Accounting Policies of Oberoi Realty Ltd. Company
Mar 31, 2023
NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES_1.1 NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited company is incorporated in India under provisions of the Companies Act applicable in India. The Company is engaged primarily in the business of real estate development and hospitality.
The Company is headquartered in Mumbai, India. The shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Its registered office is situated at Commerz, 3rd Floor, International Business Park, Oberoi Garden City, Off Western Express Highway, Goregaon (East), Mumbai-400 063 (CIN : L45200MH1998PLC114818).
The standalone Ind AS financial statements for the year ended March 31, 2023 were authorised and approved for issue by the Board of Directors on May 16, 2023.
1.2 SIGNIFICANT ACCOUNTING POLICIES1.2.1 Basis of preparation
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules 2015 (as amended) and presentation requirements of Division II of Schedule III to the Companies Act, 2013.
The standalone Ind AS financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
The standalone Ind AS financial statements are presented in Indian Rupee ("INR") and all values are presented in INR Lakh and rounded off to the extent of 2 decimals, except when otherwise indicated.
1.2.2 Current/non-current classification
The Company as required by Ind AS 1 presents assets and liabilities in the Balance Sheet based on current/non-current classification.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Company''s normal operating cycle in respect of operations relating to the construction of real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current based on their respective operating cycle.
1.2.3 Foreign currencies(i) Initial recognition
Foreign currency transactions are recorded in the functional currency (Indian Rupee) by applying to the foreign currency amount, the exchange rate between the functional currency and the foreign currency on the date of the transaction.
All monetary items outstanding at year end denominated in foreign currency are converted into Indian Rupees at the reporting date exchange rate. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
The exchange differences arising on such conversion and on settlement of the transactions are recognised in the Statement of Profit and Loss.
1.2.4 Property, plant and equipment (PPE)
(i) Recognition and initial measurement
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
Cost comprises the purchase price and any attributable/allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenue earned, if any, during trial run of assets is adjusted against cost of the assets. Cost also includes the cost of replacing part of the plant and equipment.
Borrowing costs relating to acquisition/construction/development of tangible assets, which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to use.
When significant components of property and equipment are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
(ii) Subsequent measurement (depreciation and useful lives)
Depreciation is provided from the date the assets are ready to use, on straight line basis as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixture |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment* |
5 years |
|
Computers |
3 years |
|
Vehicles |
8 years |
|
*Mobile handsets - 3 years |
|
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
The carrying amount of PPE is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
(iii) De-recognition
PPE are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.5 Intangible assets
(i) Recognition and initial measurement
I ntangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable/allocable incidental cost of bringing the asset to its working condition for its intended use.
(ii) Subsequent measurement (amortisation)
All intangible assets with definite useful life are amortized on a straight line basis over the estimated useful lives.
|
Computer Software |
Over license period or 5 years |
The carrying amount of intangible asset is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
1.2.6 Investment properties
(i) Recognition and initial measurement
I nvestment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at cost, including transaction costs. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
(ii) Subsequent measurement (depreciation and useful lives)
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognised and relevant professional qualification and has experience in the category of the investment property being valued.
I nvestment Properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any, subsequently. Depreciation is provided from the date the assets are ready to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixture |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment* |
5 years |
|
Computers |
3 years |
|
Lessee specific assets and improvements |
Over lease period or useful life as prescribed in Schedule II, whichever is lower |
|
*Mobile handsets - 3 years |
|
For above classes of assets, based on internal assessment, the management believes that the useful lives as given above best represent the period over which management expects to use these assets.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
The carrying amount of investment properties is reviewed periodically for impairment based on internal/ external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
When significant components of investment properties are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
(iii) De-recognition
I nvestment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.7 Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditures incurred in respect of capital projects under development and includes any attributable/allocable cost and other incidental expenses. Revenues earned, if any, from such capital project before capitalisation are adjusted against the capital work in progress.
1.2.8 Revenue recognition
(i) Revenue from contracts with customer
Revenue from contracts with customer is recognised, when control of the goods or services are transferred to the customer, at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised.
