Accounting Policies of Mahindra Lifespace Developers Ltd. Company
Mar 31, 2023
1. General Information
Mahindra Lifespace Developers Limited (âthe Companyâ) is a limited company incorporated in India. Its Corporate Identification Number is (CIN) L45200MH1999PLC118949. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Its parent and ultimate holding company is Mahindra & Mahindra Limited.
The addresses of its registered office is disclosed in the introduction to the annual report. The Company along with its subsidiary companies is engaged in the development of residential projects and large formats developments such as integrated cities and industrial clusters.
2. Significant Accounting Policies
2.1 Statement of compliance and basis of preparation and presentation
The Standalone Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Companies Act, 2013 (the âActâ) and other relevant provision of the act. The aforesaid financial statements have been approved by the Companyâs Board of Directors and authorised for issue in the meeting held on 25th April, 2023.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.2 Basis of measurement
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical Cost: Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire them at the time of
their acquisition. Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes), at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.
2.3 Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In measuring the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these standalone financial statements is determined on such basis, except for share-based payment transactions that are within the scope of Ind AS 102 - "Share based Paymentsâ, leasing transactions within the scope of Ind AS 116, "Leasesâ and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - "Inventoriesâ or value in use in Ind AS 36 - "Impairment of Assetsâ.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2 : Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 : Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2.4 Revenue from Contracts with Customers
2.4.1 Revenue from Projects
i. The Company develops and sells residential and commercial properties. Revenue from contracts is recognised when control over the property has been transferred to the customer. An enforceable right to payment does not arise until the development of the property is completed. Therefore, revenue is recognised at a point in time as per IND AS 115 when (a) the seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate unit to a degree usually associated with ownership, (b) The seller has effectively handed over possession of the real estate unit to the buyer forming part of the transaction; (c) No significant uncertainty exists regarding the amount of consideration that will be derived from real estate unit sales; and (d) It is not unreasonable to expect ultimate collection of revenue from buyers. The revenue is measured at the transaction price agreed under the contract.
ii. The Company invoices the customers for construction contracts based on achieving performance-related milestones.
iii. For certain contracts involving the sale of property under development, the Company offers deferred payment schemes to its customers. The Company adjusts the transaction price for the effects of the significant financing component.
iv. Costs to obtain contracts ("Contract costsâ) relate to fees paid for obtaining property sales contracts. Such costs are recognised as assets when incurred and amortised upon recognition of revenue from the related property sale contract.
v. Contract assets is the Companyâs right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned on something other than the passage of time
vi. The Company recognizes revenue at a point in time in each reporting period considering the estimates like reasonableness of collections from customers, disputes with the customer which may result in the cancellation of the contract, which are re assessed periodically by the management. The effect of these changes to estimates is recognised in the period when changes are determined. Accordingly any revenues attributable to such changes and the corresponding Cost of Goods Sold ("COGSâ) previously recognised are reversed and reduced from the current yearâs Revenue and COGS respectively.
2.4.2 Revenue from Sale of land and other rights
Revenue from Sale of land and other rights is generally a single performance obligation and the Company has determined that this is satisfied at the point in time when control transfers as per the terms of the contract entered into with the buyers, which generally are with the firmity of the sale contracts / agreements.
2.4.3 Revenue from Project Management fees and Rental Income
Revenue from Project Management Fees and Rental Income are recognized on accrual basis as per the terms and conditions of relevant agreements.
2.4.4 Dividend and interest income
Dividend income from investments in shares is recognized when right to receive is established, which is generally when shareholders approve the dividend.
Dividend income from investment in mutual funds is recognised when the unit holderâs right to receive payment has been established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
2.5 Current versus non-current classification
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Based on the nature of activity carried out by the company and the period between the procurement and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 3 to 5 years for the purpose of Current - Non Current classification of assets & liabilities.
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is classified as current when it is:
â Expected to be realised or intended to be sold or consumed in normal operating cycle
â Held primarily for the purpose of trading
â Expected to be realised within twelve months after the reporting period, or
â Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
The Company classifies all other assets as non-current.
A liability is classified as current when:
â I t is expected to be settled in normal operating cycle
â It is held primarily for the purpose of trading
â It is due to be settled within twelve months after the reporting period, or
â There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Borrowings are classified as current if they are due to be settled within 12 months after the reporting period.
2.6 Leasing
2.6.1 The Company as a Lessor
Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as expense on a straight-line basis over the lease term. The respective leased assets are presented in the balance sheet based on their nature. The Company did not need to make any adjustments to the accounting for assets held as a lessor.
2.6.2 The Company as a Lessee
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability at the lease commencement date i.e. the date at which the leased asset is available for use by the Company. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of right-of-use asset or the end of the lease term. The estimated useful lives of right-of use assets are determined
on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that, at the commencement date, have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straightline basis over the lease term.
2.7 Foreign exchange transactions and translation
Transactions in foreign currencies i.e. other than the Companyâs functional currency are recognised at
the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated using the closing rate prevailing at that date. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was measured. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise except for:
⢠Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
⢠Exchange differences on transactions entered to hedge certain foreign currency risks.
2.8 Employee Benefits
2.8.1 Defined contribution plans
The Companyâs contribution to provident fund and superannuation fund is considered as defined contribution plan and is charged as an expense in profit and loss based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
2.8.2 Defined benefit plan
Defined benefit gratuity plan is wholly or partly funded by contributions by the Company. The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using an actuarial technique, the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows with reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
Net interest on the net defined benefit liability (asset) is the change during the period in the net defined benefit liability (asset) that arises from the passage of time.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
2.8.3 Remeasurement gains/losses
Remeasurement of defined benefit plans, comprising of actuarial gains or losses, return on plan assets excluding interest income are recognised immediately in balance sheet with corresponding debit or credit to other comprehensive income. They are included in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet. Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be reclassified to profit or loss in subsequent period.
Remeasurement gains or losses on long term compensated absences that are classified as other long term benefits are recognised in profit or loss.
2.8.4 Short-term and other long-term employee benefits:
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is
accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees up the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
2.8.5 Employee Stock Option Scheme
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period the Company revises its estimate of the No. of equity instruments expected to vest. The impact of revision of the original estimate, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate with the corresponding adjustments to the equity settled.
2.9 Cash and Cash Equivalents
Cash and cash equivalent in the Balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
2.10 Earnings per share
The Company reports basic and diluted earnings per share in accordance with Ind AS - 33 on âEarnings per Shareâ. Basic earnings per share is computed by
dividing the profit or loss attributable to ordinary equity holders of the Company for the year by the weighted average number of Equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit or loss attributable to ordinary equity holders of the Company for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all diluted potential equity shares except where the results are anti-dilutive.
2.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until substantially all the activities necessary to prepare the qualifying assets for its intended use or sale are complete.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.12 Income Taxes
Income Tax expense represents the sum of tax currently payable and deferred tax
2.12.1 Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in Equity.
2.12.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
2.12.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.13 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Furniture & Fixtures and Office equipmentâs are stated at cost l ess accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortised over the period of lease/ estimated period of lease.
Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle for the Company.
Sales office and the sample flat/ show unit cost at site is amortised over 5 years or the duration of the project (as estimated by management) whichever is lower.
Computers, computer equipmentâs and furniture and fixtures are depreciated over the period of 1 year to 10 years.
Plant and equipmentâs are depreciated over the period of 1 year to 7 years.
Fixed Assets held for disposal are valued at estimated net realizable value.
2.14 Intangible Assets
2.14.1 Intangible assets acquired separately
I ntangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
2.14.2 Derecognition of Intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.
2.14.3 Useful lives of Intangible assets
Estimated useful lives of the intangible assets are as follows:
Computer Software 5 years
2.15 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
Investment property includes freehold/leasehold land and building. Depreciation on investment property has been provided on pro-rata basis, on the straight-line
2.17 Inventories
Raw materials are valued at lower of cost and net realisable value. Cost is determined based on a weighted average basis.
Stock of units in completed projects and construction work-in- progress are valued at lower of cost and net realisable value. Cost includes land cost, materials, contract works, direct expenses and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
2.18 Cost of Construction/Development
Cost of Construction/Development (including cost of land) incurred is charged to the statement of profit and loss proportionate to project area sold. Costs incurred for projects which have not received Occupancy/ Completion Certificate is carried over as construction work-in-progress. Costs incurred for projects which have received Occupancy/Completion Certificate is carried over as Completed Properties.
2.19 Dividend Distribution
Dividends paid (including income tax thereon) is recognized in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
2.20 Provisions and contingent liabilities 2.20.1 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
method as per the useful life of such property. Buildings are depreciated over the period of 60 years considering this period as the useful life for the Company.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
2.16 Impairment of tangible and intangible asset
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash generating unit, as the case may be, is estimated and the impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions and contingent liabilities are reviewed at each Balance Sheet date.
2.20.2 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.20.3 Contingent liabilities
Contingent liability is disclosed in case of:
a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
b) a present obligation arising from past events, when no reliable estimate is possible.
2.21 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. However, trade receivables that do not contain a significant financing component are measured at transaction price.
2.21.1 Classification and subsequent measurement
2.21.1.1 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured at either amortised cost or fair value depending on their respective classification.
On initial recognition, a financial asset is classified as - measured at:
â Amortised cost; or
â Fair Value through Other Comprehensive Income (FVTOCI) - debt investment; or
â Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or
â Fair Value Through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
All financial assets not classified as measured at amortised cost or FVTOCI are measured at FVTPL.
Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs
and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Debt investment at FVTOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in Other Comprehensive Income (OCI). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVTOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for medium or long term strategic purpose.
Equity investments that are not designated as measured at FVTOCI are designated as measured at FVTPL and subsequent changes in fair value are recognised in profit or loss.
Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
2.21.1.2 Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of directly attributable transaction costs.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is a derivative (that does not meet hedge accounting requirements) or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
2.21.2 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
2.21.3 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
2.21.4 Impairment of financial assets
The Company applies the expected credit loss (ECL) model for recognising impairment loss on financial assets. With respect to trade receivables, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVTOCI, the loss allowance is recognised in OCI and is not reduced from the carrying amount of the financial asset in the balance sheet.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities under the Companyâs recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Investment in Subsidiaries and Joint Ventures:
The entire carrying amount of the investment in subsidiaries, associates and joint ventures is tested for impairment in accordance with Ind AS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment.
