Accounting Policies of DS Kulkarni Developers Ltd. Company
Mar 31, 2016
1 Corporate Information:
D. S. Kulkarni Developers Ltd. is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the business of real estate development in India.
The Company is not a Small Company as defined in Section 2(85) of the Companies Act, 2013 (âthe Actâ) because it is a public company.
As per Rule 7 of the Companies (Accounts) Rules 2014, the standards of accounting as specified under the Companies Act, 1956 (1 of 1956) shall be deemed to be the accounting standards until accounting standards are specified by the Central Government u/s 133 of the Act. Rule 3 (1) of the Companies (Accounting Standards) Rules, 2006, made by the Central Government u/s 642 (1) read with Section 211(3C) and Section 210A(1) of the Companies Act, 1956 provides that the accounting standards recommended by the Institute of Chartered Accountants of India (ICAI) specified in the annexure to the said Rules shall come into effect in respect of accounting periods commencing on or after the publication of these accounting standards.
The Company is not a Small and Medium Sized Company (SMC) as defined in Rule 2(f) of the Companies (Accounting Standards) Rules, 2006 because
a) it did have borrowings (including public deposits) in excess of Rs.10 crores at any time during the immediately preceding accounting year and in the year under review
b) its turnover (excluding other income) did exceed Rs.50 crores in the immediately preceding accounting year and in the year under review, and
c) its equity or debt securities are listed or are in the process of being listed on any stock exchange.
2 Basis of Preparation of Financial Statements
These financial statements comply in all material respects with the relevant provisions of the Act, the Generally Accepted Accounting Principles followed in India in conjunction with the Accounting Standards issued by the Institute of Chartered Accountants of India which are specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. As required by AS 1 issued by the Institute of Chartered Accountants of India, the accounting policies adopted in the preparation of these financial statements are disclosed below.
2.1 Summary of significant accounting policies:
2.1.1 Presentation and disclosure of financial statements:
These financial statements have been presented in accordance with the Schedule III to the Companies Act, 2013.
2.1.2 Accounting Convention:
These financial statements are prepared under the historical cost convention.
2.1.3 Method of Accounting:
As required by Section 128(1) of the Act, these financial statements are prepared in accordance with the accrual method of accounting with revenues recognized and expenses accounted on their accrual including provisions / adjustments for committed obligations and amounts determined as payable or receivable during the period.
2.1.4 Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions, that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the end of the reporting periods and the reported amounts of revenues and expenses for the reporting periods. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised.
2.1.5 Consistency:
These financial statements have been prepared on a basis consistent with previous years and accounting policies not specifically referred hereto are consistent with generally accepted accounting principles.
2.1.6 Contingencies and Events occurring after the Balance Sheet Date:
AS 4 issued by the Institute of Chartered Accountants of India is applicable since
i) there are no contingent liabilities existing on the reporting date for which provision may be required and
ii) there are events occurring after the balance sheet date but before the financial statements are approved, having an effect on the balance sheet and profit and loss statement.
2.1.7 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:
The Company''s Profit & Loss Account presents profit / loss from ordinary activities. There are no extraordinary items or changes in accounting estimates and policies during the year under review which need to be disclosed as per AS 5 issued by the Institute of Chartered Accountants of India.
2.1.8 Cash Flow Statements:
Cash Flows are reported as per the Indirect Method as specified in AS 3 issued by the Institute of Chartered Accountants of India.
2.1.9 Previous Year Figures:
The figures for the previous year have been rearranged to facilitate comparison.
2.2 Fixed Assets
2.2.1 Tangible Fixed Assets: In accordance with AS 10 issued by the Institute of Chartered Accountants of India,
i) Tangible Fixed Assets are stated at cost of acquisition or construction net of accumulated depreciation and accumulated impairment losses, if any.
ii) The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable incidental expenses related to acquisition and installation and other pre-operative expenses of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
iii) Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the statement of profit and loss for the period during which such expenses are incurred.
iv) Gains or losses arising from derecognition of fixed assets 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 derecognized.
2.2.2 Depreciation on Tangible Fixed Assets: In accordance with AS 6 issued by the Institute of Chartered Accountants of India,
i) Depreciation on Tangible Fixed Assets is provided as per Schedule II to the Companies Act, 2013.
ii) Leasehold land is amortized on a straight line basis over the period of the lease
2.2.3 Intangible Fixed Assets: In accordance with AS 26 issued by the Institute of Chartered Accountants of India,
i) Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation. 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, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
ii) Intangible assets are amortized on a straight line basis over the estimated useful economic life. The company uses a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. If the persuasive evidence exists to the effect that useful life of an intangible asset exceeds ten years, the company amortizes the intangible asset over the best estimate of its useful life.
iii) Such intangible assets and intangible assets not yet available for use are tested for impairment annually, either individually or at the cash-generating unit level. All other intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.
iv) The amortization period and the amortization 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. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies.
v) Gains or losses arising from derecognition 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 derecognized.
2.2.4 Borrowing Costs: In accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India,
i) Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
ii) A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.
iii) Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are recognized as an expense in the period in which those are incurred.
2.2.5 Impairment of tangible and intangible assets: In accordance with AS 28 issued by the Institute of Chartered Accountants of India,
i) The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the company estimates the recoverable amount of the asset. Such recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
ii) The company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the company''s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.
iii) Impairment losses of continuing operations, including write-down of inventories, are recognized in the statement of profit and loss, except for previously revalued tangible fixed assets, where the revaluation was taken to revaluation reserve. In this case, the impairment is also recognized in the revaluation reserve up to the amount of any previous revaluation.
iv) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
v) An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the company estimates the asset''s or cash-generating unit''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
2.2.6 Research and development costs: In accordance with AS 26 issued by the Institute of Chartered Accountants of India,
i) Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the company can demonstrate all the following:
a) The technical feasibility of completing the intangible asset so that it will be available for use or sale
b) Its intention to complete the asset
c) Its ability to use or sell the asset
d) How the asset will generate future economic benefits
e) The availability of adequate resources to complete the development and to use or sell the asset
f) The ability to measure reliably the expenditure attributable to the intangible asset during development.
ii) Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized on a straight line basis over the period of expected future benefit from the related project. Amortization is recognized in the statement of profit and loss. During the period of development, the asset is tested for impairment annually.
2.2.7 Leases: In accordance with Accounting Standard 19, issued by the Institute of Chartered Accountants of India,
A Where the company is lessee
i) Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. Lease payments are apportioned between the 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 recognized as finance costs in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized.
ii) A leased asset is depreciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life.
iii) Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
B Where the company is the lessor
i) Leases in which the company transfers substantially all the risks and benefits of ownership of the asset are classified as finance leases. Assets given under finance lease are recognized as a receivable at an amount equal to the net investment in the lease. After initial recognition, the company apportions lease rentals between the principal repayment and interest income so as to achieve a constant periodic rate of return on the net investment outstanding in respect of the finance lease. The interest income is recognized in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
ii) Leases in which the company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Assets subject to operating leases are included in fixed assets. Costs, including depreciation, are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
2.3 Investments: In accordance with AS 13 issued by the Institute of Chartered Accountants of India,
i) Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
ii) On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. If an investment is acquired, or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued. If an investment is acquired in exchange for another asset, the acquisition is determined by reference to the fair value of the asset given up or by reference to the fair value of the investment acquired, whichever is more clearly evident.
iii) Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
v) An investment in land or buildings, which is not intended to be occupied substantially for use by, or in the operations of, the company, is classified as investment property. Investment properties are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.
vi) The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the investment property to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
vii) Depreciation on building component of investment property is calculated on a straight-line basis using the rate arrived at based on the useful life prescribed under the Schedule II to the Companies Act, 2013.
viii) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
2.4 Inventories: In accordance with Accounting Standards 2 & 9 issued by the Institute of Chartered Accountants of India,
i) Construction materials, components, stores and spares are valued at the lower of cost and net realizable value (as certified by the management) after providing for the cost of obsolescence. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above its cost of acquisition. Cost of raw materials, components and stores and spares is determined on FIFO basis.
ii) Inventories of work in progress are valued, in accordance with the Percentage of Completion Method. Profit on incomplete projects is not recognized unless 20% expenditure has been incurred in respect of the project. Based on projections and estimates by the Company of the expected revenues and costs to completion, provision for losses to completion and / or write off of costs carried to inventories is made on projects where the expected revenues are lower than the estimated costs to completion. In the opinion of the management, the net realizable value of the work in progress as at the balance sheet date will not be lower than the costs so included therein.
iii) Inventories of finished tenements are valued at the carrying value or estimated net realizable value, (as certified by the management) whichever is the less.
iv) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
2.5 Revenue Recognition: In accordance with AS 9 issued by the Institute of Chartered Accountants of India, Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company.
The following specific recognition criteria must also be met before revenue is recognized.
i) Income from real estate sales is recognized on the transfer of all significant risks and rewards of ownership to the buyer and it is not unreasonable to expect ultimate collection and no significant uncertainty exists regarding the amount of consideration.
ii) However, if, at the time of transfer, substantial acts are yet to be performed, revenue is recognized on proportionate basis as the acts are performed, that is, on the percentage of completion basis. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion. As the construction projects necessarily extend beyond one year, revision in estimates of costs and revenues during the year under review are reflected in the accounts of the year.
iii) Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The company collects value added taxes (VAT) and service tax on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.
iv) Revenues from maintenance contracts are recognized pro-rata over the period of the contract as and when services are rendered. The company collects service tax on behalf of the government and, therefore, it is not an economic benefit flowing to the company. Hence, it is excluded from revenue.
v) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head âother incomeâ in the statement of profit and loss.
vi) Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.
2.6 Expense Recognition: Project-specific revenue Expenses such as development & construction expenses, interest on borrowings attributable to specific projects etc. are included in the valuation of inventories of work in progress. Indirect costs are treated as period costs and are charged to the Profit & Loss Account in the year incurred. Expenses incurred on repairs & maintenance of completed projects are charged to Profit & Loss Account.