Revenue is recognised as follows:
(a) Revenue from real estate projects
The Company recognises revenue, on execution of agreement or letter of allotment and when control of the goods or services are transferred to the customer, at an amount that reflects the consideration (i.e. the transaction price) to which the Company is expected to be entitled in exchange for those goods or services excluding any amount received on behalf of third party (such as indirect taxes). An asset created by the Company''s performance does not have an alternate use and as per the terms of the contract, the Company has an enforceable right to payment for performance completed till date. Hence the Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time. The Company recognises revenue at the transaction price (net of transaction costs) which is determined on the basis of agreement or letter of allotment entered into with the customer. The Company recognises revenue for performance obligation satisfied over time only if it can reasonably measure its progress towards complete satisfaction of the performance obligation. The Company would not be able to reasonably measure its progress towards complete satisfaction of a performance obligation if it lacks reliable information that would be required to apply an appropriate method of measuring progress. In those circumstances, the Company recognises revenue only to the extent of cost incurred until it can reasonably measure outcome of the performance obligation.
The Company uses cost based input method for measuring progress for performance obligation satisfied over time. Under this method, the Company recognises revenue in proportion to the actual project cost incurred (excluding land and finance cost) as against the total estimated project cost (excluding land and finance cost).
I n a Joint development arrangement (JDA) wherein the land owner provides land and in lieu the Company transfers certain percentage of constructed area, the revenue is recognised over time using cost based input method of percentage of completion. Project costs include fair value of such land received and this fair value is accounted for on launch of the project.
The management reviews and revises its measure of progress periodically and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognised
prospectively in the period in which such changes are determined.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 1.2.10 Financial instruments - initial recognition and subsequent measurement.
(b) Revenue from hospitality business
Revenue comprises sale of rooms, food and beverages and allied services relating to hotel operations. Revenue is recognised upon rendering of the service, provided pervasive evidence of an arrangement exists, tariff/rates are fixed or are determinable and collectability is reasonably certain. Revenue from sales of goods or rendering of services is net of indirect taxes, returns and discounts.
(ii) Revenue from lease rentals and related income
Lease income is recognised in the Statement of Profit and Loss on straight line basis over the non-cancellable lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from property management service is recognised at value of service and is disclosed net of indirect taxes, if any.
(iii) Finance income
Finance income is recognised as it accrues using the Effective Interest Rate (EIR) method. Finance income is included in other income in the Statement of Profit and Loss.
When calculating the EIR, the Company estimates the expected cash flow by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
(iv) Dividend income
Revenue is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
(v) Other income
Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company''s claim.
1.2.9 Leases
The determination of whether a contract is (or contains) a lease arrangement is based on the substance of the contract at the inception of the arrangement. The contract is, or contains, a lease if the contract provide lessee, the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee does not have the right to use an identified asset if, at inception of the contract, a lessor has a substantive right to substitute the asset throughout the period of use.
The Company accounts for the lease arrangement as follows:
(i) Where the Company is the lessee
The Company applies single recognition and measurement approach for all leases, except for short term leases and leases of low value assets. On the commencement of the lease, the Company, in its Balance Sheet, recognises the right of use asset at cost and lease liability at present value of the non-cancellable lease payments to be made over the lease term.
Subsequently, the right of use asset are measured at cost less accumulated depreciation and any accumulated impairment loss. Lease liability are measured at amortised cost using the effective interest method. The lease payment made, are apportioned between the finance charge and the reduction of lease liability, and are recognised as expense in the Statement of Profit and Loss.
Lease deposits given are a financial asset and are measured at amortised cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognised over the non-cancellable lease term. Unwinding of discount is treated as finance income and recognised in the Statement of Profit and Loss.
(ii) Where the Company is the lessor
The lessor needs to classify its leases as either an operating lease or a finance lease. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating lease. The Company has only operating lease and accounts the same as follows:
Assets given under operating leases are included in investment properties. Lease income is recognised in the Statement of Profit and Loss on straight line basis over the non-cancellable lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
I nitial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the non-cancellable lease term on the same basis as rental income.
Lease deposits received are financial instruments (financial liability) and are measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised over the non-cancellable lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.
1.2.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
EIR is the rate that exactly discounts the estimated future cash receipts or payments over the expected life of the financial instruments or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
(i) Financial assets
(a) Initial measurement
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value Trade receivables are initially recorded at transaction value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.