2.21.5 Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and/ or payable is recognised in profit or loss.
3. Use of estimates and judgements
In the application of the Companyâs accounting policies, which are described in note 2, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
In the process of applying the Companyâs accounting policies, management has made the following judgements based on estimates and assumptions, which have the significant effect on the amounts recognised in the financial statements:
A. Useful lives of property, plant and equipment, Investment Property and Intangible Asset
The Company reviews the useful life of property, plant and equipment, Investment Property and Intangible Asset at the end of each reporting period. This re-assessment may result in change in depreciation expense in future periods.
B. Fair value measurements and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets, liabilities and share based payments are disclosed in the notes to the financial statements.
C. Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through
independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in other comprehensive income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.
D. Taxes
Deferred tax assets are recognised for temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
E. Determination of the timing of revenue recognition on the sale of completed and under development property
The Company has evaluated and generally concluded that the recognition of revenue over the period of time criteria are not met owing to non-enforceable right to payment for performance completed to date and, therefore, recognises revenue at a point in time. The Company has further evaluated and concluded that based on the analysis of the rights and obligations under the terms of the contracts relating to the sale of property, the revenue is to be recognised at a point in time when control transfers which coincides with receipt of Occupation Certificate.
F. Determination of performance obligations
With respect to the sale of property, the Company has evaluated and concluded that the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property
is to undertake development of property and obtaining the Occupation Certificate. Generally, the Company is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Company accounts for them as a single performance obligation because they are not distinct in the context of the contract.
G. Impairment of investments
The Company assesses impairment of investments in subsidiaries, associates and joint ventures which are recorded at cost. At the time when there are any indications that such investments have suffered a loss, if any, is recognised in the statement of Profit and Loss. The recoverable amount requires estimates of operating margin, discount rate, future growth rate, terminal values, etc. based on managementâs best estimate
H. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of IND AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the noncancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonable certain to exercise that option and period covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. The Company revises the lease term if there is a change in the non-cancellable period of the lease.
The discount rate is generally based on increment borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
Mar 31, 2022
1. General Information
Mahindra Lifespace Developers Limited (âthe Companyâ) is a limited company incorporated in India. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Its parent and ultimate holding company is Mahindra & Mahindra Limited.
The addresses of its registered office is disclosed in the introduction to the annual report. The Company along with its subsidiary companies is engaged in the development of residential projects and large formats developments such as integrated cities and industrial clusters.
2. Significant Accounting Policies
2.1 Statement of compliance and basis of preparation and presentation
The Standalone Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Companies Act, 2013 (the âActâ) and other relevant provision of the act. The aforesaid financial statements have been approved by the Companyâs Board of Directors and authorised for issue in the meeting held on 27th April, 2022.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.2 Basis of measurement
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.3 Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date,
regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these standalone financial statements is determined on such basis, except for share-based payment transactions that are within the scope of Ind AS 102 - Share based Payments and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2: Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2.4 Revenue from Contracts with Customers
2.4.1 Revenue from Projects
i. The Company develops and sells residential and commercial properties. Revenue from contracts is recognised when control over the property has been transferred to the customer. An enforceable right to payment does not arise until the development of the property is completed. Therefore, revenue is recognised at a point in time i.e. Completed contract method of accounting as per IND AS 115 when (a) the seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually
associated with ownership, (b) The seller has effectively handed over possession of the real estate unit to the buyer forming part of the transaction; (c) No significant uncertainty exists regarding the amount of consideration that will be derived from real estate sales; and (d) It is not unreasonable to expect ultimate collection of revenue from buyers. The revenue is measured at the transaction price agreed under the contract.
ii. The Company invoices the customers for construction contracts based on achieving performance-related milestones.
iii. For certain contracts involving the sale of property under development, the Company offers deferred payment schemes to its customers. The Company adjusts the transaction price for the effects of the significant financing component.
iv. Costs to obtain contracts ("Contract costsâ) relate to fees paid for obtaining property sales contracts. Such costs are recognised as assets when incurred and amortised upon recognition of revenue from the related property sale contract.
v. Contract assets is the Companyâs right to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditioned on something other than the passage of time.
2.4.2 Revenue from Sale of land and other rights
Revenue from Sale of land and other rights is generally a single performance obligation and the Company has determined that this is satisfied at the point in time when control transfers as per the terms of the contract entered into with the buyers, which generally are with the firmity of the sale contracts / agreements.
2.4.3 Revenue from Project Management fees and Rental Income
Revenue from Project Management Fees and Rental Income are recognized on accrual basis as per the terms and conditions of relevant agreements.
2.4.4 Dividend and interest income
Dividend income from investment in mutual funds is recognised when the unit holderâs right to receive payment has been established
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
2.5 Current versus non-current classification
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Based on the nature of activity carried out by the company and the period between the procurement and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 5 years for the purpose of Current - Non Current classification of assets & liabilities.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
â Expected to be realised or intended to be sold or consumed in normal operating cycle
â Held primarily for the purpose of trading
â Expected to be realised within twelve months after the reporting period, or
â Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
â It is expected to be settled in normal operating cycle
â It is held primarily for the purpose of trading
â It is due to be settled within twelve months after the reporting period, or
â There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as
non-current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
Borrowings are classified as current if they are due to
be settled within 12 months after the reporting period.
2.6 Leasing
2.6.1 The Company as a Lessor
Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as expense on a straightline basis over the lease term. The respective leased assets are included in the balance sheet based on their nature. The Company did not need to make any adjustments to the accounting for assets held as a lessor as a result of adopting IND AS 116-Leases.
2.6.2 The Company as a Lessee
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease
liability at the lease commencement date i.e. the date at which the leased asset is available for use by the Company. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to shortterm leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
2.7 Foreign exchange transactions and translation
Transactions in foreign currencies i.e. other than the Companyâs functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
2.8 Employee Benefits
2.8.1 Defined contribution plans
The Companyâs contribution paid/payable during the year to Superannuation Fund and Provident fund is recognised in profit or loss.
2.8.2 Defined benefit plan
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows with reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
2.8.3 Remeasurement gains/losses
Remeasurement of defined benefit plans, comprising of actuarial gains or losses, return on plan assets excluding interest income are recognised immediately in balance sheet with corresponding debit or credit to other comprehensive income. They are included in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet. Remeasurements are not reclassified to profit or loss in subsequent period.
Remeasurement gains or losses on long term compensated absences that are classified as other long term benefits are recognised in profit or loss.
2.8.4 Short-term and other long-term employee benefits:
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees up the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
2.8.5 Employee Stock Option Scheme
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
At the end of each reporting period the Company revises its estimate of the No. of equity instruments expected to vest. The impact of revision of the original estimate, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate with the corresponding adjustments to the equity settled.
2.9 Cash and Cash Equivalents
Cash and cash equivalent in the Balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
2.10 Earnings per share
The Company reports basic and diluted earnings per share in accordance with Ind AS - 33 on âEarnings per Shareâ. Basic earnings per share is computed by dividing the net profit or loss for the year by the weighted average number of Equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all diluted potential equity shares except where the results are anti- dilutive.
2.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.12 Income Taxes
Income Tax expense represents the sum of tax currently payable and deferred tax
2.12.1 Current tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year. The Companyâs current tax is calculated using tax rate that has been enacted or substantially enacted by the end of the reporting period.
2.12.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
2.12.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.13 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost,
less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Furniture & Fixtures and Office equipmentâs are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortised over the period of lease/estimated period of lease.
Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle for the Company.
Sales office and the sample flat/ show unit cost at site is amortised over 5 years or the duration of the project (as estimated by management) whichever is lower.
Fixed Assets held for disposal are valued at estimated net realizable value.
difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
2.16 Impairment of tangible and intangible asset other than Goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash generating unit, as the case may be, is estimated and the impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.17 Inventories
Inventories are stated at lower of cost and net realisable value. The cost of construction material is determined on the basis of weighted average method. Construction Work-in-Progress includes cost of land, premium for development rights, construction costs and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
2.14 Intangible Assets
2.14.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
2.14.2 Derecognition of Intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.
2.14.3 Useful lives of Intangible assets
Estimated useful lives of the intangible assets are as follows:
Computer Software 5 years
2.15 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
Investment property includes freehold/leasehold land and building. Depreciation on investment property has been provided on pro-rata basis, on the straight-line method as per the useful life of such property. Buildings are depreciated over the period of 60 years considering this period as the useful life for the Company.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the
2.18 Cost of Construction/Development
Cost of Construction/Development (including cost of land) incurred is charged to the statement of profit and loss proportionate to project area sold. Costs incurred for projects which have not received Occupancy/ Completion Certificate is carried over as construction work-in-progress. Costs incurred for projects which have received Occupancy/Completion Certificate is carried over as Completed Properties.
2.19 Dividend Distribution
Dividends paid (including income tax thereon) is recognized in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
2.20 Provisions and contingent liabilities
2.20.1 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions and contingent liabilities are reviewed at each Balance Sheet date.
2.20.2 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract
under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.20.3 Contingent liabilities
Contingent liability is disclosed in case of:
a) a present obligation arising from past
events, when it is not probable that an outflow of resources will be required to settle the obligation; and
b) a present obligation arising from past
events, when no reliable estimate is possible.
2.21Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
2.21.1 Classification and subsequent measurement
2.21.1.1 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured at either amortised cost or fair value depending on their respective classification.
On initial recognition, a financial asset is classified as - measured at:
â Amortised cost; or
â Fair Value through Other Comprehensive
Income (FVTOCI) - debt investment; or
â Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or
â Fair Value Through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
All financial assets not classified as measured at amortised cost or FVTOCI are measured at FVTPL.
Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Debt investment at FVTOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in Other Comprehensive Income (OCI). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVTOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair
value recognised in other comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for medium or long term strategic purpose.
Equity investments that are not designated as measured at FVTOCI are designated as measured at FVTPL and subsequent changes in fair value are recognised in profit or loss.
Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
2.21.1.2 Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of directly attributable transaction costs.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is a derivative (that does not meet hedge accounting requirements) or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
2.21.2 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows
in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
2.21.3 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
2.21.4 Impairment of financial assets
The Company applies the expected credit loss (ECL) model for recognising impairment loss on financial assets. With respect to trade receivables, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVTOCI, the loss allowance is recognised in OCI and is not reduced from the carrying amount of the financial asset in the balance sheet.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcement activities under the Companyâs recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
2.21.5 Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and/or payable is recognised in profit or loss.
3. Use of estimates and judgements
In the application of the Companyâs accounting policies, which are described in note 2, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
In the process of applying the Companyâs accounting policies, management has made the following judgements based on estimates and assumptions, which have the significant effect on the amounts recognised in the financial statements:
A. Useful lives of property, plant and equipment, Investment Property and Intangible Asset
The Company reviews the useful life of property, plant and equipment, Investment Property and Intangible Asset at the end of each reporting period. This re-assessment may result in change in depreciation expense in future periods.
B. Fair value measurements and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets, liabilities and share based payments are disclosed in the notes to the financial statements.
C. Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in other comprehensive income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.
D. Taxes
Deferred tax assets are recognised for temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
E. Determination of the timing of revenue recognition on the sale of completed and under development property
The Company has evaluated and generally concluded that the recognition of revenue over the period of time criteria are not met owing to non-enforceable right to payment for performance completed to date and, therefore, recognises revenue at a point in time. The Company has further evaluated and concluded that based on the analysis of the rights and obligations under the terms of the contracts relating to the sale of property, the revenue is to be recognised at a point in time when control transfers which coincides with receipt of Occupation Certificate.
F. Determination of performance obligations
With respect to the sale of property, the Company has evaluated and concluded that the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property is to undertake development of property and obtaining the Occupation Certificate. Generally, the Company is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Company accounts for them as a single performance obligation because they are not distinct in the context of the contract.
G. Impairment of investments
The Company assesses impairment of investments in subsidiaries, associates and joint ventures which are recorded at cost. At the time when there are any indications that such investments have suffered a loss, if any, is recognised in the statement of Profit and Loss. The recoverable amount requires estimates of operating margin, discount rate, future growth rate, terminal values, etc. based on managementâs best estimate
H. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of IND AS 116. Identification of a lease requires significant judgement. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonable certain to exercise that option and period covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. The Company revises the lease term if there is a change in the non-cancellable period of the lease.
The discount rate is generally based on increment borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
Mar 31, 2019
1.1 Statement of compliance and basis of preparation and presentation
The Standalone Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Companies Act, 2013 (the âActâ) and other relevant provision of the act. The aforesaid financial statements have been approved by the Companyâs Board of Directors and authorised for issue in the meeting held on 22nd April, 2019.
2.2 Basis of measurement
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.3 Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these standalone financial statements is determined on such basis, except for share-based payment transactions that are within the scope of Ind AS 102 - Share based Payments, leasing transactions that are within the scope of Ind AS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
- Level 2 : Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 : Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2.4 Revenue from Contracts with Customers
2.4.1 Revenue from Projects
i. The Company develops and sells residential and commercial properties. Revenue from contracts is recognised when control over the property has been transferred to the customer. An enforceable right to payment does not arise until the development of the property is completed. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer and the development of the property is completed. The revenue is measured at the transaction price agreed under the contract.
ii. The Company invoices the customers for construction contracts based on achieving performance-related milestones.
iii. For certain contracts involving the sale of property under development, the Company offers deferred payment schemes to its customers. The Company adjusts the transaction price for the effects of the significant financing component.
iv. Costs to obtain contracts (âContract costsâ) relate to fees paid for obtaining property sales contracts. Such costs are recognised as assets when incurred and amortised upon recognition of revenue from the related property sale contract.
2.4.2 Revenue from Sale of land and other rights
Revenue from Sale of land and other rights is generally a single performance obligation and the Company has determined that this is satisfied at the point in time when control transfers as per the terms of the contract entered into with the buyers, which generally are with the firmity of the sale contracts / agreements. The determination of transfer of control did not change upon the adoption of Ind AS 115 - Revenue from Contracts with Customers.
2.4.3 Revenue from Project Management fees
Project Management Fees receivable on fixed period contracts is accounted over the tenure of the contract/ agreement. Where the fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claims submitted. Where the management fee is linked to the revenue generation from the project, revenue is recognised on the percentage of completion basis. The determination of transfer of control did not change upon the adoption of Ind AS 115.
2.4.4 Dividend and interest income
Dividend income from investment in mutual funds is recognised when the unit holderâs right to receive payment has been established
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
2.5 Current versus non-current classification
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Based on the nature of activity carried out by the company and the period between the procurement and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 5 years for the purpose of Current - Non Current classification of assets & liabilities.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
â Expected to be realised or intended to be sold or consumed in normal operating cycle
â Held primarily for the purpose of trading
â Expected to be realised within twelve months after the reporting period, or
â Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
â It is expected to be settled in normal operating cycle
â It is held primarily for the purpose of trading
â It is due to be settled within twelve months after the reporting period, or
â There is is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Borrowings are classified as current if they are due to be settled within 12 months after the reporting period.
2.6 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
2.6.1 The Company as a Lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Companyâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
2.6.2 The Company as a Lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
2.7 Foreign exchange transactions and translation
Transactions in foreign currencies i.e. other than the Companyâs functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:
- Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- Exchange differences on transactions entered into in order to hedge certain foreign currency risks.
2.8 Employee Benefits
2.8.1 Superannuation Fund
The Companyâs contribution paid/payable during the year to Superannuation Fund is recognised in profit or loss.
2.8.2 Long term Compensated Absences & Gratuity
Companyâs liability towards long term compensated absences are determined by independent actuaries, using the projected unit credit method.
Companyâs liability towards gratuity are determined by independent actuaries, using the projected unit credit method. Past services are recognised at the earlier of the plan amendment/curtailment and the recognition of related restructuring costs/termination benefits.
The obligation on long term compensated absences and defined benefit plans are measured at the present value of estimated future cash flows using a discount rate that is determined by reference to the market yields at the balance sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the obligation.
2.8.3 Remeasurement gains/losses
Remeasurement of defined benefit plans, comprising of actuarial gains or losses, return on plan assets excluding interest income are recognised immediately in balance sheet with corresponding debit or credit to other comprehensive income. Remeasurements are not reclassified to profit or loss in subsequent period.
Remeasurement gains or losses on long term compensated absences that are classified as other long term benefits are recognised in profit or loss.
2.8.4 Employee Stock Option Scheme
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
2.9 Cash and Cash Equivalents
Cash and cash equivalent in the Balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
2.10 Earnings per share
Basic earnings per share is computed by dividing the profit/ (Loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue and bonus element in a right issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/ (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for arriving the basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.
2.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.12 Share based payment transaction of the Company
1. Equity-settled share-based payment to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
2. At the end of each reporting period the Company revises its estimate of the No. of equity instruments expected to vest. The impact of revision of the original estimate, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate with the corresponding adjustments to the equity settled.
2.13 Income Taxes
Income Tax expense represents the sum of tax currently payable and deferred tax
2.13.1 Current tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year. The Companyâs current tax is calculated using tax rate that has been enacted or substantially enacted by the end of the reporting period.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
2.13.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
2.13.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.14 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Furniture & Fixtures and Office equipmentâs are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortised over the period of lease/estimated period of lease.
Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle for the Company.
Sales office and the sample flat/ show unit cost at site is amortised over 5 years or the duration of the project (as estimated by management) whichever is lower.
Fixed Assets held for disposal are valued at estimated net realizable value.
2.15 Intangible Assets
2.15.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
2.15.2 Derecognition of Intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.
2.15.3 Useful lives of Intangible assets
Estimated useful lives of the intangible assets are as follows:
Computer Software 5 years
2.16 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
Investment property includes freehold/leasehold land and building. Depreciation on investment property has been provided on pro-rata basis, on the straight-line method as per the useful life of such property. Buildings are depreciated over the period of 60 years considering this period as the useful life for the Company.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
2.17 Impairment of tangible and intangible asset other than Goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash generating unit, as the case may be, is estimated and the impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.18 Inventories
Inventories are stated at lower of cost and net realisable value. The cost of construction material is determined on the basis of weighted average method. Construction Work-in-Progress includes cost of land, premium for development rights, construction costs and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
2.19 Dividend Distribution
Dividends paid (including income tax thereon) is recognized in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
2.20 Provisions and contingent liabilities
2.20.1 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions and contingent liabilities are reviewed at each Balance Sheet date.
2.20.2 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.20.3 Contingent liabilities
Contingent liability is disclosed in case of:
a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
b) a present obligation arising from past events, when no reliable estimate is possible.
2.21 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
2.21.1 Classification and subsequent measurement
2.21.1.1 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured at either amortised cost or fair value depending on their respective classification.
On initial recognition, a financial asset is classified as - measured at:
â Amortised cost; or
â Fair Value through Other Comprehensive Income (FVTOCI) - debt investment; or
â Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or
â Fair Value Through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
All financial assets not classified as measured at amortised cost or FVTOCI are measured at FVTPL.
Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Debt investment at FVTOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in Other Comprehensive Income (OCI). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVTOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for medium or long term strategic purpose.
Equity investments that are not designated as measured at FVTOCI are designated as measured at FVTPL and subsequent changes in fair value are recognised in profit or loss.
Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
2.21.1.2 Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of directly attributable transaction costs.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is a derivative (that does not meet hedge accounting requirements) or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
2.21.2 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
2.21.3 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
2.21.4 Impairment of financial assets
The Company applies the expected credit loss (ECL) model for recognising impairment loss on financial assets. With respect to trade receivables, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVTOCI, the loss allowance is recognised in OCI and is not reduced from the carrying amount of the financial asset in the balance sheet.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcement activities under the Companyâs recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
2.21.5 Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and/or payable is recognised in profit or loss.