2.7 Foreign currency transactions and balances: In accordance with AS 11 issued by the Institute of Chartered Accountants of India,
i) Initial recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii) Conversion: Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
iii) Exchange differences: From accounting periods commencing on or after 7 December 2006, the company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as below:
a) Exchange differences arising on a monetary item that, in substance, forms part of the company''s net investment in a non-integral foreign operation is accumulated in the foreign currency translation reserve until the disposal of the net investment. On the disposal of such net investment, the cumulative amount of the exchange differences which have been deferred and which relate to that investment is recognized as income or as expenses in the same period in which the gain or loss on disposal is recognized.
b) Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and depreciated over the remaining useful life of the asset in accordance with the Ministry of Corporate Affairs Notification dated 31st March 2009. For this purpose, the company treats a foreign monetary item as âlong-term foreign currency monetary itemâ, if it has a term of 12 months or more at the date of its origination.
c) Exchange differences arising on other long-term foreign currency monetary items are accumulated in the âForeign Currency Monetary Item Translation Difference Accountâ and amortized over the remaining life of the concerned monetary item.
d) All other exchange differences are recognized as income or as expenses in the period in which they arise.
iv) Translation of integral and non-integral foreign operation: The company classifies all its foreign operations as either âintegral foreign operationsâ or ânon-integral foreign operations.â The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the company itself. The assets and liabilities of a non-integral foreign operation are translated into the reporting currency at the exchange rate prevailing at the reporting date and their statement of profit and loss are translated at annual average exchange rates. The exchange differences arising on translation are accumulated in the foreign currency translation reserve. On disposal of a non-integral foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognized in the statement of profit and loss. When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised classification are applied from the date of the change in the classification.
2.8 Retirement and other employee benefits: In accordance with Accounting Standard 15 issued by the
Institute of Chartered Accountants of India,
i) Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The company has no obligation, other than the contribution payable to the provident fund.
ii) The company operates one defined benefit plan for its employees, viz., gratuity. The cost of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end using the projected unit credit method. The Company has obtained a Group Gratuity Policy from the Life Insurance Corporation of India in respect of the gratuity obligation and the annual contribution paid by the Company to LIC is charged to the profit & loss statement.
2.9 Tax Expense: In accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India,
i) Tax expense comprises current and deferred tax.
ii) Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.
iii) Deferred tax assets and liabilities are recognized for future tax consequences attributable to the timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent periods and are measured using tax rates enacted or substantively enacted as at the balance sheet date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.
iv) Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
v) In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the company restricts recognition of 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. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.
vi) At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
vii) The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available
viii) Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to setoff current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
ix) Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available for a particular assessment year as an asset only after the assessment for that year is complete and such credit is finally quantified and only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as âMAT Credit Entitlementâ under the head âCurrent Assetsâ. The company reviews the âMAT credit entitlementâ asset at each reporting date and writes down its carrying amount to the extent such credit is set-off u/s 115JAA or to the extent the company does not have convincing evidence that it will pay normal tax during the specified period.
2.10 Consolidated Financial Statements: In accordance with AS 21 and AS 27 issued by the Institute of Chartered Accountants of India, separate consolidated financial statements of the Company and its Subsidiaries have been prepared by combining on a line-to-line basis by adding together the book values of like items of assets, liabilities, incomes and expenses after fully eliminating intra-group balances, intergroup transactions and unrealized profits and losses.
2.11 Earnings Per Share: In accordance with Accounting Standard 20, issued by the Institute of Chartered Accountants of India.
i) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources.
ii) For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.
2.12 Provisions: In accordance with Accounting Standard 29 issued by the Institute of Chartered Accountants of India,
i) A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Where the company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.
ii) warranty provisions: Provisions for warranty-related costs are recognized when the product is sold or service provided. Provision is based on historical experience. The estimate of such warranty-related costs is revised annually.
2.13 Contingent Liabilities and Contingent Assets: In accordance with Accounting Standard 29 issued by the Institute of Chartered Accountants of India,
i) A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.
ii) Contingent assets are not recognized.
2.14 Accounting Standards not applicable to the Company during the year under review:
i) Accounting for Government Grants: AS 12 is not applicable since the Company has not received any Government Grants
ii) Accounting for Amalgamations: AS 14 is not applicable since the Company has not so far entered into any amalgamation.
iii) Segment reporting: AS 17 is not applicable since the Company operates only in one segment, to wit, real estate development.
iv) Accounting for Investments in Associates in Consolidated Financial statements: AS 23 is not applicable to the standalone financial statements of the Company.
v) Discontinuing Operations: AS 24 is not applicable since the Company has not so far discontinued operations.
vi) Interim Financial Reporting: AS 25 is not applicable to the financial statements under review.
vii) Financial Reporting of Interests in Joint Ventures: AS 27 is not applicable since the Company has no joint ventures.
Mar 31, 2014
1.1.1 Presentation and disclosure of financial statements
These financial statements are presented in accordance with the revised
Schedule VI notified under the Companies Act, 1956.
1.1.2 Accounting Convention:
These financial statements are prepared under the historical cost
convention.
1.1.3 Method of Accounting:
As required by Section 209(3)(b) of the Act, these financial statements
are prepared in accordance with the accrual method of accounting with
revenues recognized and expenses accounted on their accrual including
provisions/adjustments for committed obligations and amounts determined
as payable or receivable during the period.
1.1.4 Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions,
that affect the application of accounting policies and the reported
amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the end of the reporting periods and the
reported amounts of revenues and expenses for the reporting periods.
Although these estimates are based on the management''s best knowledge
of current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes requiring a material adjustment
to the carrying amounts of assets or liabilities in future periods.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which
the estimate is revised and future years affected.
1.1.5 Consistency:
These financial statements have been prepared on a basis consistent
with previous years and accounting policies not specifically referred
hereto are consistent with generally accepted accounting principles.
1.1.6 Contingencies and Events occurring after the Balance Sheet Date:
AS 4 issued by the Institute of Chartered Accountants of India is not
applicable since there are no such contingencies nor events.
1.1.7 Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies:
The Company''s Profit and Loss Account presents profit / loss from
ordinary activities. There are no extra- ordinary items or changes in
accounting estimates and policies during the year under review which
need to be disclosed as per AS 5 issued by the Institute of Chartered
Accountants of India.
1.1.8 Cash Flow Statements:
Cash Flows are reported as per the Indirect Method as specified in AS 3
issued by the Institute of Chartered Accountants of India.
1.1.9 Previous Year Figures:
The figures for the previous year have been rearranged to facilitate
comparison.
1.2 Fixed Assets
1.2.1 Tangible Fixed Assets: In accordance with AS 10 issued by the
Institute of Chartered Accountants of India,
i) Tangible Fixed Assets are stated at cost of acquisition or
construction net of accumulated depreciation and accumulated impairment
losses, if any
ii) The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable incidental
expenses related to acquisition and installation and other
pre-operative expenses of bringing the asset to its working condition
for the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
iii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
iv) From accounting periods commencing on or after 7th December, 2006,
the company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining life of the asset.
v) Gains or losses arising from derecognition of fixed assets 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 derecognized.
1.2.2 Depreciation on Tangible Fixed Assets: In accordance with AS 6
issued by the Institute of Chartered
Accountants of India,
i) Depreciation on Tangible Fixed Assets is provided as per the
straight line method at the rates prescribed in Schedule XIV to the
Companies Act, 1956, for the period for which the asset is put to use.
ii) Leasehold land is amortized on a straight-line basis over the
period of the lease
1.2.3 Intangible Fixed Assets: In accordance with AS 26 issued by the
Institute of Chartered Accountants of India,
i) Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. 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, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred.
ii) Intangible assets are amortized on a straight-line basis over the
estimated useful economic life. The company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the effect that useful life of an
intangible asset exceeds ten years, the company amortizes the
intangible asset over the best estimate of its useful life.
iii) Such intangible assets and intangible assets not yet available for
use are tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
iv) The amortization period and the amortization 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. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies.
v) Gains or losses arising from derecognition 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 derecognized
1.2.4 Borrowing Costs: In accordance with Accounting Standard 16 issued
by the Institute of Chartered Accountants of India,
i) Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
ii) A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
iii) borrowing costs that are attributable to the acquisition,
construction or production of qualifying assets are capitalized as part
of the cost of such assets. All other borrowing costs are recognized as
an expense in the period in which those are incurred.
1.2.5 Impairment of tangible and intangible assets: In accordance with
AS 28 issued by the Institute of Chartered Accountants of India.
i) The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the company
estimates the recoverable amount of the asset. Such recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
ii) The Company bases its impairment calculation on detailed budgets
and forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long-term growth
rate is calculated and applied to project future cash flows after the
fifth year.
iii) Impairment losses of continuing operations, including write-down
of inventories, are recognized in the statement of profit and loss,
except for previously revalued tangible fixed assets, where the
revaluation was taken to revaluation reserve. In this case, the
impairment is also recognized in the revaluation reserve up to the
amount of any previous revaluation.
iv) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
v) An assessment is made at each reporting date as to whether there is
any indication that previously recognized impairment losses may no
longer exist or may have decreased. If such indication exists, the
Company estimates the asset''s or cash-generating unit''s recoverable
amount. A previously recognized impairment loss is reversed only if
there has been a change in the assumptions used to determine the
asset''s recoverable amount since the last impairment loss was
recognized. The reversal is limited so that the carrying amount of the
asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognized for the asset in prior years. Such
reversal is recognized in the statement of profit and loss unless the
asset is carried at a revalued amount, in which case the reversal is
treated as a revaluation increase.
1.2.6 Research and development costs: In accordance with AS 26 issued
by the Institute of Chartered Accountants of India,
i) Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the company can demonstrate all the following:
a) The technical feasibility of completing the intangible asset so that
it will be available for use or sale.
b) Its intention to complete the asset.
c) Its ability to use or sell the asset.
d) How the asset will generate future economic benefits.
e) The availability of adequate resources to complete the development
and to use or sell the asset.
f) The ability to measure reliably the expenditure attributable to the
intangible asset during development.
ii) Following the initial recognition of the development expenditure as
an asset, the cost model is applied requiring the asset to be carried
at cost less any accumulated amortization and accumulated impairment
losses. Amortization of the asset begins when development is complete
and the asset is available for use. It is amortized on a straight line
basis over the period of expected future benefit from the related
project. Amortization is recognized in the statement of profit and
loss. During the period of development, the asset is tested for
impairment annually.