(b) Subsequent measurement
i. Financial assets at amortised cost
Financial assets are measured at the amortised cost, if both of the following criteria are met:
a. These assets are held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
ii. Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI if both of the following criteria are met:
a. These assets are held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Fair value movements are recognised in the Other Comprehensive Income (OCI). On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss.
iii. Financial assets at fair value through profit or loss (FVTPL)
Any financial assets, which do not meet the criteria for categorisation as at amortised cost or as FVTOCI, are classified as FVTPL. Gain or losses are recognised in the Statement of Profit and Loss.
iv. Equity instruments
Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as FVTPL, and measured at fair value with all changes recognised in the Statement of Profit and Loss.
(c) De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
(d) Impairment of financial assets
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
i. Trade receivables; and
ii. All lease receivables resulting from transactions within the scope of Ind AS 116.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial
recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL 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 entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
(ii) Financial liabilities
(a) Initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
(b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance cost in the Statement of Profit and Loss.
I ntercompany loans not repayable on demand are discounted to its present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the loan and its present value is accounted based on the relationship with the borrower for e.g. in case of subsidiary, the difference is shown as further equity infusion in the subsidiary. The unwinding of discount from the date of loan to the transition date is shown as an income and recognised in "Retained Earningsâ of the Lender.
(c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
(d) De-recognition
A financial liability (or a part of a financial liability) is derecognised from the Company''s financial statement when the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(e) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the financial statement if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(iii) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs:
i. Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
ii. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
iii. Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.2.11 Cash and cash equivalents
Cash and cash equivalent in the financial statement comprise cash at banks and on hand, demand deposit and shortterm deposits, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above and short term liquid investments.
1.2.12 Income taxes
(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be refunded from or paid to the taxation authorities using the tax rates and tax laws that are in force at the reporting date.
Current income tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss (either in Other Comprehensive Income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(a) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(b) I n respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss. Such deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Minimum Alternate Tax (''MAT'') paid during the year is charged to the Statement of Profit and Loss as current tax for the year. MAT credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognises MAT credit as an asset in accordance with Ind AS 12, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "Deferred Tax". The Company reviews the MAT Credit asset at each reporting date and reduces to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the MAT to be utilised.
1.2.13 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s fair value less cost of disposals 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for the Company Cash Generating Unit''s (CGU) to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of 5 years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the 5th year.
Impairment losses are recognised in the Statement of Profit and Loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
1.2.14 Inventories
(i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost or net realisable value. The construction materials and consumables purchased for construction work issued to construction are treated as consumed.
(ii) Construction work in progress
The construction work in progress is valued at lower of cost or net realisable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.
(iii) Finished stock of completed projects
Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realisable value.
(iv) Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realisable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.
(v) Hospitality related operating supplies
Hospitality related operating supplies are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value and are expensed as and when purchased.
1.2.15 Provisions and contingent liabilities
(i) A provision is recognised when:
(a) The Company has a present obligation (legal or constructive) as a result of a past event;
(b) I t is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
(ii) I f the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(iii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in extreme cases where there is a probable liability that cannot be recognised because it cannot be measured reliably.
(iv) Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.2.16 Borrowing costs
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the company excludes such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
1.2.17 Segment reporting
Based on the "management approach" as defined in Ind AS 108 Operating Segments, the Chairman and Managing Director/Chief Financial Officer evaluates the Company''s performance based on an analysis of various performance indicators by business segment. Segment revenue and expense include amounts which can be directly attributable to the segment and allocable on reasonable basis. Segment assets and liabilities are assets/liabilities which are directly attributable to the segment or can be allocated on a reasonable basis. Income/expenses/assets/liabilities relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated income/expenses/assets/liabilities.
1.2.18 Employee benefits
(i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and pension fund are charged to the Statement of Profit and Loss.
(ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial valuations carried out at the reporting date and is charged to the Statement of Profit and Loss. The actuarial valuation is computed using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the financial statement with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(iii) Other employee benefits
Leave encashment is recognised as an expense in the Statement of Profit and Loss as and when they accrue. The Company determines the liability using the projected unit credit method, with actuarial valuations carried out as at the reporting date. Actuarial gains and losses are recognised in the Statement of Other Comprehensive Income.
