present obligation arising from a past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(b) a possible obligation, unless the probability of outflow of
resources is remote.
Contingent Assets are neither recognized nor disclosed.
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