1.2.7 Leases: In accordance with Accounting Standard 19, issued by the
Institute of Chartered Accountants of India,
A. Where the Company is lessee
i) Finance leases, which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
leased item, are capitalized at the inception of the lease term at the
lower of the fair value of the leased property and present value of
minimum lease payments. Lease payments are apportioned between the
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 recognized as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalized.
ii) A leased asset is depreciated on a straight-line basis over the
useful life of the asset or the useful life envisaged in Schedule XIV
to the Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the company will obtain the ownership by the
end of the lease term, the capitalized asset is depreciated on a
straight-line basis over the shorter of the estimated useful life of
the asset, the lease term or the useful life envisaged in Schedule XIV
to the Companies Act, 1956.
iii) Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
B. Where the Company is the lessor
i) Leases in which the Company transfers substantially all the risks
and benefits of ownership of the asset are classified as finance
leases. Assets given under finance lease are recognized as a receivable
at an amount equal to the net investment in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs, etc.
are recognized immediately in the statement of profit and loss.
ii) Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
statement of profit and loss on a straight-line basis over the lease
term. Costs, including depreciation, are recognized as an expense in
the statement of profit and loss. Initial direct costs such as legal
costs, brokerage costs, etc. are recognized immediately in the
statement of profit and loss.
1.3 Investments: In accordance with AS 13 issued by the Institute of
Chartered Accountants of India,
i) Investments, which are readily realizable and intended to be held
for not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
ii) On initial recognition, all investments are measured at cost. The
cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other
securities, the acquisition cost is the fair value of the securities
issued. If an investment is acquired in exchange for another asset, the
acquisition is determined by reference to the fair value of the asset
given up or by reference to the fair value of the investment acquired,
whichever is more clearly evident.
iii) Current investments are carried in the financial statements at
lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision
for diminution in value is made to recognize a decline other than
temporary in the value of the investments.
iv) On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
v) An investment in land or buildings, which is not intended to be
occupied substantially for use by, or in the operations of, the
Company, is classified as investment property. Investment properties
are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any.
vi) The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable cost of
bringing the investment property to its working condition for the
intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
vii) Depreciation on building component of investment property is
calculated on a straight-line basis using the rate arrived at based on
the useful life estimated by the management, or that prescribed under
the Schedule XIV to the Companies Act, 1956, whichever is higher.
viii) On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
1.4 Inventories: In accordance with Accounting Standards 2 & 9 issued
by the Institute of Chartered
Accountants of India,
i) Construction materials, components, stores and spares are valued at
the lower of cost and net realizable value (as certified by the
management) after providing for the cost of obsolescence. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above its cost of
acquisition. Cost of raw materials, components and stores and spares is
determined on FIFO basis.
ii) Inventories of work-in-progress are valued, in accordance with the
Percentage of Completion Method. Profit on incomplete projects is not
recognized unless 20% expenditure has been incurred in respect of the
project. Based on projections and estimates by the Company of the
expected revenues and costs to completion, provision for losses to
completion and/or write off of costs carried to inventories is made on
projects where the expected revenues are lower than the estimated costs
to completion. In the opinion of the management, the net realisable
value of the work-in-progress as at the balance sheet date will not be
lower than the costs so included therein.
iii) Inventories of finished tenements are valued at the carrying value
or estimated net realizable value, (as certified by the management)
whichever is the less.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
2.5 Revenue Recognition: In accordance with AS 9 issued by the
Institute of Chartered Accountants of India, Revenue is recognized to
the extent that it is probable that the economic benefits will flow to
the company. The following specific recognition criteria must also be
met before revenue is recognized.
i) Income from real estate sales is recognized on the transfer of all
significant risks and rewards of ownership to the buyer and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
ii) However, if, at the time of transfer, substantial acts are yet to
be performed, revenue is recognized on proportionate basis as the acts
are performed, that is, on the percentage of completion basis.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
and the foreseeable losses to completion. As the construction projects
necessarily extend beyond one year, revision in estimates of costs and
revenues during the year under review are reflected in the accounts of
the year.
iii) Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of the goods. The Company collects value
added taxes (VAT) and service tax on behalf of the government and,
therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue.
iv) Revenues from maintenance contracts are recognized pro-rata over
the period of the contract as and when services are rendered. The
Company collects service tax on behalf of the government and,
therefore, it is not an economic benefit flowing to the Company. Hence,
it is excluded from revenue.
v) Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
vi) Dividend income is recognized when the Company''s right to receive
dividend is established by the reporting date.
1.6 Expense Recognition: Project-specific revenue Expenses such as
development and construction expenses, interest on borrowings
attributable to specific projects etc. are included in the valuation of
inventories of work in progress. Indirect costs are treated as period
costs and are charged to the Profit and Loss Account in the year
incurred. Expenses incurred on repairs and maintenance of completed
projects are charged to Profit and Loss Account.
1.7 Foreign currency transactions and balances: In accordance with AS
11 issued by the Institute of Chartered Accountants of India,
i) Initial recognition: Foreign currency transactions are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
ii) Conversion: Foreign currency monetary items are retranslated using
the exchange rate prevailing at the reporting date. Non-monetary items,
which are measured in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured at fair value or
other similar valuation denominated in a foreign currency, are
translated using the exchange rate at the date when such value was
determined.
iii) Exchange differences: From accounting periods commencing on or
after 7th December, 2006, the Company accounts for exchange differences
arising on translation/settlement of foreign currency monetary items as
below:
a) Exchange differences arising on a monetary item that, in substance,
forms part of the company''s net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized.
b) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset in accordance
with the Ministry of Corporate Affairs Notification dated 31st March,
2009. For this purpose, the company treats a foreign monetary item as
"long- term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination.
c) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized over the remaining life
of the concerned monetary item.
d) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
iv) Translation of integral and non-integral foreign operation: The
Company classifies all its foreign operations as either "integral
foreign operations" or "non-integral foreign operations." The financial
statements of an integral foreign operation are translated as if the
transactions of the foreign operation have been those of the Company
itself. The assets and liabilities of a non-integral foreign operation
are translated into the reporting currency at the exchange rate
prevailing at the reporting date and their statement of profit and loss
are translated at annual average exchange rates. The exchange
differences arising on translation are accumulated in the foreign
currency translation reserve. On disposal of a non-integral foreign
operation, the accumulated foreign currency translation reserve
relating to that foreign operation is recognized in the statement of
profit and loss. When there is a change in the classification of a
foreign operation, the translation procedures applicable to the revised
classification are applied from the date of the change in the
classification.
1.8 Retirement and other employee benefits: In accordance with
Accounting Standard 15 issued by the
Institute of Chartered Accountants of India,
i) Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the year when the
contributions are due. The Company has no obligation, other than the
contribution payable to the provident fund.
ii) The Company operates one defined benefit plan for its employees,
viz., gratuity. The cost of providing benefits under this plan are
determined on the basis of actuarial valuation at each year-end using
the projected unit credit method. The Company has obtained a policy
from the Life Insurance Corporation of India in respect of the gratuity
obligation and the annual contribution paid by the Company to LIC is
charged to the profit and loss statement. The actuarial gains and
losses for the defined benefit plan are not recognized in the period in
which they occur in the statement of profit and loss.
1.9 Tax Expense: In accordance with Accounting Standard 22 issued by
the Institute of Chartered
Accountants of India,
i) Tax expense comprises current and deferred tax.
ii) Current income-tax is measured at the amount expected to be paid to
the tax authorities in accordance with the Income-tax Act, 1961 enacted
in India and tax laws prevailing in the respective tax jurisdictions
where the Company operates. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, at the
reporting date. Current income tax relating to items recognized
directly in equity is recognized in equity and not in the statement of
profit and loss.
iii) Deferred tax assets and liabilities are recognized for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the balance sheet date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
iv) Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
v) In the situations where the Company is entitled to a tax holiday
under the Income-tax Act, 1961 enacted in India or tax laws prevailing
in the respective tax jurisdictions where it operates, no deferred tax
(asset or liability) is recognized in respect of timing differences
which reverse during the tax holiday period, to the extent the
Company''s gross total income is subject to the deduction during the tax
holiday period. Deferred tax in respect of timing differences which
reverse after the tax holiday period is recognized in the year in which
the timing differences originate. However, the Company restricts
recognition of 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. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
vi) At each reporting date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax asset to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
vii) The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
viii) Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
ix) Minimum Alternate Tax (MAT) paid in a year is charged to the
statement of profit and loss as current tax. The Company recognizes MAT
credit available for a particular assessment year as an asset only
after the assessment for that year is complete and such credit is
finally quantified and only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income- tax Act, 1961, the said asset is created by way of credit to
the statement of profit and loss and shown as "MAT Credit Entitlement"
under the head "Current Assets". The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down its carrying
amount to the extent such credit is set-off u/s 115JAA or to the extent
the Company does not have convincing evidence that it will pay normal
tax during the specified period.
1.10 Consolidated Financial Statements: In accordance with AS 21 and AS
27 issued by the Institute of Chartered Accountants of India, separate
consolidated financial statements of the Company and its Subsidiaries
have been prepared by combining on a line-to-line basis by adding
together the book values of like items of assets, liabilities, incomes
and expenses after fully eliminating intra-group balances, intra-group
transactions and unrealised profits and losses.
1.11 Earnings Per Share: In accordance with Accounting Standard 20,
issued by the Institute of Chartered Accountants of India.
i) Basic earnings per share are calculated by dividing the net profit
or loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
ii) For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares,
except where the results are anti-dilutive.