1.2.19 Earnings per share
Basic earnings per share is calculated by dividing the net profit/(loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit/(loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.3 USE OF JUDGEMENTS AND ESTIMATES
The preparation of standalone Ind AS financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting estimates and assumptions are recognised prospectively i.e. recognised in the period in which the estimate is revised and future periods affected.
1.3.1 Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have a significant effect on the financial statements:
(i) Revenue recognition from sale of premises
Revenue is recognised only when the Company can measure its progress towards complete satisfaction of the performance obligation. The measurement of progress is estimated by reference to the stage of the projects determined based on the proportion of costs incurred to date (excluding land and finance cost) and the total estimated costs to complete (excluding land and finance cost).
(ii) Classification of property
The Company determines whether a property is classified as investment property or as inventory:
(a) I nvestment property comprises land and buildings that are not occupied for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are rented to tenants and are not intended to be sold in the ordinary course of business.
(b) I nventory comprises property that is held for sale in the ordinary course of business. Principally these are properties that the Company develops and intends to sell before or on completion of construction.
(iii) Operating lease contracts - the Company as lessor
The Company has entered into leases of its investment properties. The Company has determined based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
(iv) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in tax jurisdictions.
1.3.2 Estimates and assumptions
(i) Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and non-current categories based on the operating cycle of the respective business/projects.
(ii) Impairment of assets
I n assessing impairment, management estimates the recoverable amounts of each asset or CGU (in case of non-financial assets) based on expected future cash flows and uses an estimated interest rate to discount them. Estimation relates to assumptions about future cash flows and the determination of a suitable discount rate.
(iii) Useful lives of depreciable/amortisable assets (Property, plant and equipment, intangible assets and investment property)
Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected usage of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the usage of certain assets.
(iv) Inventories
Inventory is stated at the lower of cost or net realisable value (NRV).
NRV for completed inventory property is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realise from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (reference to the recent selling prices) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to complete the construction are estimated by management.
(v) Defined benefit obligation (DBO)
The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(vi) Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument/assets. Management bases its assumptions on observable data as far as possible but this may not always be available. In that case Management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
1.4 Recent accounting pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
I nd AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant on its standalone financial statements.
I nd AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
Mar 31, 2022
NOTE 1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES_1.1 NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited company is incorporated in India under provisions of the Companies Act applicable in India. The Company is engaged primarily in the business of real estate development and hospitality.
The Company is headquartered in Mumbai, India. The shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Its registered office is situated at Commerz, 3rd Floor, International Business Park, Oberoi Garden City, Off Western Express Highway, Goregaon (East), Mumbai- 400 063.
The standalone Ind AS financial statements for the year ended March 31, 2022 were authorised and approved for issue by the Board of Directors on May 26, 2022.
1.2 SIGNIFICANT ACCOUNTING POLICIES1.2.1 Basis of preparation
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules 2015 (as amended) and presentation requirements of Division II of Schedule III to the Companies Act, 2013.
The standalone Ind AS financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
The standalone Ind AS financial statements are presented in Indian Rupee ("INR") and all values are presented in INR Lakh and rounded off to the extent of 2 decimals, except when otherwise indicated.
1.2.2 Current/non-current classification
The Company as required by Ind AS 1 presents assets and liabilities in the Balance Sheet based on current/non-current classification.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Company''s normal operating cycle in respect of operations relating to the construction of real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current based on their respective operating cycle.
1.2.3 Foreign currencies(i) Initial recognition
Foreign currency transactions are recorded in the functional currency (Indian Rupee) by applying to the foreign currency amount, the exchange rate between the functional currency and the foreign currency on the date of the transaction.
All monetary items outstanding at year end denominated in foreign currency are converted into Indian Rupees at the reporting date exchange rate. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
The exchange differences arising on such conversion and on settlement of the transactions are recognised in the Statement of Profit and Loss.
1.2.4 Property, plant and equipment (PPE)
(i) Recognition and initial measurement
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.
Cost comprises the purchase price and any attributable/allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenue earned, if any, during trial run of assets is adjusted against cost of the assets. Cost also includes the cost of replacing part of the plant and equipment.