3. Use of estimates and judgements
In the application of the Companyâs accounting policies, which are described in note 2, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
Key sources of estimation uncertainty
In the process of applying the Companyâs accounting policies, management has made the following judgements based on estimates and assumptions, which have the significant effect on the amounts recognised in the financial statements:
A. Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
B. Fair value measurements and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the fair value of various assets, liabilities and share based payments are disclosed in the notes to the financial statements.
C. Actuarial Valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in other comprehensive income. Such valuation depends upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.
D. Taxes
Deferred tax assets are recognised for temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
E. Determination of the timing of revenue recognition on the sale of completed and under development property
The Company has evaluated and generally concluded that the recognition of revenue over the period of time criteria are not met owing to non-enforceable right to payment for performance completed to date and, therefore, recognises revenue at a point in time. The Company has further evaluated and concluded that based on the analysis of the rights and obligations under the terms of the contracts relating to the sale of property, the revenue is to be recognised at a point in time when control transfers which coincides with receipt of Occupation Certificate.
F. Determination of performance obligations
With respect to the sale of property, the Company has evaluated and concluded that the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property is to undertake development of property and obtaining the Occupation Certificate. Generally, the Company is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Company accounts for them as a single performance obligation because they are not distinct in the context of the contract.
Mar 31, 2018
Notes to the Standalone Financial Statement as at and for the year ended 31st March, 2018
1. General Information
Mahindra Lifes paces Developers Limited (âthe Companyâ) is a limited company incorporated in India. The equity shares of the Company is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and its debentures are listed on BSE. Its parent and ultimate holding company is Mahindra & Mahindra Limited.
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report. The Company along with its subsidiary companies is engaged in the development of residential projects and large formats developments such as integrated cities and industrial clusters.
2. Significant Accounting Policies
2.1 Statement of compliance and basis of preparation and presentation
The Standalone Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Companies Act, 2013 (the Act) and other relevant provision of the act. The aforesaid financial statements have been approved by the Companyâs Board of Directors and authorised for issue in the meeting held on 27th April, 2018.
2.2 Basis of measurement
These financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
2.3 Measurement of Fair Values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these standalone financial statements is determined on such basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
- Level 2 : Inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 : Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2.4 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
2.4.1 Income from Projects
Income from real estate sales is recognised on the transfer of all significant risks and rewards of ownership to the buyers 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 under the contract, revenue is recognised on proportionate basis as the acts are performed, i.e. on the percentage of completion basis.
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the balance sheet under trade receivables, whereas amount not billed for work performed are included as unbilled revenue under other current assets.
Further, in accordance with the Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable) issued by the Institute of Chartered Accountants of India, revenues will be recognized from these real estate projects only when
i. All critical approvals necessary for commencement of the project have been obtained and;
ii. the actual construction and development cost incurred is at least 25% of the total construction and development cost (without considering land cost) and;
iii. when at least 10% of the sales consideration is realised and;
iv. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.
2.4.2 Income from Sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer of all significant risks and rewards of ownership of such real estate/property as per the terms of the contract entered into with the buyers, which generally are with the firmity of the sale contracts/agreements.
2.4.3 Income from Project Management
Project Management Fees receivable on fixed period contracts is accounted over the tenure of the contract/ agreement. Where the fee is linked to the input costs, revenue is recognised as a proportion of the work completed based on progress claims submitted. Where the management fee is linked to the revenue generation from the project, revenue is recognised on the percentage of completion basis.
2.4.4 Dividend and interest income
Dividend income from investment in mutual funds is recognised when the unit holderâs right to receive payment has been established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
2.5 Current versus non-current classification
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Based on the nature of activity carried out by the company and the period between the procurement and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 5 years for the purpose of Current - Non Current classification of assets & liabilities.
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
â Expected to be realised or intended to be sold or consumed in normal operating cycle
â Held primarily for the purpose of trading
â Expected to be realised within twelve months after the reporting period, or
â Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
â It is expected to be settled in normal operating cycle
â It is held primarily for the purpose of trading
â It is due to be settled within twelve months after the reporting period, or
â There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Borrowings are classified as current if they are due to be settled within 12 months after the reporting period.
2.6 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
2.6.1 The Company as a Lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Companyâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
2.6.2 The Company as a Lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
2.7 Foreign exchange transactions and translation
Transactions in foreign currencies i.e. other than the Companyâs functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:
- Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- Exchange differences on transactions entered into in order to hedge certain foreign currency risks.
2.8 Employee Benefits
2.8.1 Superannuation Fund
The Companyâs contribution paid/payable during the year to Superannuation Fund is recognised in profit or loss.
2.8.2 Long term Compensated Absences & Gratuity
Companyâs liability towards long term compensated absences are determined by independent actuaries, using the projected unit credit method.
Companyâs liability towards gratuity are determined by independent actuaries, using the projected unit credit method. Past services are recognised at the earlier of the plan amendment/curtailment and the recognition of related restructuring costs/termination benefits.
The obligation on long term compensated absences and defined benefit plans are measured at the present value of estimated future cash flows using a discount rate that is determined by reference to the market yields at the balance sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the obligation.
2.8.3 Remeasurement gains/losses
Remeasurement of defined benefit plans, comprising of actuarial gains or losses, return on plan assets excluding interest income are recognised immediately in balance sheet with corresponding debit or credit to other comprehensive income. Remeasurements are not reclassified to profit or loss in subsequent period.
Remeasurement gains or losses on long term compensated absences that are classified as other long term benefits are recognised in profit or loss.
2.8.4 Employee Stock Option Scheme
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
2.9 Cash and Cash Equivalents
Cash and cash equivalent in the Balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of changes in value.
2.10 Earnings per share
Basic earnings per share is computed by dividing the profit/ (Loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue and bonus element in a right issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/ (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for arriving the basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.
2.11 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.12 Share based payment transaction of the Company
1. Equity-settled share-based payment to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
2. At the end of each reporting period the Company revises its estimate of the No. of equity instruments expected to vest. The impact of revision of the original estimate, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate with the corresponding adjustments to the equity settled.
2.13 Income Taxes
Income Tax expense represents the sum of tax currently payable and deferred tax
2.13.1 Current tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year. The Companyâs current tax is calculated using tax rate that has been enacted or substantially enacted by the end of the reporting period.
2.13.2 Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
2.13.3 Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.14 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Furniture & Fixtures and Office equipmentâs are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortised over the period of lease/estimated period of lease.
Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle for the Company.
Sales office and the sample flat/ show unit cost at site is amortised over 5 years or the duration of the project (as estimated by management) whichever is lower.
Fixed Assets held for disposal are valued at estimated net realizable value.
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS i.e. 1 April, 2015, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
2.15 Intangible Assets
2.15.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
The Company has elected to continue with the carrying value of its Intangible assets as recognised in the financial statements as at the date of transition to Ind AS i.e. 1 April, 2015, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
2.15.2 Derecognition of Intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in profit or loss when the asset is derecognised.
2.15.3 Useful lives of Intangible assets
Estimated useful lives of the intangible assets are as follows:
Computer Software 5 years
2.16 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
Investment property includes freehold/leasehold land and building. Depreciation on investment property has been provided on pro-rata basis, on the straight-line method as per the useful life of such property. Buildings are depreciated over the period of 60 years considering this period as the useful life for the Company.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
The Company has elected to continue with the carrying value of its Investment property as recognised in the financial statements as at the date of transition to Ind AS i.e. 1 April, 2015, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
2.17 Impairment of tangible and intangible asset other than Goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash generating unit, as the case may be, is estimated and the impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.18 Inventories
Inventories are stated at lower of cost and net realisable value. The cost of construction material is determined on the basis of weighted average method. Construction Work-in-Progress includes cost of land, premium for development rights, construction costs and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
2.19 Provisions, contingent liabilities and contingent assets
2.19.1 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
2.19.2 Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.19.3 Contingent liabilities
Contingent liability is disclosed in case of:
a) a present obligation arising from past events, when
a) a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and
b) a present obligation arising from past events, when no reliable estimate is possible.
2.19.4 Contingent assets
Contingent assets are disclosed where an inflow of economic benefits is probable.
2.20 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
2.20.1 Classification and subsequent measurement
2.20.1.1 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured at either amortised cost or fair value depending on their respective classification.
On initial recognition, a financial asset is classified as - measured at:
â Amortised cost; or
â Fair Value through Other Comprehensive Income (FVTOCI) - debt investment; or
â Fair Value through Other Comprehensive Income (FVTOCI) - equity investment; or
â Fair Value Through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
All financial assets not classified as measured at amortised cost or FVTOCI are measured at FVTPL.
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Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain and loss on derecognition is recognised in profit or loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Debt investment at FVTOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in Other Comprehensive Income (OCI). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVTOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for medium or long term strategic purpose.
Equity investments that are not designated as measured at FVTOCI are designated as measured at FVTPL and subsequent changes in fair value are recognised in profit or loss.
Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
2.20.1.2 Financial liabilities and equity instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company is recognised at the proceeds received, net of directly attributable transaction costs.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is a derivative (that does not meet hedge accounting requirements) or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
2.20.2 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
2.20.3 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
2.20.4 Impairment of financial assets
The Company applies the expected credit loss (ECL) model for recognising impairment loss on financial assets. With respect to trade receivables, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVTOCI, the loss allowance is recognised in OCI and is not reduced from the carrying amount of the financial asset in the balance sheet.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcement activities under the Companyâs recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
3. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Companyâs accounting policies, which are described in note 2, the management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
Judgements
In the process of applying the Companyâs accounting policies, management has made the following judgements based on estimates and assumptions, which have the significant effect on the amounts recognised in the financial statements:
Taxes
Deferred tax assets are recognised for temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Mar 31, 2017
1) General Information
Mahindra Lifespace Developers Limited (âThe Companyâ) is a limited company incorporated in India. Its parent and ultimate holding company is Mahindra & Mahindra Limited.
The address of its registered office and principal place of business are disclosed in the introduction to the annual report. The Company along with its subsidiary companies is engaged in the development of residential projects and large formats developments such as integrated cities and industrial clusters.
2) Significant Accounting Policies
2.1 Statement of compliance
The financial statements have been prepared in accordance with Ind ASâs notified under the Companies (Indian Accounting Standards) Rules, 2015.