1.12 Provisions: In accordance with Accounting Standard 29 issued by
the Institute of Chartered Accountants of India,
i) A provision is recognized when the Company has a present obligation
as a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates. Where the company
expects some or all of a provision to be reimbursed, for example under
an insurance contract, the reimbursement is recognized as a separate
asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of profit and
loss net of any reimbursement.
ii) Warranty provisions: Provisions for warranty-related costs are
recognized when the product is sold or service provided. Provision is
based on historical experience. The estimate of such warranty-related
costs is revised annually.
1.13 Contingent Liabilities and Contingent Assets: In accordance with
Accounting Standard 29 issued by the Institute of Chartered Accountants
of India,
i) A contingent liability is a possible obligation that arises from
past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
ii) Contingent assets are not recognized.
1.14 Accounting Standards not applicable to the Company during the year
under review:
i) Construction Contracts: AS 7 is not applicable since the Company is
not engaged in execution of construction contracts.
ii) Accounting for Government Grants: AS 12 is not applicable since the
Company has not received any Government Grants.
iii) Accounting for Amalgamations: AS 14 is not applicable since the
Company has not so far entered into any amalgamation.
iv) Segment Reporting: AS 17 is not applicable since the Company
operates only in one segment,
i.e. real estate development.
v) Accounting for Investments in Associates in Consolidated Financial
Statements: AS 23 is not applicable since the Company is not required
to consolidate its financial statements.
vi) Discontinuing Operations: AS 24 is not applicable since the Company
has not so far discontinued operations.
vii) Interim Financial Reporting: AS 25 is not applicable to the
financial statements under review.
viii) Financial Reporting of Interests in Joint Ventures: AS 27 is not
applicable since the Company has no joint ventures.
Mar 31, 2013
1.1.1 Presentation and disclosure of financial statements
These financial statements are presented in accordance with the revised
Schedule VI notified under the Companies Act, 1956.
1.1.2 Accounting Convention:
These financial statements are prepared under the historical cost
convention.
1.1.3 Method of Accounting:
As required by Section 209(3)(b) of the Act, these financial statements
are prepared in accordance with the accrual method of accounting with
revenues recognized and expenses accounted on their accrual including
provisions/adjustments for committed obligations and amounts determined
as payable or receivable during the period.
1.1.4 Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions,
that affect the application of accounting policies and the reported
amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the end of the reporting periods and the
reported amounts of revenues and expenses for the reporting periods.
Although these estimates are based on the management''s best knowledge
of current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes requiring a material adjustment
to the carrying amounts of assets or liabilities in future periods.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which
the estimate is revised and future years affected.
1.1.5 Consistency:
These financial statements have been prepared on a basis consistent
with previous years and accounting policies not specifically referred
hereto are consistent with generally accepted accounting principles.
1.1.6 Contingencies and Events occurring after the Balance Sheet Date:
AS 4 issued by the Institute of Chartered Accountants of India is not
applicable since there are no such contingencies nor events.
1.1.7 Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies:
The Company''s Profit and Loss Account presents profit/loss from
ordinary activities. There are no extra- ordinary items or changes in
accounting estimates and policies during the year under review which
need to be disclosed as per AS 5 issued by the Institute of Chartered
Accountants of India.
1.1.8 Cash Flow Statements:
Cash Flows are reported as per the Indirect Method as specified in AS 3
issued by the Institute of Chartered Accountants of India.
1.1.9 Previous Year Figures:
The figures for the previous year have been rearranged to facilitate
comparison.
Mar 31, 2012
1. Corporate Information:
D. S. Kulkarni Developers Ltd. is a public limited company domiciled in
India and incorporated under the provisions of the Companies Act, 1956
("the Act"). The Company is engaged in the business of real estate
development in India. The Company is not a Small and Medium Sized
Company (SMC) as defined in the General Instructions in respect of
Accounting Standards notified under the Act, in as much as
a) its turnover (excluding other income) did exceed Rs. 50 crores in the
immediately preceding accounting year and in the year under review, and
b) it did have borrowings (including public deposits) in excess of Rs. 10
crores at any time during the immediately preceding accounting year and
in the year under review
c) its equity shares are listed on the Mumbai and National Stock
Exchanges
d) it is the holding or subsidiary company of DSK Global Education &
Research P. Ltd. which is not a SMC although
e) it is not a bank, financial institution or an insurance company.
2. Basis of Preparation of Financial Statements
These financial statements comply in all material respects with the
relevant provisions of the Act, the Generally Accepted Accounting
Principles in India, and the Accounting Standards issued by the
Institute of Chartered Accountants of India which are prescribed in the
Companies (Accounting Standards) Rules, 2006 notified by the Central
Government u/s 211 (3C) read with Sections 210A(1) and 642(1 )(a) of
the said Act. As required by AS 1 issued by the Institute of Chartered
Accountants of India, the accounting policies followed in the
preparation of these financial statements are disclosed below.
2.1 Summary of significant accounting policies
2.1.1 Presentation and disclosure of financial statements
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.
Except accounting for dividend on investments in subsidiary companies,
the adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
2.1.2 Accounting Convention:
These financial statements are prepared under the historical cost
convention
2.1.3 Method of Accounting:
As required by Section 209(3)(b) of the Act, these financial statements
are prepared in accordance with the accrual method of accounting with
revenues recognized and expenses accounted on their accrual including
provisions/ adjustments for committed obligations and amounts
determined as payable or receivable during the period
2.1.4 Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions,
that affect the application of accounting policies and the reported
amounts of assets and liabilities and disclosures of contingent
liabilities at the date of the end of the reporting periods and the
reported amounts of revenues and expenses for the reporting periods
Although these estimates are based on the management's best knowledge
of current events and actions, uncertainty about these assumptions and
estimates could result in the outcomes requiring a material adjustment
to the carrying amounts of assets or liabilities in future periods
Actual results may differ from these estimates
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which
the estimate is revised and future years affected
2.1.5 Consistency:
These financial statements have been prepared on a basis consistent
with previous years and accounting policies not specifically referred
hereto are consistent with generally accepted accounting principles.
2.1.6 Contingencies and Events occurring after the Balance Sheet Date:
AS 4 issued by the Institute of Chartered Accountants of India is not
applicable since there are no such contingencies nor events
2.1.7 Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies:
The Company's Profit and Loss Account presents profit/loss from
ordinary activities. There are no extra- ordinary items or changes in
accounting estimates and policies during the year under review which
need to be disclosed as per AS 5 issued by the Institute of Chartered
Accountants of India. The prior period adjustments represent interest
paid for delay in payment of income tax.
2.1.8 Cash Flow Statements:
Cash Flows are reported as per the Indirect Method as specified in AS 3
issued by the Institute of Chartered Accountants of India.
2.1.9 Previous Year Figures:
The figures for the previous year have been rearranged as follows to
facilitate comparison
2.2 Fixed Assets
2.2.1 Tangible Fixed Assets: In accordance with AS 10 issued by the
Institute of Chartered Accountants of India,
i) Tangible Fixed Assets are stated at cost of acquisition or
construction net of accumulated depreciation and accumulated impairment
losses, if any.
ii) The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable incidental
expenses related to acquisition and installation and other
pre-operative expenses of bringing the asset to its working condition
for the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
iii) Subsequent expenditure related to an item of fixed asset is added
to its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
changed to the statement of profit and loss for the period during which
such expenses are incurred
iv) From accounting periods commencing on or after 7th December, 2006,
the company adjusts exchange differences arising on
translation/settlement of long-term foreign currency monetary items
pertaining to the acquisition of a depreciable asset to the cost of the
asset and depreciates the same over the remaining life of the asset.
v) Gains or losses arising from derecognition of fixed assets 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 derecognized
2.2.2 Depreciation on Tangible Fixed Assets: In accordance with AS 6
issued by the Institute of Chartered Accountants of India,
i) Depreciation on Tangible Fixed Assets is provided as per the
straight line method at the rates prescribed in Schedule XIV to the
Companies Act, 1956, for the period for which the asset is put to use.
ii) Leasehold land is amortized on a straight line basis over the
period of the lease.
2.2.3 Intangible Fixed Assets: In accordance with AS 26 issued by the
Institute of Chartered Accountants of India,
i) Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in an
amalgamation in the nature of purchase is their fair value as at the
date of amalgamation. 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, are not capitalized and
expenditure is reflected in the statement of profit and loss in the
year in which the expenditure is incurred
ii) Intangible assets are amortized on a straight line basis over the
estimated useful economic life. The Company uses a rebuttable
presumption that the useful life of an intangible asset will not exceed
ten years from the date when the asset is available for use. If the
persuasive evidence exists to the effect that useful life of an
intangible asset exceeds ten years, the Company amortizes the
intangible asset over the best estimate of its useful life.
iii) Such intangible assets and intangible assets not yet available for
use are tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired
iv) The amortization period and the amortization 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. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies.
v) Gains or losses arising from derecognition 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 derecognized
vi) The Company has expensed the preliminary expenses and those
pre-operative expenses which did not result in the creation of a
tangible asset and the amalgamation expenses incurred in earlier years
2.2.4 Borrowing Costs: In accordance with Accounting Standard 16 issued
by the Institute of Chartered Accountants of India,
i) Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the A1 arrangement of borrowings and
exchange differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to the interest cost
ii) A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale
iii) Borrowing costs that are attributable to the acquisition,
construction or production of qualifying assets are capitalized as part
of the cost of such assets. All other borrowing costs are recognized as
an expense in the period in which those are incurred
2.2.5 Impairment of tangible and intangible assets: In accordance with
AS 28 issued by the Institute of Chartered Accountants of India.
i) The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the recoverable amount of the asset. Such recoverable amount
is the higher of an asset's or cash-generating unit's (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used
ii) The Company bases its impairment calculation on detailed budgets
and forecast calculations which are prepared separately for each of the
Company's cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. For longer periods, a long-term growth
rate is calculated and applied to project future cash flows after the
fifth year.