Borrowing costs relating to acquisition/construction/development of tangible assets, which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
When significant components of property and equipment are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
(ii) Subsequent measurement (depreciation and useful lives)
Depreciation is provided from the date the assets are put to use, on straight line basis as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixture |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment* |
5 years |
|
Computers |
3 years |
|
Vehicles |
8 years |
*Mobile handsets - 3 years
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
Assets individually costing less than or equal to '' 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
The carrying amount of PPE is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
(iii) De-recognition
PPE are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.5 Intangible assets
(i) Recognition and initial measurement
I ntangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable/allocable incidental cost of bringing the asset to its working condition for its intended use.
(ii) Subsequent measurement (amortisation)
All intangible assets with definite useful life are amortized on a straight line basis over the estimated useful lives.
Computer Software Over license period or 5 years
The carrying amount of intangible asset is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
1.2.6 Investment properties
(i) Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at cost, including transaction costs. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
(ii) Subsequent measurement (depreciation and useful lives)
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognised and relevant professional qualification and has experience in the category of the investment property being valued.
Investment Properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any, subsequently. Depreciation is provided from the date the assets are put to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixture |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment* |
5 years |
|
Computers |
3 years |
|
Lessee specific assets and improvements |
Over lease period or useful life as prescribed in Schedule II, whichever is lower |
*Mobile handsets - 3 years
For above classes of assets, based on internal assessment, the management believes that the useful lives as given above best represent the period over which management expects to use these assets.
Assets individually costing less than or equal to '' 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
The carrying amount of investment properties is reviewed periodically for impairment based on internal/ external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
When significant components of investment properties are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
(iii) De-recognition
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.7 Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditures incurred in respect of capital projects under development and includes any attributable/allocable cost and other incidental expenses. Revenues earned, if any, from such capital project before capitalisation are adjusted against the capital work in progress.
1.2.8 Revenue recognition
(i) Revenue from contracts with customer
Revenue from contracts with customer is recognised, when control of the goods or services are transferred to the customer, at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised.
Revenue is recognised as follows:
(a) Revenue from real estate projects
The Company recognises revenue, on execution of agreement or letter of allotment and when control of the goods or services are transferred to the customer, at an amount that reflects the consideration (i.e. the transaction price) to which the Company is expected to be entitled in exchange for those goods or services excluding any amount received on behalf of third party (such as indirect taxes). An asset created by the Company''s performance does not have an alternate use and as per the terms of the contract, the Company has an enforceable right to payment for performance completed till date. Hence the Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time. The Company recognises revenue at the transaction price (net of transaction costs) which is determined on the basis of agreement or letter of allotment entered into with the customer. The Company recognises revenue for performance obligation satisfied over time only if it can reasonably measure its progress towards complete satisfaction of the performance obligation. The Company would not be able to reasonably measure its progress towards complete satisfaction of a performance obligation if it lacks reliable information that would be required to apply an appropriate method of measuring progress. In those circumstances, the Company recognises revenue only to the extent of cost incurred until it can reasonably measure outcome of the performance obligation.
The Company uses cost based input method for measuring progress for performance obligation satisfied over time. Under this method, the Company recognises revenue in proportion to the actual project cost incurred (excluding land and finance cost) as against the total estimated project cost (excluding land and finance cost).
In a Joint development arrangement (JDA) wherein the land owner provides land and in lieu the Company transfers certain percentage of constructed area, the revenue is recognised over time using cost based input method of percentage of completion. Project costs include fair value of such land received and this fair value is accounted for on launch of the project.
The management reviews and revises its measure of progress periodically and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognised prospectively in the period in which such changes are determined.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 1.2.10 Financial instruments - initial recognition and subsequent measurement.
(b) Revenue from hospitality business
Revenue comprises sale of rooms, food and beverages and allied services relating to hotel operations. Revenue is recognised upon rendering of the service, provided pervasive evidence of an arrangement exists, tariff/rates are fixed or are determinable and collectability is reasonably certain. Revenue from sales of goods or rendering of services is net of indirect taxes, returns and discounts.
(ii) Revenue from lease rentals and related income
Lease income is recognised in the Statement of Profit and Loss on straight line basis over the non-cancellable lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from property management service is recognised at value of service and is disclosed net of indirect taxes, if any.
(iii) Finance income
Finance income is recognised as it accrues using the Effective Interest Rate (EIR) method. Finance income is included in other income in the Statement of Profit and Loss.