Up to the year ended 31st March 2016, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006.
These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is 1st April 2015. Refer note 2.19 for the details of first-time adoption exemptions availed by the Company.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability, if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
2.4 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
2.4.1 Income from projects
Income from real estate sales is recognized on the transfer of all significant risks and rewards of ownership to the buyers 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 under the contract, revenue is recognized on proportionate basis as the acts are performed, i.e. on the percentage of completion basis.
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
When contract costs incurred to date plus recognized profits less recognized losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the balance sheet, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the balance sheet under trade receivables, whereas amount not billed for work performed are included as unbilled revenue under other current assets.
Further, in accordance with the Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable) issued by the Institute of Chartered Accountants of India, revenues will be recognized from these real estate projects only when
i. All critical approvals necessary for commencement of the project have been obtained and
ii. the actual construction and development cost incurred is at least 25% of the total construction and development cost (without considering land cost) and
iii. when at least 10% of the sales consideration is realized and
iv. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.
2.4.2 Income from sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer of all significant risks and rewards of ownership of such real estate/property as per the terms of the contract entered into with the buyers, which generally with the firmity of the sale contracts/agreements.
2.4.3 Income from Project Management
Project Management Fees receivable on fixed period contracts is accounted over the tenure of the contract/agreement. Where the fee is linked to the input costs, revenue is recognized as a proportion of the work completed based on progress claims submitted. Where the management fee is linked to the revenue generation from the project, revenue is recognized on the percentage of completion basis.
2.4.4 Dividend and interest income
Dividend income from investment in mutual funds is recognized when the unit holderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
2.5 Foreign currencies
In preparing the financial statements of the Company, transactions in currencies other than the entityâs functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note 2.18 below for hedging accounting policies)
2.6 Borrowing costs
Borrowing costs that are directly attributable to long-term project management and development activities are capitalized as part of project cost. Other borrowing costs are recognized as expense in the period in which they are incurred.
Borrowing costs are capitalized as part of project cost when the activities that are necessary to prepare the asset for its intended use or sale are in progress. Borrowing costs are suspended from capitalization on the project when development work on the project is interrupted for extended periods.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
2.7 Share-based payment transaction of the Company
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 26.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Groupâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability is recognized for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is re measured, with any changes in fair value recognized in profit or loss for the year.
2.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
2.8.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
2.8.2 Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
2.8.3 Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
2.9 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated. Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortized over the period of lease/estimated period of lease.
Plant & Machinery includes Plant and Machinery used in civil construction - Others and amortized over a period of 5 years. Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle for the Company.
Sales office and the sample flat/ show unit cost at site is amortized over 5 years or the duration of the project (as estimated by management) whichever is lower.
Fixed Assets held for disposal are valued at estimated net realizable value.
2.10 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is de recognized.
2.11 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
2.12 Inventories
Inventories are stated at lower of cost and net realizable value. The cost of construction material is determined on the basis of weighted average method. Construction Work-in-Progress includes cost of land, premium for development rights, construction costs and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
2.13 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.13.1 Onerous contracts
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.
2.14 Financial instruments
Financial assets and financial liabilities are recognized when a Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
2.15 Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets
2.15.1 Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income is recognized in profit or loss for fair value through other comprehensive income (FVTOCI) debt instruments. For the purposes of recognizing foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortized cost. Thus, the exchange differences on the amortized cost are recognized in profit or loss and other changes in the fair value of FVTOCI financial assets are recognized in other comprehensive income and accumulated under the heading of âReserve for debt instruments through other comprehensive incomeâ. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to profit or loss.
All other financial assets are subsequently measured at fair value.
2.15.2 Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the âOther incomeâ line item.
2.15.3 Investments in equity instruments at fair value through other comprehensive income (FVTOCI)
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive incomeâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
2.15.4 Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Debt instruments that do not meet the amortized cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortized cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortized cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther incomeâ line item. Dividend on financial assets at FVTPL is recognized when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
2.15.5 Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information and also other factors like the underlying collateral security resulting in ultimate exposure which may lead to credit loss, if any.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognized in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
2.15.6 De recognition of financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de recognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
2.15.7 Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
- For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
- Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognized in other comprehensive income.
- For the purposes of recognizing foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortized cost. Thus, the exchange differences on the amortized cost are recognized in profit or loss and other changes in the fair value of FVTOCI financial assets are recognized in other comprehensive income.
2.16 Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
2.16.1 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Companyâs own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments.
2.16.2 Compound financial instruments
The component parts of compound financial instruments (convertible notes) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. A conversion option that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Companyâs own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recognized as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or at the instrumentâs maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound financial instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently re measured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to other component of equity. When the conversion option remains unexercised at the maturity date of the convertible note, the balance recognized in equity will be transferred to retained earnings. No gain or loss is recognized in profit or loss upon conversion or expiration of the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component and are amortized over the lives of the convertible notes using the effective interest method.
2.16.2.1 Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for de recognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
2.16.2.2 Financial liabilities at Fair value through profit and loss (FVTPL)
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a Company of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companyâs documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liabilityâs credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognized in profit or loss. The remaining amount of change in the fair value of liability is always recognized in profit or loss. Changes in fair value attributable to a financial liabilityâs credit risk that are recognized in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognized in profit or loss.
2.16.2.3 Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
2.16.2.4 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18.
2.16.2.5 Commitments to provide a loan at a below-market interest rate
Commitments to provide a loan at a below-market interest rate are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18.
2.16.2.6 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in âOther incomeâ.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss.
2.16.2.7 De recognition of financial liabilities
The Company de recognizes financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
2.17 First-time adoption - mandatory exceptions and optional exemptions
2.17.1 Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of 1st April, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
2.17.2 De recognition of financial assets and financial liabilities
The Company has applied the de recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1st April, 2015 (the transition date).
2.17.3 Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
2.17.4 Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
2.17.5 Assessment of embedded derivatives
The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.
2.17.6 Deemed cost for property, plant and equipment, investment property, and intangible assets
The Company has not elected the exemption of previous GAAP carrying value of all its Property, Plant and Equipment, Investment Property, and Intangible Assets recognized as of 1st April 2015 (transition date) as deemed cost.
2.17.7 Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
3) Critical accounting judgments and key sources of estimation uncertainty
In the application of the Companyâs accounting policies, which are described in note 2, the management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
Judgments
In the process of applying the Companyâs accounting policies, management has made the following judgments, which have the significant effect on the amounts recognized in the financial statements:
Taxes
Deferred tax assets are recognized for unused tax losses and other temporary differences leading to deferred tax assets to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Mar 31, 2016
a) Basis of Preparation:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in
India (Indian GAAP) to comply with the Accounting Standards applicable under Section 133 of the Companies Act, 2013, read with
Paragraph 7 of the Companies (Accounts) Rules, 2014 (as amended) and the relevant provisions of the Companies Act, 2013 ("the
2013 Act") as applicable. The financial statements have been prepared on an accrual basis and under the historical cost
convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous
year.
b) Presentation and Disclosure of Financial Statements
Assets & liabilities have been classified as current & non â current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of activity carried out by the company and
the period between the procurement and realization in cash and cash equivalents, the Company has ascertained its operating cycle
as 5 years for the purpose of Current â Non Current classification of assets & liabilities.
c) Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial
statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the
preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates.
d) Fixed Assets:
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 operation expenses and interest in case where the asset takes a
substantial period of time to be ready for its intended use.
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 higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life
prescribed in Schedule II to the Companies Act, 2013 except for certain assets as indicated below:
Lease hold improvements are amortized over the period of lease/estimated period of lease.
Plant & Machinery includes Plant and Machinery used in civil construction â Others and amortized over a period of 5 years.
Vehicles used by employees are depreciated over the period of 48 months considering this period as the useful life of the vehicle
for the Company.
Sales office and the sample fat/ show unit cost at site is amortized over 5 years or the duration of the project (as estimated by
management) whichever is lower.
e) Intangible Assets:
All Intangible Assets are initially measured at cost and amortized so as to reflect the pattern in which the assets'' economic
benefits are consumed.
Software expenses are treated as an intangible asset and amortized over the useful life of the asset. The maximum period for such
amortization is 36 months
f) Investments:
Investments are classified into Non-Current and Current Investments.
Non-current investments are carried at cost less diminution other than temporary. 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.
g) Inventories:
Inventories are stated at lower of cost and net realizable value. The cost of construction material is determined on the basis of
weighted average method. Construction Work-in-Progress includes cost of land, premium for development rights, construction costs
and allocated interest & manpower costs and expenses incidental to the projects undertaken by the Company.
h) Revenue Recognition:
Income from Projects
Income from real estate sales is recognized on the transfer of all significant risks and rewards of ownership to the buyers 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 under the contract, revenue is recognized on
proportionate basis as the acts are performed, i.e. on the percentage of completion basis. Up to 31st March, 2012, revenue from
real estate projects is recognized only when actual project cost incurred is at least 25% of the total estimated project costs
including land and when at least 10% of the sales consideration is received.
In accordance with the Guidance Note on Accounting for Real Estate Transactions (Revised 2012) issued by the Institute of
Chartered Accountants of India, in case of projects commencing on or after 1st April 2012 or in case of projects which have
already commenced but where revenue is being recognized for the first time on or after 1st April 2012, revenues will be
recognized from these real estate projects only when
i. the actual construction and development cost incurred is at least 25% of the total construction and development cost (without
considering land cost) and
ii. when at least 10% of the sales consideration is realized and
iii. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.
Income from long term contracting assignments is also recognized on the percentage of completion basis. As the long term
contracts necessarily extend beyond one year, revision in costs and revenues estimated during the course of the contract are
reflected in the accounting period in which the facts requiring the revision become known. Any expected loss on a project is
recognized in the year in which costs incurred together with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as construction work-in-progress.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of
which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected
revenues from the project/activity and the foreseeable losses to completion.
Income from sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer of all significant risks and rewards of ownership of such
real estate/property as per the terms of the contract entered into with the buyers, which generally with the ferity of the sale
contracts/agreements.