iii) Impairment losses of continuing operations, including impairment
on inventories, are recognized in the statement of profit and loss,
except for previously revalued tangible fixed assets, where the
revaluation was taken to revaluation reserve. In this case, the
impairment is also recognized in the revaluation reserve up to the
amount of any previous revaluation
iv) After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
v) An assessment is made at each reporting date as to whether there is
any indication that previously recognized impairment losses may no
longer exist or may have decreased. If such indication exists, the
Company estimates the asset's or cash-generating unit's recoverable
amount. A previously recognized impairment loss is reversed only if
there has been a change in the assumptions used to determine the
asset's recoverable amount since the last impairment loss was
recognized The reversal is limited so that the carrying amount of the
asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no
impairment loss been recognized for the asset in prior years. Such
reversal is recognized in the statement of profit and loss unless the
asset is carried at a revalued amount, in which case the reversal is
treated as a revaluation increase
2.2.6 Research and development costs: In accordance with AS 26 issued
by the Institute of Chartered Accountants of India,
i) Research costs are expensed as incurred. Development expenditure
incurred on an individual project is recognized as an intangible asset
when the Company can demonstrate all the following
a) The technical feasibility of completing the intangible asset so that
it will be available for use or sale
b) Its intention to complete the asset
c) Its ability to use or sell the asset
d) How the asset will generate future economic benefits
e) The availability of adequate resources to complete the development
and to use or sell the asset
f) The ability to measure reliably the expenditure attributable to the
intangible asset during development
ii) Following the initial recognition of the development expenditure as
an asset, the cost model is applied requiring the asset to be carried
at cost less any accumulated amortization and accumulated impairment
losses. Amortization of the asset begins when development is complete
and the asset is available for use. It is amortized on a straight line
basis over the period of expected future benefit from the related
project. Amortization is recognized in the statement of profit and
loss. During the period of development, the asset is tested for
impairment annually.
2.2.7 Leases: In accordance with Accounting Standard 19, issued by the
Institute of Chartered Accountants of India,
A Where the company is lessee
i) Finance leases, which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
leased item, are capitalized at the inception of the lease term at the
lower of the fair value of the leased property and present value of
minimum lease payments. Lease payments are apportioned between the
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 recognized as finance costs in the statement of
profit and loss. Lease management fees, legal charges and other initial
direct costs of lease are capitalized
ii) A leased asset is depreciated on a straight-line basis over the
useful life of the asset or the usefu life envisaged in Schedule XIV to
the Companies Act, 1956, whichever is lower. However, if there is no
reasonable certainty that the Company will obtain the ownership by the
end of the lease term, the capitalized asset is depreciated on a
straight-line basis over the shorter of the estimated usefu life of the
asset, the lease term or the useful life envisaged in Schedule XIV to
the Companies Act, 1956.
iii) Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the statement of profit and loss on a straight-line basis over the
lease term
B Where the Company is the lessor
i) Leases in which the Company transfers substantially all the risks
and benefits of ownership of the asset are classified as finance
leases. Assets given under finance lease are recognized as a receivable
at an amount equal to the net investment in the lease. After initial
recognition, the Company apportions lease rentals between the principal
repayment and interest income so as to achieve a constant periodic rate
of return on the net investment outstanding in respect of the finance
lease. The interest income is recognized in the statement of profit and
loss. Initial direct costs such as legal costs, brokerage costs, etc.
are recognized immediately in the statement of profit and loss
ii) Leases in which the Company does not transfer substantially all the
risks and benefits of ownership of the asset are classified as
operating leases. Assets subject to operating leases are included in
fixed assets. Lease income on an operating lease is recognized in the
statement of profit and loss on a straight-line basis over the lease
term. Costs, including depreciation, are recognized as an expense in
the statement of profit and loss. Initial direct costs such as legal
costs, brokerage costs, etc. are recognized immediately in the
statement of profit and loss
2.3 Investments: In accordance with AS 13 issued by the Institute of
Chartered Accountants of India,
i) Investments, which are readily realizable and intended to be held
for not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
ii) On initial recognition, all investments are measured at cost. The
cost comprises purchase price and directly attributable acquisition
charges such as brokerage, fees and duties. If an investment is
acquired, or partly acquired, by the issue of shares or other
securities, the acquisition cost is the fair value of the securities
issued. If an investment is acquired in exchange for another asset, the
acquisition is determined by reference to the fair value of the asset
given up or by reference to the fair value of the investment acquired,
whichever is more clearly evident.
iii) Current investments are carried in the financial statements at
lower of cost and fair value determined on an individual investment
basis. Long-term investments are carried at cost. However, provision
for diminution in value is made to recognize a decline other than
temporary in the value of the investments
iv) On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss
v) An investment in land or buildings, which is not intended to be
occupied substantially for use by, or in the operations of, the
Company, is classified as investment property. Investment properties
are stated at cost, net of accumulated depreciation and accumulated
impairment losses, if any.
vi) The cost comprises purchase price, borrowing costs if
capitalization criteria are met and directly attributable cost of
bringing the investment property to its working condition for the
intended use. Any trade discounts and rebates are deducted in arriving
at the purchase price.
vii) Depreciation on building component of investment property is
calculated on a straight-line basis using the rate arrived at based on
the useful life estimated by the management, or that prescribed under
the Schedule XIV to the Companies Act, 1956, whichever is higher.
viii) On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss
2.4 Inventories: In accordance with Accounting Standards 2 & 9 issued
by the Institute of Chartered Accountants of India,
i) Construction materials, components, stores and spares are valued at
lower of cost and net realizable value (as certified by the management)
after providing for the cost of obsolescence. However, materials and
other items held for use in the production of inventories are not
written down below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost. Cost of raw
materials, components and stores and spares is determined on FIFO basis
ii) Inventories of work in progress are valued, in accordance with the
Percentage of Completion Method. Profit on incomplete projects is not
recognized unless 20% expenditure has been Incurred in respect of the
project. Based on projections and estimates by the Company of the
expected revenues and costs to completion, provision for losses to
completion and/or write off of costs carried to inventories is made on
projects where the expected revenues are lower than the estimated costs
to completion. In the opinion of the management, the net realisable
value of the work in progress as at the balance sheet date will not be
lower than the costs so included therein
iii) Inventories of finished tenements are valued at the carrying value
or estimated net realizable value, (as certified by the management)
whichever is the less.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
2.5 Revenue Recognition: In accordance with AS 9 issued by the
Institute of Chartered Accountants of India,
i) Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company. The following specific
recognition criteria must also be met before revenue is recognized
ii) Income from real estate sales is recognized on the transfer of all
significant risks and rewards of ownership to the buyer and it is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration
iii) However, if, at the time of transfer, substantial acts are yet to
be performed, revenue is recognized on proportionate basis as the acts
are performed, that is, on the percentage of completion basis
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
and the foreseeable losses to completion. As the construction projects
necessarily extend beyond one year, revision in estimates of costs and
revenues during the year under review are reflected in the accounts of
the year.
iv) Revenue from sale of goods is recognized when all the significant
risks and rewards of ownership of the goods have been passed to the
buyer, usually on delivery of the goods. The Company collects sales
taxes and value added taxes (VAT) on behalf of the government and,
therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue. Excise duty deducted from
revenue (gross) is the amount that is included in the revenue (gross)
v) Revenues from maintenance contracts are recognized pro-rata over the
period of the contract as and when services are rendered. The Company
collects service tax on behalf of the government and, therefore, it is
not an economic benefit flowing to the Company. Hence, it is excluded
from revenue.
vi) Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
vii) Dividend income is recognized when the Company's right to receive
dividend is established by the reporting date.
2.6 Expense Recognition: Revenue Expenses such as those incurred on
foreign and domestic exhibitions, advertisement for sale of tenements,
interest on borrowings attributable to specific projects are included
in the valuation of inventories of work in progress. Indirect costs are
treated as period costs and are charged to the Profit & Loss Account in
the year incurred. Expenses incurred on repairs & maintenance of
completed projects are charged to Profit & Loss Account
2.7 Foreign currency transactions and balances: In accordance with AS
11 issued by the Institute of Chartered Accountants of India.
i) Initial recognition: Foreign currency transactions are recorded in
the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction
ii) Conversion: Foreign currency monetary items are retranslated using
the exchange rate prevailing at the reporting date. Non-monetary items,
which are measured in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of the
transaction. Non-monetary items, which are measured at fair value or
other similar valuation denominated in a foreign currency, are
translated using the exchange rate at the date when such value was
determined
iii) Exchange differences: From accounting periods commencing on or
after 7 December 2006, the Company accounts for exchange differences
arising on translation/settlement of foreign currency monetary items as
below:
a) Exchange differences arising on a monetary item that, in substance,
forms part of the Company's net investment in a non-integral foreign
operation is accumulated in the foreign currency translation reserve
until the disposal of the net investment. On the disposal of such net
investment, the cumulative amount of the exchange differences which
have been deferred and which relate to that investment is recognized as
income or as expenses in the same period in which the gain or loss on
disposal is recognized
b) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset in accordance
with the Ministry of Corporate Affairs Notification dated 31st March
2009. For this purpose, the Company treats a foreign monetary item as
"long-term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination
c) Exchange differences arising on other long-term foreign currency
monetary items are accumulated in the "Foreign Currency Monetary Item
Translation Difference Account" and amortized overthe remaining life of
the concerned monetary item
d) All other exchange differences are recognized as income or as
expenses in the period in which they arise.
iv) Translation of integral and non-integral foreign operation: The
Company classifies all its foreign operations as either "integral
foreign operations" or "non-integral foreign operations." The financial
statements of an integral foreign operation are translated as if the
transactions of the foreign operation have been those of the Company
itself. The assets and liabilities of a non- integral foreign operation
are translated into the reporting currency at the exchange rate
prevailing at the reporting date and their statement of profit and loss
are translated at annual average exchange rates. The exchange
differences arising on translation are accumulated in the foreign
currency translation reserve. On disposal of a non-integral foreign
operation, the accumulated foreign currency translation reserve
relating to that foreign operation is recognized in the statement of
profit and loss. When there is a change in the classification of a
foreign operation, the translation procedures applicable to the revised
classification are applied from the date of the change in the
classification
2.8 Retirement and other employee benefits: In accordance with
Accounting Standard 15 issued by the Institute of Chartered Accountants
of India,
i) Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the year when the
contributions are due. The Company has no obligation, other than the
contribution payable to the provident fund
ii) The Company operates one defined benefit plan for its employees,
viz., gratuity. The cost of providing benefits under this plan are
determined on the basis of actuarial valuation at each year- end using
the projected unit credit method. The Company has obtained a policy
from the Life nsurance Corporation of India in respect of the gratuity
obligation and the annual contribution paid by the Company to LIC is
charged to the profit & loss statement. The actuarial gains and losses
for the defined benefit plan are not recognized in the period in which
they occur in the statement of profit and loss
2.9 Tax Expense: In accordance with Accounting Standard 22 issued by
the Institute of Chartered Accountants of India,
i) Tax expense comprises current and deferred tax.
ii) Current income-tax is measured at the amount expected to be paid to
the tax authorities in accordance with the Income-tax Act, 1961 enacted
in India and tax laws prevailing in the respective tax jurisdictions
where the Company operates. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted, at the
reporting date. Current income tax relating to items recognized
directly in equity is recognized in equity and not in the statement of
profit and loss
iii) Deferred tax assets and liabilities are recognized for future tax
consequences attributable to the timing differences between taxable
income and accounting income that are capable of reversal in one or
more subsequent periods and are measured using tax rates enacted or
substantively enacted as at the balance sheet date. Deferred income tax
relating to items recognized directly in equity is recognized in equity
and not in the statement of profit and loss.
iv) Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits
v) In the situations where the Company is entitled to a tax holiday
under the Income-tax Act, 1961 enacted in India or tax laws prevailing
in the respective tax jurisdictions where it operates, no deferred tax
(asset or liability) is recognized in respect of timing differences
which reverse during the tax holiday period, to the extent the
Company's gross total income is subject to the deduction during the tax
holiday period. Deferred tax in respect of timing differences which
reverse after the tax holiday period is recognized in the year in which
the timing differences originate. However, the Company restricts
recognition of 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. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
vi) At each reporting date, the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax asset to
the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized
vii) The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
viii) Deferred tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set- off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes
relate to the same taxable entity and the same taxation authority.
ix) Minimum alternate tax (MAT) paid in a year is charged to the
statement of profit and loss as current tax. The Company recognizes MAT
credit available for a particular assessment year as an asset only
after the assessment for that year is complete and such credit is
finally quantified and only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the Company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income- tax Act, 1961, the said asset is created by way of credit to
the statement of profit and loss and shown as "MAT Credit Entitlement"
under the head "Current Assets". The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down its carrying
amount to the extent such credit is set-off u/s 115JAA or to the extent
the Company does not have convincing evidence that it will pay normal
tax during the specified period
2.10 Consolidated Financial Statements: In accordance with AS 21 and AS
27 issued by the Institute of Chartered Accountants of India, separate
consolidated financial statements of the Company and its Subsidiaries
have been prepared by combining on a line-to-line basis by adding
together the book values of like items of assets, liabilities, incomes
and expenses after fully eliminating intra-group balances, intra- group
transactions and unrealised profits and losses
2.11 Earnings Per Share: In accordance with Accounting Standard 20,
issued by the Institute of Chartered Accountants of India,
i) Basic earnings per share are calculated by dividing the net profit
or loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they are entitled to participate in dividends relative to a
fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events such as bonus issue, bonus element in a rights
issue, share split, and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources
ii) For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares,
except where the results are anti-dilutive.
2.12 Provisions: In accordance with Accounting Standard 29 issued by
the Institute of Chartered Accountants of India,
i) A provision is recognized when the Company has a present obligation
as a result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates. Where the Company
expects some or all of a provision to be reimbursed, for example under
an insurance contract, the reimbursement is recognized as a separate
asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of profit and
loss net of any reimbursement.
ii) Warranty provisions: Provisions for warranty-related costs are
recognized when the product is sold or service provided. Provision is
based on historical experience. The estimate of such warranty-related
costs is revised annually.
2.13 Contingent Liabilities and Contingent Assets: In accordance with
Accounting Standard 29 issued by the Institute of Chartered Accountants
of India,
i) A contingent liability is a possible obligation that arises from
past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
ii) Contingent assets are not recognized
2.14 Measurement of EBITDA
i) As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The Company
measures EBITDA on the basis of profit/floss) from continuing
operations. In its measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense
2.15 Accounting Standards not applicable to the Company during the year
under review:
i) Construction Contracts: AS 7 is not applicable since the Company is
not engaged in execution of construction contracts
ii) Accounting for Government Grants: AS 12 is not applicable since the
Company has not received any Government Grants
iii) Accounting for Amalgamations: AS 14 is not applicable since the
Company has not so far entered into any amalgamation
iv) Segment reporting: AS 17 is not applicable since the Company
operates only in one segment, to wit, real estate development
v) Accounting for Investments in Associates in Consolidated Financial
Statements: AS 23 is not applicable since the Company is not required
to consolidate its financial statements
vi) Discontinuing Operations: AS 24 is not applicable since the Company
has not so far discontinued operations
vii) Interim Financial Reporting: AS 25 is not applicable to the
financial statements under review.
viii) Financial Reporting of Interests in Joint Ventures: AS 27 is not
applicable since the Company has no joint ventures.
Mar 31, 2011
1 The Company is not a Small and Medium Sized Company (SMC) as defined
in the General Instructions in respect of Accounting Standards notified
under the Companies Act, 1956, inasmuch as its equity securities are
listed on the National & Bombay Stock Exchanges, it did have borrowings
(including public deposits) in excess of Rs. 10 crores at any time
during the immediately preceding accounting year and its turnover
(excluding other income) exceeded Rs. 50 crores in the immediately
preceding accounting year.
2 Accordingly, these financial statements comply in all material
respects with the relevant provisions of the Companies Act, 1956, the
Generally Accepted Accounting Principles in India, and the Accounting
Standards issued by the Institute of Chartered Accountants of India
which are prescribed in the Companies (Accounting Standards) Rules 2006
notified by the Central Government under section 211(3C) read with
sections 210A(1) and 642(1)(a) of the said Act. As required by AS 1
issued by the Institute of Chartered Accountants of India, the
accounting policies followed in the preparation of these financial
statements are disclosed below.
3 Basis of Preparation of Financial Statements
a) Accounting Convention: These financial statements are prepared under
the historical cost convention.
b) Method of Accounting: As required by Section 209(3)(b) of the
Companies Act, 1956, these financial statements are prepared in
accordance with the accrual method of accounting with revenues
recognized and expenses accounted on their accrual including provisions
/ adjustments for committed obligations and amounts determined as
payable or receivable during the period.
c) Use of Estimates: The preparation of financial statements requires
management to make judgements, estimates and assumptions, that affect
the application of accounting policies and the reported amounts of
assets and liabilities and disclosures of contingent liabilities at the
date of these financial statements and the reported amounts of revenues
and expenses for the years presented. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which
the estimate is revised and future years affected.
d) Consistency: These financial statements have been prepared on a
basis consistent with previous years and accounting policies not
specifically referred hereto are consistent with generally accepted
accounting principles.
e) Cash Flow Statements: Cash Flows are reported as per the Indirect
Method as specified in AS 3 issued by the Institute of Chartered
Accountants of India.
f) Contingencies and Events occurring after the Balance Sheet Date: AS
4 issued by the Institute of Chartered Accountants of India is not
applicable since there are no such contingencies nor events.
g) Net Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies: The Company's Profit & Loss Account presents
profit / loss from ordinary activities. There are no extraordinary
items or changes in accounting estimates and policies during the year
under review which need to be disclosed as per AS 5 issued by the
Institute of Chartered Accountants of India. The prior period
adjustments represent interest paid for delay in payment of income tax.
h) Previous Year Figures: The figures in the balance sheet for the
previous year have been rearranged to facilitate comparison.
4 Effect of Changes in Foreign Exchange Rates: In accordance with AS 11
issued by the Institute of Chartered Accountants of India, transactions
in foreign currencies are recorded at the rate of exchange prevailing
on the date of the transaction. Monetary items denominated in foreign
currency and outstanding at the balance sheet date are translated at
the rate of exchange prevailing on the balance sheet date. In the case
forward contracts for foreign exchange, the difference between the
forward rate and the exchange rate at the date of the transaction is
recognized over the life of the contract. Such contracts outstanding at
the year end are marked to market, and the resultant exchange
difference is recognised as income or expense in the profit and loss
account. The profit or loss arising on cancellation or renewal of such
contracts is recognised as income or expense for the year.
5 Fixed Assets
a) Accounting for Fixed Assets: In accordance with AS 10 issued by the
Institute of Chartered Accountants of India, Fixed Assets are stated at
cost of acquisition or construction less accumulated depreciation. Cost
includes all incidental expenses related to acquisition and
installation, other pre-operative expenses and interest in case of
construction.
b) Leases: In accordance with Accounting Standard 19, issued by the
Institute of Chartered Accountants of India, assets given / taken on
lease under which all risks and rewards of ownership are effectively
retained by the lessor are classified as operating lease. Lease income
/ payments under operating leases are recognised as an income / expense
on a straight-line basis over the lease term. The Company has not so
far entered into any financial lease arrangement.
c) Borrowing Costs: In accordance with Accounting Standard 16 issued by
the Institute of Chartered Accountants of India, borrowing costs that
are attributable to the acquisition, construction or production of
qualifying assets are capitalized as part of the cost of such assets. A
qualifying asset is an asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which those are incurred.
d) Intangible Assets: In accordance with AS 26 & AS 10 issued by the
Institute of Chartered Accountants of India, the Company has expensed
the preliminary expenses and those pre-operative expenses which did not
result in the creation of a tangible asset. However, share issue
expenses (which are outside the purview of AS 26) are deferred and
written off over a period of five years.
e) Impairment of Assets: In accordance with AS 28 issued by the
Institute of Chartered Accountants of India, the carrying amount of
cash generating units / assets is reviewed at the balance sheet date to
determine whether there is any indication of impairment. If such
indication exists, the recoverable amount is estimated as the net
selling price or" value in use", whichever is the higher. Impairment
loss, if any, is recognized whenever the carrying amount exceeds the
recoverable amount.