Income from Project Management
Project Management Fees receivable on fixed period contracts is accounted over the tenure of the contract/agreement. Where the
fee is linked to the input costs, revenue is recognized as a proportion of the work completed based on progress claims submitted.
Where the management fee is linked to the revenue generation from the project, revenue is recognized on the percentage of
completion basis.
Income from operation of commercial complexes is recognized over the tenure of the lease/service agreement.
Interest and dividend income
Interest income is accounted on an accrual basis at contracted rates except where there is uncertainty of ultimate collection.
Dividend income is recognized when the right to receive the same is established.
i) Employee benefits:
(i) Defined contribution Plans
Company''s contributions paid/payable during the year to Provident Fund and Superannuation Fund are recognized in the Statement of
Profit and Loss.
(ii) Defined Benefit Plan
Company''s liabilities towards gratuity and leave encashment are determined on actuarial basis using the projected unit credit
method, which consider each period of service as giving rise to an additional unit of benefit and measures each unit separately
to build up the final obligation. Past services are recognized on straight-line basis over the average period until the amended
benefits become vested. Actuarial gain and losses are recognized immediately in the Statement of Profit and Loss Account as
income or expense. Obligation is measured at the present value of estimated future cash fow using a discount rate that is
determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the
government bonds are consistent with the currency and estimated terms of the defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of employee benefit in the form of compensated absences, being in
the nature of short term benefit, is accounted for on accrual basis at an undiscounted value.
j) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project management and development activities are capitalized as part
of project cost. Other borrowing costs are recognized as expense in the period in which they are incurred.
Borrowing costs are capitalized as part of project cost when the activities that are necessary to prepare the asset for its
intended use or sale are in progress. Borrowing costs are suspended from capitalization on the project when development work on
the project is interrupted for extended periods.
k) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws.
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 Tax assets are not recognized unless, in the
management judgment, there is reasonable certainty that sufficient future taxable income will be available against which such
deferred tax assets can be realized except in case of deferred tax asset arising from unabsorbed depreciation, brought forward
tax losses and items relating to capital losses wherein deferred tax asset is only recognized when there is virtual certainty.
The carrying amount of deferred tax is reviewed at each balance sheet date.
l) Segment Information:
The Company operates in two main segments; namely ''''Projects, Project Management and Development activities'''' and ''''Operating of
commercial complexes''''. The segments have been identified and reported taking into account the differing risks and returns and
the internal business reporting systems. Revenues and expenses have been identified to the segments based on their relationship
to the business activity of the segment. Income/expenses relating to the enterprise as a whole and not allocable on a reasonable
basis to business segments are reflected as unallocated corporate income/expenses.
m) Provisions and Contingent Liabilities
Provisions are recognized in the financial statements in respect of a present obligation arising from a past event, 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.
n) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based
Payments, issued by ICAI. The company measures compensation cost relating to employee stock options using the intrinsic value
method. Compensation expense is amortized over the vesting period of the option on a straight line basis.
Mar 31, 2015
A) Basis of Preparation:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards applicable under
Section 133 of the Companies Act, 2013, read with Paragraph 7 of the
Companies (Accounts) Rules, 2014 (as amended) and the relevant
provisions of the Companies Act, 2013 ("the 2013 Act") as
applicable. The financial statements have been prepared on an accrual
basis and under the historical cost convention. The accounting policies
adopted in the preparation of financial statements are consistent with
those of previous year.
b) Presentation and Disclosure of Financial Statements
Assets & liabilities have been classified as current & non - current as
per the Company''s normal operating cycle and other criteria set out
in the Schedule III of the Companies Act, 2013. Based on the nature of
activity carried out by the company and the period between the
procurement and realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 5 years for the purpose of
Current - Non Current classification of assets & liabilities.
c) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from those
estimates.
d) Fixed Assets:
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 operation expenses and
interest in case of construction.
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
higher. Impairment loss, if any, is recognized whenever carrying amount
exceeds the recoverable amount.
Depreciation on tangible fixed assets has been provided on prorata
basis, on the straight-line method as per the useful life prescribed in
Schedule II to the Companies Act, 2013 or except for certain assets as
indicated below
Lease hold improvements are amortised over the period of
lease/estimated period of lease.
Plant and Machinery includes Plant and Machinery used in civil
construction-others and amortised over a period of 5 years.
Vehicles used by employees are depreciated over the period of 48 months
considering this period as the useful life of the vehicle for the
Company.
Sales office and the sample flat/ show unit cost at site is amortised
over 5 years or the duration of the project (as estimated by
management) whichever is lower
e) Intangible Assets:
All Intangible Assets are initially measured at cost and amortised so
as to reflect the pattern in which the assets'' economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortised over
the useful life of the asset. The maximum period for such amortization
is 36 months
f) Investments:
Investments are classified into Non Current and Current Investments.
Non current investments are carried at cost less diminution other than
temporary. 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.
g) Inventories:
Inventories are stated at lower of cost and net realisable value. The
cost of construction material is determined on the basis of weighted
average method. Construction Work-in-Progress includes cost of land,
premium for development rights, construction costs and allocated
interest and expenses incidental to the projects undertaken by the
Company.
h) Revenue Recognition:
Income from Projects
Income from real estate sales is recognised on the transfer of all
significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognised on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Up to 31st
March 2012, revenue from real estate projects are recognized only when
actual project cost incurred is atleast 25% of the total estimated
project costs including land and when atleast 10% of the sales
consideration is received.
In accordance with the Guidance Note on Accounting for Real Estate
Transactions (Revised 2012) issued by the Institute of Chartered
Accountants of India, in case of projects commencing on or after 1st
April 2012 or in case of projects which have already commenced but
where revenue is being recognised for the first time on or after 1st
April 2012, revenues will be recognized from these real estate projects
only when
i. the actual construction and development cost incurred is at least
25% of the total construction and development cost (without considering
land cost) and
ii. when at least 10% of the sales consideration is realised and
iii. where 25% of the total saleable area of the project is secured by
contracts of agreement with buyers.
Income from long term contracting assignments is also recognised on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognised in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature,concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Income from sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer
of all significant risks and rewards of ownership of such real
estate/property as per the terms of the contract entered into with the
buyers, which generally with the firmity of the sale
contracts/agreements.
Income from Project Management
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the fee is
linked to the input costs, revenue is recognised as a proportion of the
work completed based on progress claims submitted. Where the management
fee is linked to the revenue generation from the project, revenue is
recognised on the percentage of completion basis.
Income from operation of commercial complexes is recognised over the
tenure of the lease/service agreement.
Interest and dividend income
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection. Dividend
income is recognised when the right to receive the same is established.
i) Employee benefits:
(i) Defined contribution Plans
Company''s contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognised in the Statement of Profit
and Loss.
(ii) Defined Benefit Plan
Company''s liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the final
obligation. Past services are recognised on straight-line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by reference to market yields at the Balance Sheet date
on government bonds where the currency and terms of the government
bonds are consistent with the currency and estimated terms of the
defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
j) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalised as part of
project cost. Other borrowing costs are recognised as expense in the
period in which they are incurred.
Borrowing costs are capitalised as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalisation on the project when development work on the project is
interrupted for extended periods.
k) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities are recognised 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 Tax assets
are not recognised unless, in the management judgment, there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized except
in case of deferred tax asset arising from unabsorbed depreciation,
brought forward tax losses and items relating to capital losses wherein
deferred tax asset is only recognized when there is virtual certainty.
The carrying amount of deferred tax is reviewed at each balance sheet
date.
l) Segment Information:
The Company operates in two main segments; namely ''''Projects,
Project Management and Development activities" and ''''Operating of
commercial complexes". The segments have been identified and reported
taking into account the differing risks and returns and the internal
business reporting systems. Revenues and expenses have been identified
to the segments based on their relationship to the business activity of
the segment. Income/expenses relating to the enterprise as a whole and
not allocable on a reasonable basis to business segments are reflected
as unallocated corporate income/expenses.
m) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of a
present obligation arising from a past event, 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.
n) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by ICAI. The
company measures compensation cost relating to employee stock options
using the intrinsic value method. Compensation expense is amortized
over the vesting period of the option on a straight line basis.
Mar 31, 2014
A) Presentation and Disclosure of Financial Statements
Assets & liabilities have been classified as Current & Non  Current as
per the Company''s normal operating cycle and other criteria set out in
the Schedule VI of the Companies Act, 1956. Based on the nature of
activity carried out by the company and the period between the
procurement and realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 5 years for the purpose of
Current  Non Current classification of assets & liabilities.
b) Basis of Preparation:
The financial statements are prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
in India, the Accounting Standards notified under The Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956 which continue to be applicable in respect of the
current financial year.
c) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from those
estimates.
d) Fixed Assets:
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 operation expenses and
interest in case of construction.
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
higher. Impairment loss, if any, is recognized whenever carrying amount
exceeds the recoverable amount.
Depreciation on fixed assets is provided, on prorata basis, on straight
line method over their estimated useful lives or lives based on the
rates specified in Schedule XIV to the Companies Act, 1956, whichever is
higher except for:
1. Furniture & Fixtures, Plant & Machinery and Computers, individually
costing more than Rs. 5,000, which are depreciated over their estimated
useful lives of 5 years, and
2. Vehicles at 15 % per annum of cost.
3. Leasehold improvements are amortised over the period of lease.
e) Intangible Assets:
All Intangible Assets are initially measured at cost and amortised so
as to reflect the pattern in which the assets'' economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortised over
the useful life of the asset. The maximum period for such amortization
is 36 months
f) Investments:
Investments are classified into Non Current and Current Investments.
Non current investments are carried at cost less diminution other then
temporary. 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.
g) Inventories:
Inventories are stated at lower of cost and net realisable value. The
cost of construction material is determined on the basis of weighted
average method. Construction Work-in-Progress includes cost of land,
premium for development rights, construction costs and allocated
interest and expenses incidental to the projects undertaken by the
Company.
h) Revenue Recognition:
Income from Projects
Income from real estate sales is recognised on the transfer of all
Significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognised on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Revenues
from real estate projects are recognised only when the actual project
costs incurred is at least 25 % of the total estimated project costs
including land and when at least 10% of the sales consideration is
realised.