6 Investments: In accordance with AS 13 issued by the Institute of
Chartered Accountants of India, investments are classified into long
term and current investments. Long term investments are carried at
cost. Provision for diminution, if any, in the value of each long term
investment is made to recognize a decline other than of a temporary
nature. Current investments are carried individually at lower of cost
and fair value and the resultant decline, if any, is charged to
revenue.
7 Inventories: In accordance with AS 2 & 9 issued by the Institute of
Chartered Accountants of India,
a) Inventories of finished tenements are valued at the carrying value
or estimated net realizable value, (as certified by the management)
whichever is the less.
b) Inventories of work in progress are valued, in accordance with the
Percentage of Completion Method. Profit on incomplete projects is not
recognized unless 20% expenditure has been incurred in respect of the
project. Based on projections and estimates by the Company of the
expected revenues and costs to completion, provision for losses to
completion and / or write off of costs carried to inventories has been
made on projects where the expected revenues are lower than the
estimated costs to completion. In the opinion of the management, the
net realisable value of the work in progress will not be lower than the
costs so included therein.
c) Inventories of construction materials are valued at cost of
acquisition or net replacement value (as certified by the management),
whichever is the less.
8 Revenue Recognition :
a) In accordance with AS 9 issued by the Institute of Chartered
Accountants of India, income from real estate sales is recognized on
the transfer of all significant risks and rewards of ownership to the
buyer and it is not unreasonable to expect ultimate collection and no
significant uncertainty exists regarding the amount of consideration.
b) However, if, at the time of transfer, substantial acts are yet to be
performed, revenue is recognized on proportionate basis as the acts are
performed, that is, on the percentage of completion basis.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the project
and the foreseeable losses to completion. As the construction projects
necessarily extend beyond one year, revision in estimates of costs and
revenues during the year under review are reflected in the accounts of
the year.
9 Expense Recognition: Revenue Expenses such as those incurred on
foreign and domestic exhibitions, advertisement for sale of tenements,
interest on borrowings attributable to specific projects are included
in the valuation of inventories of work in progress. Indirect costs are
treated as period costs and are charged to the Profit & Loss Account in
the year incurred. Expenses incurred on repairs & maintenance of
completed projects are charged to Profit & Loss Account.
10 Employee Benefits :
a) In accordance with Accounting Standard 15 issued by the Institute of
Chartered Accountants of India, benefits to the employees comprising of
payments under defined contribution plans like provident fund and
family pension fund are charged to Profit & Loss Account. There are no
defined benefit plans.
b) The liability for gratuity is funded through Group Gratuity scheme
of the Life Insurance Corporation of India which is in nature of a
Defined Contribution Plan and accordingly periodic contributions to the
LIC are charged to Profit & Loss Account.
11 Provisions, Contingent Liabilities and Contingent Assets: In
accordance with Accounting Standard 29 issued by the Institute of
Chartered Accountants of India, provisions are recognized in the
accounts in respect of present probable obligations, the amount of
which can be reliably estimated. Contingent liabilities are disclosed
in respect of possible obligations that arise from past events but
their existence is confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company. Contingent assets are not recognized.
12 Tax Expense :
a) In accordance with Accounting Standard 22 issued by the Institute of
Chartered Accountants of India, Tax expense comprises current corporate
tax and deferred corporate tax. Current corporate tax is measured at
the amount expected to be paid to the tax authorities using the
applicable tax rates and tax laws. Minimum Alternative Tax (MAT) credit
for a particular assessment year is recognised as an asset only after
the assessment for that year is complete and such credit is finally
quantified. The recognition of such credit is limited to the extent
there is convincing evidence that the Company's corporate tax liability
under the normal scheme of taxation, during the period in which the MAT
Credit can be carried forward u/s 115JAA of the IT Act, 1961, will
exceed the MAT liability u/s 115JB. In accordance with the
recommendations contained in the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), in the year in which the MAT
credit becomes eligible to be recognised as an asset, t he said asset
is created by way of a credit to the profit and loss account and shown
as "MAT credit entitlement" under the head "Current Assets".
b) The Company reviews the "MAT credit entitlement" at each balance
sheet date and writes down its carrying amount to the extent such
credit is set-off u/s 115JAA or there is no longer convincing evidence
as stated supra. Deferred corporate tax assets and liabilities are
recognized for future tax consequences attributable to the timing
differences between taxable income and accounting income that are
capable of reversal in one or more subsequent periods and are measured
using tax rates enacted or substantively enacted as at the balance
sheet date. Deferred corporate tax assets are not recognized unless, in
the judgement of the management, there is virtual certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. The carrying amount of deferred
corporate tax is reviewed at each balance sheet date.
13 Related Party Disclosures: Please see Annexure
14 Earnings per Share: The Company reports basic and diluted Earnings
per share (EPS) in accordance with Accounting Standard 20, issued by
the Institute of Chartered Accountants of India. Basic EPS is computed
by dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year. Diluted EPS is computed by dividing the
net profit or loss for the year attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
year as adjusted for the effects of all dilutive potential equity
shares, except where the results are anti-dilutive. The basic & diluted
EPS is stated in the Profit & Loss Account as well as in the Notes to
Accounts.
15 Consolidated Financial Statements: In accordance with AS 21 and AS
27 issued by the Institute of Chartered Accountants of India, separate
consolidated financial statements of the Company and its Subsidiaries
and Jointly Controlled Entities have been prepared by combining on a
line-to-line basis by adding together the book values of like items of
assets, liabilities, incomes and expenses after fully eliminating
intra-group balances, intra-group transactions and unrealised profits
and losses.
16 Financial Reporting of Interests in Joint Ventures: In accordance
with Para 53 of AS 27 issued by the Institute of Chartered Accountants
of India, the Company has made the necessary disclosures in Annexure 1
hereto. The Consolidated Financial Statements include the book values
of like items of assets, liabilities, incomes and expenses of the
Company's Joint Ventures after fully eliminating intra-group balances,
intra-group transactions and unrealised profits and losses.
17 Accounting Standards not applicable to the Company during the year
under review:
a) Construction Contracts: AS 7 is not applicable since the Company is
not engaged in execution of construction contracts
b) Accounting for Government Grants: AS 12 is not applicable since the
Company has not so far received any Government Grants.
c) Accounting for Amalgamations: AS 14 is not applicable since the
Company has not entered into any amalgamation during the year under
review.
d) Segment Reporting: AS 17 is not applicable since the company
operates only in one segment, namely, integrated real estate
development and construction of residential and commercial tenements.
e) Accounting for Investments in Associates in Consolidated Financial
statements: AS 23 is not applicable because the Company has no
associates.
f) Discontinuing Operations: AS 24 is not applicable since the Company
has not so far discontinued operations.
g) Interim Financial Reporting: AS 25 is not applicable since these
financial statements are not interim statements.
h) Financial Instruments - Recognition & Measurement, Presentation &
Disclosures: AS 30, 31 & 32 issued by the Institute of Chartered
Accountants of India are recommendatory in nature for the intial period
of two years, i.e; FYs 2009-10 & 2010-11 and will become mandatory
w.e.f 01st April, 2011. Moreover, the said standards have not so far
been notified by the Central Government u/s 211(3C) of the Companies
Act,1956. Hence, the Company has not applied these accounting standards
in the preparation and presentation of these financial statements.
Mar 31, 2010
The Company is not a Small and Medium Sized Company (SMC) as defined in
the General Instructions in respect of Accounting Standards notified
under the Companies Act, 1956, inasmuch as its equity securities are
listed on the National & Bombay Stock Exchanges, it did have borrowings
(including public deposits) in excess of Rs 10 crores at any time
during the immediately preceding accounting year and its turnover
(excluding other income) exceeded Rs 50 crores in the immediately
preceding accounting year.
Accordingly, these financial statements comply in all material respects
with the relevant provisions of the Companies Act, 1956, the Generally
Accepted Accounting Principles in India, and the following Accounting
Standards issued by the Institute of Chartered Accountants of India
which are prescribed in the Companies (Accounting Standards) Rules 2006
notified by the Central Government under section 211(3C) read with
sections 210A(1) and 642(1)(a) of the said Act:
1. AS 1: Disclosure of Accounting Policies - The accounting policies
followed in the preparation of these financial statements are disclosed
below.
2. AS 2: Valuation of Inventories -
(i) Inventories of finished tenements are valued at the carrying value
or estimated net realizable value, (as certified by the management)
whichever is the less.
(ii) Inventories of work in progress are valued, in accordance with the
Percentage of Completion
Method. Profit on incomplete projects is not recognized unless 20%
expenditure has been incurred in respect of the project. Based on
projections and estimates by the Company of the expected revenues and
costs to completion, provision for losses to completion and / or write
off of costs carried to inventories has been made on projects where the
expected revenues are lower than the estimated costs to completion. In
the opinion of the management, the net realisable value of the work in
progress will not be lower than the costs so included therein.
(iii) Inventories of construction materials are valued at cost of
acquisition or net replacement value (as certified by the management),
whichever is the less.
3 AS 3: Cash Flow Statements - Cash Flows are reported as per the
Indirect Method as specified in AS 3 issued by the Institute of
Chartered Accountants of India.
4 AS 4: Contingencies and Events occurring after the Balance Sheet Date
- This AS is not applicable since there are no such contingencies nor
events.
5 AS 5: Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies -
The Companys Profit & Loss Account presents profit / loss form
ordinary activities. There are no extra-ordinary items or changes in
accounting estimates and policies during the year under review. The
prior period adjustments represent interest paid for delay in payment
of income tax
6 AS 6: Depreciation Accounting - In accordance with AS 6 issued by the
Institute of Chartered Accountants of India, depreciation is provided
as per the straight line method at the rates prescribed in Schedule XIV
to the Companies Act, 1956.