In accordance with the Guidance Note on Accounting for Real Estate
Transactions (Revised 2012) issued by the Institute of Chartered
Accountants of India, in case of projects commencing on or after 1st
April 2012 or in case of projects which have already commenced but
where revenue is being recognised for the first time on or after 1st
April 2012, revenues will be recognized from these real estate projects
only when
i. the actual construction and development cost incurred is at least
25% of the total construction and development cost (without considering
land cost) and
ii. when at least 10% of the sales consideration is realised and
iii. where 25% of the total saleable area of the project is secured by
contracts of agreement with buyers.
Income from long term contracting assignments is also recognised on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognised in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Income from sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer
of all Significant risks and rewards of ownership of such real
estate/property as per the terms of the contract entered into with the
buyers, which generally with the frmity of the sale
contracts/agreements.
Income from Project Management
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the fee is
linked to the input costs, revenue is recognised as a proportion of the
work completed based on progress claims submitted. Where the management
fee is linked to the revenue generation from the project, revenue is
recognised on the percentage of completion basis.
Income from operation of commercial complexes is recognised over the
tenure of the lease/service agreement.
Interest and dividend income
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection. Dividend
income is recognised when the right to receive the same is established.
i) Employee benefits:
(i) Defined contribution Plans
Company''s contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognised in the Statement of Profit
and Loss.
(ii) Defined Benefit Plan
Company''s liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the fnal
obligation. Past services are recognised on straight-line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by reference to market yields at the Balance Sheet date
on government bonds where the currency and terms of the government
bonds are consistent with the currency and estimated terms of the
defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
j) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalised as part of
project cost. Other borrowing costs are recognised as expense in the
period in which they are incurred.
Borrowing costs are capitalised as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalisation on the project when development work on the project is
interrupted for extended periods.
k) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities are recognised 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 Tax assets
are not recognised unless, in the management judgment, there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized except
in case of deferred tax asset arising from brought forward tax losses
wherein deferred tax asset is only recognized when there is virtual
certainty. The carrying amount of deferred tax is reviewed at each
balance sheet date.
l) Segment Information:
The Company operates in three main segments; namely Projects, Project
Management and Development activities, Operating of commercial
complexes and Business Centers. The segments have been identified and
reported taking into account the differing risks and returns and the
internal business reporting systems. Revenues and expenses have been
identified to the segments based on their relationship to the business
activity of the segment. Income/expenses relating to the enterprise as
a whole and not allocable on a reasonable basis to business segments
are reflected as unallocated corporate income/expenses.
m) Provisions and Contingent Liabilities
Provisions are recognised in the financial statements in respect of a
present obligation arising from a past event, 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.
n) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by ICAI. The
company measures compensation cost relating to employee stock options
using the intrinsic value method. Compensation expense is amortized
over the vesting period of the option on a straight line basis.
Mar 31, 2013
A) Presentation and Disclosure of Financial Statements
Assets & liabilities have been classified as Current & Non - Current as
per the Company''s normal operating cycle and other criteria set out
in the Schedule VI of the Companies Act, 1956. Based on the nature of
activity carried out by the company and the period between the
procurement and realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 5 years for the purpose of
Current - Non Current classification of assets & liabilities.
b) Accounting Convention:
The financial statements are prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
in India, the Accounting Standards notified under The Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
c) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable.
d) Fixed Assets:
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 operation expenses and
interest in case of construction.
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
higher. Impairment loss, if any, is recognized whenever carrying amount
exceeds the recoverable amount.
Depreciation on fixed assets is provided, on prorata basis, on the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956, except for:
1. Furniture & Fixtures, Plant & Machinery and Computers, individually
costing more than Rs. 5,000, which are depreciated over their estimated
useful lives of 5 years, and
2. Vehicles at 15 % per annum of cost.
3. Leasehold improvements are amortised over the period of lease.
e) Intangible Assets:
All Intangible Assets are initially measured at cost and amortised so
as to reflect the pattern in which the assets'' economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortised over
the useful life of the asset. The maximum period for such amortization
is 36 months
f) Investments:
Investments are classified into Non-Current and Current Investments.
Non-Current 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.
g) Inventories:
Inventories are stated at lower of cost and net realisable value. The
cost of construction material is determined on the basis of weighted
average method. Construction Work-in-Progress includes cost of land,
premium for development rights, construction costs and allocated
interest and expenses incidental to the projects undertaken by the
Company.
h) Revenue Recognition:
Income from Projects
Income from real estate sales is recognised on the transfer of all
significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognised on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Revenues
from real estate projects are recognised only when the actual project
costs incurred is at least 25 % of the total estimated project costs
including land and when at least 10% of the sales consideration is
realised.
In accordance with the Guidance Note on Accounting for Real Estate
Transactions (Revised 2012), in case of projects commencing on or after
1st April 2012 or in case of projects which have already commenced but
where revenue is being recognised for the first time on or after 1st
April 2012, revenues will be recognized from these real estate projects
only when
i. the actual construction and development cost incurred is at least
25% of the total construction and development cost (without considering
land cost) and
ii. when at least 10% of the sales consideration is realised and
iii. where 25% of the total saleable area of the project is secured by
contracts of agreement with buyers.
Income from long term contracting assignments is also recognised on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognised in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Income from sale of land and other rights
Revenue from sale of land and other rights are considered upon transfer
of all significant risks and rewards of ownership of such real
estate/property as per the terms of the contract entered into with the
buyers, which generally with the firmity of the sale
contracts/agreements.
Income from Project Management
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the
management fee is linked to the input costs, revenue is recognised as a
proportion of the work completed based on progress claims submitted.
Where the management fee is linked to the revenue generation from the
project, revenue is recognised on the percentage of completion basis.
Income from operation of commercial complexes
Income from operation of commercial complexes is recognised over the
tenure of the lease/service agreement.
Interest and dividend income
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection. Dividend
income is recognised when the right to receive the same is established.
i) Employee benefits:
(i) Defined contribution Plans
Company''s contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognised in the Profit and Loss
Account.
(ii) Defined Benefit Plan
Company''s liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the final
obligation. Past services are recognised on straight-line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by reference to market yields at the Balance Sheet date
on government bonds where the currency and terms of the government
bonds are consistent with the currency and estimated terms of the
defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
j) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalised as part of
project cost. Other borrowing costs are recognised as expense in the
period in which they are incurred.
Borrowing costs are capitalised as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalisation on the project when development work on the project is
interrupted for extended periods.
k) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities are recognised 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 Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date. l)
Segment Information:
The Company operates in two main segments; namely, Projects, Project
Management and Development activities & Operating of commercial
complexes. The segments have been identified and reported taking into
account the differing risks and returns and the internal business
reporting systems. Revenues and expenses have been identified to the
segments based on their relationship to the business activity of the
segment. Income/expenses relating to the enterprise as a whole and not
allocable on a reasonable basis to business segments are reflected as
unallocated corporate income/expenses.
m) Provisions and Contingent Liabilities
Provisions are recognised 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.
n) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by ICAI. The
company measures compensation cost relating to employee stock options
using the intrinsic value method. Compensation expense is amortized
over the vesting period of the option on a straight line basis.
Mar 31, 2012
A) 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.
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. Assets & liabilities have
been classified as Current & Non - Current as per the Company's
normal operating cycle and other criteria set out in the Schedule VI of
the Companies Act, 1956. Based on the nature of activity carried out by
the company and the period between the procurement and realization in
cash and cash equivalents, the Company has ascertained its operating
cycle as 5 years for the purpose of Current - Non Current
classification of assets & liabilities.
The Company has also reclassified / regrouped the previous year figures
in accordance with the requirements applicable in the current year.
b) Accounting Convention:
The financial statements are prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
in India, the Accounting Standards notified under The Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
c) Use of Estimates:
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable.
d) Fixed Assets:
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 operation expenses and
interest in case of construction. 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 higher. Impairment loss, if
any, is recognized whenever carrying amount exceeds the recoverable
amount.
Depreciation on fixed assets is provided, on prorata basis, on the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956, except for:
1. Furniture & Fixtures, Plant & Machinery and Computers, individually
costing more than Rs 5,000, which are depreciated over their estimated
useful lives of 5 years,
2. Vehicles at 15 % per annum of cost, and
3. Leasehold improvements are amortized over the period of lease.
e) intangible Assets:
All Intangible Assets are initially measured at cost and amortized so
as to reflect the pattern in which the assets' economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortized over
the useful life of the asset. The maximum period for such amortization
is 36 months.
h Investments:
Investments are classified into Non-Current and Current Investments.
Non-Current Investments are carried at cost. Provision for diminution,
if any, in the value of each Non-Current 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, gj
Inventories:
Inventories are stated at lower of cost and net realizable value. The
cost of construction material is determined on the basis of weighted
average method. Construction Work-in-Progress includes cost of land,
premium for development rights, construction costs and allocated
interest and expenses incidental to the projects undertaken by the
Company.
h) Revenue Recognition:
Income from real estate sales is recognized on the transfer of all
significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognized on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Revenues
from real estate projects are recognized only when the actual project
costs incurred is at least 25 % of the total estimated project costs
including land and when at least 10% of the sales consideration is
realised.
Revenue from sale of land and other rights are considered upon transfer
of all significant risks and rewards of ownership of such real
estate/property as per the terms of the contract entered into with the
buyers, which is generally with the ferity of the sale
contracts/agreements.
Income from long term contracting assignments is also recognized on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognized in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the
management fee is linked to the input costs, revenue is recognized as a
proportion of the work completed based on progress claims submitted.
Where the management fee is linked to the revenue generation from the
project, revenue is recognized on the percentage of completion basis.
Income from operation of commercial complexes is recognized over the
tenure of the lease/service agreement.
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection. Dividend
income is recognized when the right to receive the same is established.
i) Employee benefits:
(i) Defined Contribution Plans
Company's contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognized in the Statement of Profit
and Loss.
(ii) Defined Benefit Plan
Company's liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the final
obligation. Past services are recognized on straight-line basis over the
average period until the amended benefits become vested. Actuarial gain
and losses are recognized immediately in the Statement of Profit and
Loss as income or expense. Obligation is measured at the present value
of estimated future cash flow using a discount rate that is determined
by reference to market yields at the Balance Sheet date on government
bonds where the currency and terms of the government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
j) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalized as part of
project cost. Other borrowing costs are recognized as expense in the
period in which they are incurred.
Borrowing costs are capitalized as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalization on the project when development work on the project is
interrupted for extended periods.
k) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
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 Tax assets
are not recognized unless, in the management judgment, 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 tax is reviewed at each balance sheet date.
I) Segment Information:
The Company operates in three main segments; namely, Projects, Project
Management and Development activities, Operating of commercial
complexes and Business Centers. The segments have been identified and
reported taking into account the differing risks and returns and the
internal business reporting systems. Revenues and expenses have been
identified to the segments based on their relationship to the business
activity of the segment. Income/expenses relating to the enterprise as
a whole and not allocable on a reasonable basis to business segments
are reflected as unallocated corporate income/expenses.
m) Provisions and Contingent Liabilities
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.
n) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share based Payments, issued by ICAI. The
company measures compensation cost relating to employee stock options
using the intrinsic value method. Compensation expense is amortized
over the vesting period of the option on a straight line basis.
Mar 31, 2011
A) Accounting Convention:
The financial statements are prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
in India, the Accounting Standards notified under The Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
b) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable.
c) Fixed Assets:
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 operation expenses and
interest in case of construction.
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
higher. Impairment loss, if any, is recognized whenever carrying amount
exceeds the recoverable amount.
Depreciation on fixed assets is provided, on prorata basis, on the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956, except for:
1. Furniture & Fixtures, Plant & Machinery and Computers, individually
costing more than Rs. 5,000, which are depreciated over their estimated
useful lives of 5 years, and
2. Vehicles at 15 % per annum of cost.
3. Leasehold improvements are amortised over the period of lease.
d) Intangible Assets:
All Intangible Assets are initially measured at cost and amortised so
as to reflect the pattern in which the assets economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortised over
the useful life of the asset. The maximum period for such amortization
is 36 months
e) Investments:
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.
f) Inventories:
Inventories are stated at lower of cost and net realisable value. The
cost of construction material is determined on the basis of weighted
average method. Construction Work-in-Progress includes cost of land,
premium for development rights, construction costs and allocated
interest and expenses incidental to the projects undertaken by the
Company.
g) Revenue Recognition:
Income from real estate sales is recognised on the transfer of all
significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognised on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Revenues
from real estate projects are recognised only when the actual project
costs incurred exceeds 25 % of the total estimated project costs
including land and when at least 10% of the sales consideration is
realised.
Revenue from sale of land and other rights are considered upon transfer
of all significant risks and rewards of ownership of such real
estate/property as per the terms of the contract entered into with the
buyers, which is generally with the firmity of the sale
contracts/agreements.
Income from long term contracting assignments is also recognised on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognised in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the
management fee is linked to the input costs, revenue is recognised as a
proportion of the work completed based on progress claims submitted.
Where the management fee is linked to the revenue generation from the
project, revenue is recognised on the percentage of completion basis.
Income from operation of commercial complexes is recognised over the
tenure of the lease/service agreement.
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection.
Dividend income is recognised when the right to receive the same is
established.
h) Employee benefits:
(i) Defined contribution Plans
Companys contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognised in the Profit and Loss
Account.
(ii) Defined Benefit Plan
Companys liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the final
obligation. Past services are recognised on straight-line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by reference to market yields at the Balance Sheet date
on government bonds where the currency and terms of the government
bonds are consistent with the currency and estimated terms of the
defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
i) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalised as part of
project cost. Other borrowing costs are recognised as expense in the
period in which they are incurred.
Borrowing costs are capitalised as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalisation on the project when development work on the project is
interrupted for extended periods.
j) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities are recognised 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 Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date.
k) Segment Information:
The Company operates in three main segments; namely, Projects, Project
Management and Development activities, Operating of commercial
complexes and Business Centers. The segments have been identified and
reported taking into account the differing risks and returns and the
internal business reporting systems. Revenues and expenses have been
identified to the
segments based on their relationship to the business activity of the
segment. Income/expenses relating to the enterprise as a whole and not
allocable on a reasonable basis to business segments are reflected as
unallocated corporate income/expenses.
l) Provisions and Contingent Liabilities
Provisions are recognised 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.
m) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by ICAI. The
company measures compensation cost relating to employee stock options
using the intrinsic value method. Compensation expense is amortized
over the vesting period of the option on a straight line basis.
Mar 31, 2010
A) Accounting Convention:
The financial statements are prepared under the historical cost
convention in accordance with Generally Accepted Accounting Principles
in India, the Accounting Standards notified under The Companies
(Accounting Standard) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
b) Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported balances of assets
and liabilities as of the date of the financial statements and reported
amounts of income and expenses during the period. Management believes
that the estimates used in the preparation of financial statements are
prudent and reasonable.
c) Fixed Assets:
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 operation expenses and
interest in case of construction.
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
higher. Impairment loss, if any, is recognized whenever carrying
amount exceeds the recoverable amount.
Depreciation on fixed assets is provided, on prorata basis, on the
straight line method at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956, except for:
1. Furniture & Fixtures, Plant & Machinery and Computers, individually
costing more than Rs. 5,000, which are depreciated over their estimated
useful lives of 5 years, and
2. Vehicles at 15 % per annum of cost.
d) Intangible Assets:
All Intangible Assets are initially measured at cost and amortised so
as to reflect the pattern in which the assets economic benefits are
consumed.
Software expenses are treated as an intangible asset and amortised over
the useful life of the asset. The maximum period for such amortization
is 36 months.
e) Investments:
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.
f) Inventories:
Inventories are stated at lower of cost and net realisable value. The
cost of construction material is determined on the basis of weighted
average method. During the year, the Company has changed the method of
valuation of Inventory form FIFO to Weighted Average Cost. The impact
of the same is immaterial. Construction Work-in-Progress includes cost
of land, premium for development rights, construction costs and
allocated interest and expenses incidental to the projects undertaken
by the Company.
g) Revenue Recognition:
Income from real estate sales is recognised on the transfer of all
significant risks and rewards of ownership to the buyers 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 under
the contract, revenue is recognised on proportionate basis as the acts
are performed, i.e. on the percentage of completion basis. Revenues
from real estate projects are recognised only when the actual project
costs incurred exceed 25 % of the total estimated project costs
including land and when at least 10% of the sales consideration is
realised.
Income from long term contracting assignments is also recognised on the
percentage of completion basis. As the long term contracts necessarily
extend beyond one year, revision in costs and revenues estimated during
the course of the contract are reflected in the accounting period in
which the facts requiring the revision become known. Any expected loss
on a project is recognised in the year in which costs incurred together
with the balance costs to completion are likely to be in excess of the
estimated revenues from project. Unbilled costs are carried as
construction work-in-progress.
Determination of revenues under the percentage of completion method
necessarily involves making estimates by the Company, some of which are
of a technical nature, concerning, where relevant, the percentages of
completion, costs to completion, the expected revenues from the
project/activity and the foreseeable losses to completion.
Project Management Fees receivable on fixed period contracts is
accounted over the tenure of the contract/agreement. Where the
management fee is linked to the input costs, revenue is recognised as a
proportion of the work completed based on progress claims submitted.
Where the management fee is linked to the revenue generation from the
project, revenue is recognised on the percentage of completion basis.
Income from operation of commercial complexes is recognised over the
tenure of the lease/service agreement.
Interest income is accounted on an accrual basis at contracted rates
except where there is uncertainty of ultimate collection.
Dividend income is recognised when the right to receive the same is
established.
h) Retirement benefits:
(i) Defined contribution Plans
CompanyÃs contributions paid / payable during the year to Provident
Fund and Superannuation Fund are recognised in the Profit and Loss
Account.
(ii) Defined Benefit Plan
CompanyÃs liabilities towards gratuity and leave encashment are
determined on actuarial basis using the projected unit credit method,
which consider each period of service as giving rise to an additional
unit of benefit and measures each unit separately to build up the final
obligation. Past services are recognised on straight-line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the Statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flow using a discount rate that
is determined by reference to market yields at the Balance Sheet date
on government bonds where the currency and terms of the government
bonds are consistent with the currency and estimated terms of the
defined benefit obligation.
(iii) In view of the past trends of leave availed, the amount of
employee benefit in the form of compensated absences, being in the
nature of short term benefit, is accounted for on accrual basis at an
undiscounted value.
i) Borrowing Costs:
Borrowing costs that are directly attributable to long-term project
management and development activities are capitalised as part of
project cost. Other borrowing costs are recognised as expense in the
period in which they are incurred.
Borrowing costs are capitalised as part of project cost when the
activities that are necessary to prepare the asset for its intended use
or sale are in progress. Borrowing costs are suspended from
capitalisation on the project when development work on the project is
interrupted for extended periods.
j) Provision for taxation:
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax
authorities, using the applicable tax rates and tax laws.
Deferred tax assets and liabilities are recognised 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 Tax assets
are not recognised unless, in the management judgment, there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. The carrying
amount of deferred tax is reviewed at each balance sheet date.
k) Segment Information:
The Company operates in three main segments; namely, Projects, Project
Management and Development activities, Operating of commercial
complexes and Business Centers. The segments have been identified and
reported taking into account the differing risks and returns and the
internal business reporting systems. Revenues and expenses have been
identified to the segments based on their relationship to the business
activity of the segment. Income/expenses relating to the enterprise as
a whole and not allocable on a reasonable basis to business segments
are reflected as unallocated corporate income/expenses.
l) Provisions and Contingent Liabilities
Provisions are recognised 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.
m) Employee stock compensation costs
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on
Accounting for Employee Share-based Payments, issued by The Institute
of Chartered Accountants of India. The Company measures compensation
cost relating to employee stock options using the intrinsic value
method. Compensation expense is amortized over the vesting period of
the option on a straight line basis.
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