7 AS 7: Construction Contracts - This AS is not applicable since the
Company is not engaged in execution of construction contracts.
8 AS 9: Revenue Recognition - In accordance with AS 9 issued by the
Institute of Chartered Accountants of India, income from real estate
sales is recognized on the transfer of all significant risks and
rewards of ownership to the buyer and it is not unreasonable to expect
ultimate collection and no significant uncertainty exists regarding
the amount of consideration. However, if, at the time of transfer,
substantial acts are yet to be performed, revenue is recognized on
proportionate basis as the acts are performed, that is, on the
percentage of completion basis. Determination of revenues under the
percentage of completion method necessarily involves making estimates
by the Company, some of which are of technical nature, concerning,
where relevant, the percentages of completion, costs to completion,
the expected revenues from the project and the foreseeable losses to
completion. As the construction projects necessarily extend beyond
one year, revision in estimates of costs and revenues during the year
under review are reflected in the accounts of the year.
9 AS 10: Accounting for Fixed Assets - In accordance with AS 10 issued
by the Institute of Chartered Accountants of India, Fixed Assets are
stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to
acquisition and installation, other pre- operative expenses and
interest in case of construction.
10 AS 11: The Effects of Changes in Foreign Exchange Rates - In
accordance with AS 11 issued by the Institute of Chartered Accountants
of India, transactions in foreign currencies are recorded at the rate
of exchange prevailing on the date of the transaction. Monetary items
denominated in foreign currency and outstanding at the balance sheet
date are translated at the rate of exchange prevailing on the balance
sheet date.
In the case of forward exchange contracts, the premium or discount
arising at the inception is amortised as income or expense over the
life of the contract. Such contracts outstanding at the year end are
marked to market, and the resultant exchange difference is recognised
as income or expense in the profit and loss account. The profit or loss
arising on cancellation or renewal of such contracts is recognised as
income or expense for the year.
11 AS 12: Accounting for Government Grants - This AS is not applicable
since the Company has not so far received any Government Grants.
12 AS 13: Accounting for Investments - In accordance with AS 13 issued
by the Institute of Chartered Accountants of India, investments are
classified into long term and current investments. Long term
investments are carried at cost. Provision for diminution, if any, in
the value of each long term investment is made to recognize a decline
other than of a temporary nature. Current investments are carried
individually at lower of cost and fair value and the resultant decline,
if any, is charged to revenue.
13 AS 14: Accounting for Amalgamations - This AS is not applicable
since the Company has not entered into any amalgamation during the year
under review.
14 AS 15: Employee Benefits - In accordance with Accounting Standard 15
issued by the Institute of Chartered Accountants of India, benefits to
the employees comprising of payments under defined contribution plans
like provident fund and family pension fund are charged to Profit &
Loss Account. There are no defined benefit plans.
The liability for gratuity is funded through Group Gratuity scheme of
the Life Insurance Corporation of India which is in nature of a Defined
Contribution Plan and accordingly periodic contributions to the LIC are
charged to Profit & Loss Account.
15 AS 16: Borrowing Costs - In accordance with Accounting Standard 16
issued by the Institute of Chartered Accountants of India, borrowing
costs that are attributable to the acquisition, construction or
production of qualifying assets are capitalized as part of the cost of
such assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which those are incurred.
16 AS 17: Segment Reporting - The company operates only in one segment,
namely, integrated real estate development and construction of
residential and commercial tenements. Hence the requirements of Segment
Reporting pursuant to AS 17 issued by the Institute of Chartered
Accountants of India are not applicable.
17 AS 18: Related Party Disclosures - Please see Annexure.
18 AS 19: Leases - In accordance with Accounting Standard 19, issued by
the Institute of Chartered Accountants of India, assets given / taken
on lease under which all risks and rewards of ownership are effectively
retained by the lessor are classified as operating lease. Lease income
/ payments under operating leases are recognised as an income / expense
on a straight-line basis over the lease term.
19 AS 20: Earnings per Share - The Company reports basic and diluted
Earnings per share (EPS) in accordance with Accounting Standard 20,
issued by the Institute of Chartered Accountants of India. Basic EPS
is computed by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss for the year attributable to equity
shareholders by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all dilutive
potential equity shares, except where the results are anti-dilutive.
The basic & diluted EPS is stated in the Profit & Loss Account as well
as in the Notes to Accounts.
20 AS 21 & 27: Consolidated Financial Statements - In accordance with
AS 21 and AS 27 issued by the Institute of Chartered Accountants of
India, the consolidated financial statements of the Company and its
Subsidiaries and Jointly Controlled Entities have been prepared by
combining on a line-to-line basis by adding together the book values of
like items of assets, liabilities, incomes and expenses after fully
eliminating intra-group balances, intra-group transactions and
unrealised profits and losses.
21 AS 22: Accounting for taxes on Income - In accordance with
Accounting Standard 22 issued by the Institute of Chartered Accountants
of India, Tax expense comprises current corporate tax and deferred
corporate tax. Current corporate tax is measured at the amount expected
to be paid to the tax authorities using the applicable tax rates and
tax laws. Minimum Alternative Tax (MAT) credit for a particular
assessment year is recognised as an asset only after the assessment for
that year is complete and such credit is finally quantified. The
recognition of such credit is limited to the extent there is convincing
evidence that the Companys corporate tax liability under the normal
scheme of taxation, during the period in which the MAT Credit can be
carried forward u/s 115JAA of the IT Act, 1961, will exceed the MAT
liability u/s 115JB. In accordance with the recommendations contained
in the guidance note issued by the Institute of Chartered Accountants
of India (ICAI), in the year in which the MAT credit becomes eligible
to be recognised as an asset, the said asset is created by way of a
credit to the profit and loss account and shown as "MAT credit
entitlement" under the head "Current Assets".
The Company reviews the "MAT credit entitlement" at each balance sheet
date and writes down its carrying amount to the extent such credit is
set-off u/s 115JAA or there is no longer convincing evidence as stated
supra. Deferred corporate tax assets and liabilities are recognized for
future tax consequences attributable to the timing differences between
taxable income and accounting income that are capable of reversal in
one or more subsequent periods and are measured using tax rates enacted
or substantively enacted as at the balance sheet date. Deferred
corporate tax assets are not recognized unless, in the judgement of the
management, there is virtual certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realized. The carrying amount of deferred corporate tax is reviewed at
each balance sheet date.
22 AS 23: Accounting for Investments in Associates in Consolidated
Financial statements - This AS is not applicable because the Company
has no associates.
23 AS 24: Discontinuing Operations - This AS is not applicable since
the Company has not so far discontinued operations.
24 AS 25: Interim Financial Reporting - This AS is not applicable to
the financial statements under review.
25 AS 26: Intangible Assets - In accordance with AS 26 issued by the
Institute of Chartered Accountants of India, the Company has charged
against revenue the amalgamation expenses incurred in the year under
review and in earlier years. However, share Issue expenses (which are
outside the purview of AS 26) are deferred and written off over a
period of five years.
26 AS 27: Financial Reporting of Interests in Joint Ventures - In
accordance with Para 53 of AS 27 issued by the Institute of Chartered
Accountants of India, the Company has made the necessary disclosures in
Annexure 1 hereto. The Consolidated Financial Statements include the
book values of like items of assets, liabilities, incomes and expenses
of the Companys Joint Ventures after fully eliminating intra-group
balances, intra-group transactions and unrealised profits and losses.
27 AS 28: Impairment of Assets - In accordance with AS 28 issued by the
Institute of Chartered Accountants of India, the carrying amount of
cash generating units / assets is reviewed at the balance sheet date to
determine whether there is any indication of impairment. If such
indication exists, the recoverable amount is estimated as the net
selling price or" value in use", whichever is the higher. Impairment
loss, if any, is recognized whenever the carrying amount exceeds the
recoverable amount.
28 AS 29: Provisions, Contingent Liabilities and Contingent Assets - In
accordance with Accounting Standard 29 issued by the Institute of
Chartered Accountants of India, provisions are recognized in the
accounts in respect of present probable obligations, the amount of
which can be reliably estimated. Contingent liabilities are disclosed
in respect of possible obligations that arise from past events but
their existence is confirmed by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company. Contingent assets are not recognized.
29 AS 30, 31 & 32: Financial Instruments: Recognition & Measurement,
Presentation & Disclosures - The said standards issued by the Institute
of Chartered Accountants of India are recommendatory in nature for the
intial period of two years, i.e; FYs 2009-10 & 2010-11 and will become
mandatory w.e.f 01st April, 2011. Moreover, the said standards have not
so far been notified by the Central Government u/s 211(3C) of the
Companies Act,1956. Hence, the Company has not applied these accounting
standards in the preparation and presentation of these financial
statements.
30 Accounting Convention: These financial statements are prepared under
the historical cost convention.
31 Accrual Method of Accounting: As required by Section 211 of the
Companies Act, 1956, these financial statements are prepared in
accordance with the accrual method of accounting with revenues
recognized and expenses accounted on their accrual including provisions
/ adjustments for committed obligations and amounts determined as
payable or receivable during the period.
32 Expense Recognition: Revenue Expenses such as those incurred on
foreign and domestic exhibitions, advertisement for sale of tenements,
interest on borrowings attributable to specific projects are included
in the valuation of inventories of work in progress. Indirect costs are
treated as period costs and are charged to the Profit & Loss Account in
the year incurred. Expenses incurred on repairs & maintenance of
completed projects are charged to Profit & Loss Account.
33 Consistency: These financial statements have been prepared on a
basis consistent with previous years and accounting policies not
specifically referred hereto are consistent with generally accepted
accounting principles.
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More Information on DS Kulkarni Developers Ltd.
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DS Kulkarni Developers Ltd. Tools
- Bulk Deals
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DS Kulkarni Developers Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
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Company History
- Rights
- BSE Price History
- NSE Price History
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DS Kulkarni Developers Ltd. Key Financial Ratios
- Ratios
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DS Kulkarni Developers Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
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DS Kulkarni Developers Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
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DS Kulkarni Developers Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
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DS Kulkarni Developers Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