When calculating the EIR, the Company estimates the expected cash flow by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
(iv) Dividend income
Revenue is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
(v) Other income
Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company''s claim.
1.2.9 Leases
The determination of whether a contract is (or contains) a lease arrangement is based on the substance of the contract at the inception of the arrangement. The contract is, or contains, a lease if the contract provide lessee, the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee does not have the right to use an identified asset if, at inception of the contract, a lessor has a substantive right to substitute the asset throughout the period of use.
The Company accounts for the lease arrangement as follows:
(i) Where the Company is the lessee
The Company applies single recognition and measurement approach for all leases, except for short term leases and leases of low value assets. On the commencement of the lease, the Company, in its Balance Sheet, recognises
the right of use asset at cost and lease liability at present value of the lease payments to be made over the non-cancellable lease term.
Subsequently, the right of use asset are measured at cost less accumulated depreciation and any accumulated impairment loss. Lease liability are measured at amortised cost using the effective interest method. The lease payment made, are apportioned between the finance charge and the reduction of lease liability, and are recognised as expense in the Statement of Profit and Loss.
Lease deposits given are a financial asset and are measured at amortised cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognised over the non-cancellable lease term. Unwinding of discount is treated as finance income and recognised in the Statement of Profit and Loss.
(ii) Where the Company is the lessor
The lessor needs to classify its leases as either an operating lease or a finance lease. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating lease. The Company has only operating lease and accounts the same as follows:
Assets given under operating leases are included in investment properties. Lease income is recognised in the Statement of Profit and Loss on straight line basis the non-cancellable lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised the non-cancellable lease term on the same basis as rental income.
Lease deposits received are financial instruments (financial liability) and are measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised the non-cancellable lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.
1.2.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
EIR is the rate that exactly discounts the estimated future cash receipts or payments over the expected life of the financial instruments or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
(i) Financial assets
(a) Initial measurement
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.
(b) Subsequent measurement
i. Financial assets at amortised cost
Financial assets are measured at the amortised cost, if both of the following criteria are met:
a. These assets are held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
ii. Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI if both of the following criteria are met:
a. These assets are held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Fair value movements are recognised in the Other Comprehensive Income (OCI). On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss.
iii. Financial assets at fair value through profit or loss (FVTPL)
Any financial assets, which do not meet the criteria for categorisation as at amortised cost or as FVTOCI, are classified as FVTPL. Gain or losses are recognised in the Statement of Profit and Loss.
iv. Equity instruments
Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as FVTPL, and measured at fair value with all changes recognised in the Statement of Profit and Loss.
(c) De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
(d) Impairment of financial assets
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
i. Trade receivables; and
ii. All lease receivables resulting from transactions within the scope of Ind AS 116.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL 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 entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
(ii) Financial liabilities
(a) Initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
(b) Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance cost in the Statement of Profit and Loss.
Intercompany loans not repayable on demand are discounted to its present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the loan and its present value is accounted based on the relationship with the borrower for e.g. in case of subsidiary, the difference is shown as further equity infusion in the subsidiary. The unwinding of discount from the date of loan to the transition date is shown as an income and recognised in "Retained Earningsâ of the Lender.
(c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
(d) De-recognition
A financial liability (or a part of a financial liability) is derecognised from the Company''s financial statement when the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(e) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the financial statement if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(iii) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs:
i. Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
ii. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
iii. Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.2.11 Cash and cash equivalents
Cash and cash equivalent in the financial statement comprise cash at banks and on hand, demand deposit and shortterm deposits, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above and short term liquid investments.
1.2.12 Income taxes
(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be refunded from or paid to the taxation authorities using the tax rates and tax laws that are in force at the reporting date.
Current income tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss (either in Other Comprehensive Income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(a) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(b) I n respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss. Such deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Minimum Alternate Tax (''MAT'') paid during the year is charged to the Statement of Profit and Loss as current tax for the year. MAT credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognises MAT credit as an asset in accordance with Ind AS 12, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "Deferred Tax". The Company reviews the MAT Credit asset at each reporting date and reduces to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the MAT to be utilised.
1.2.13 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s fair value less cost of disposals 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for the Company Cash Generating Unit''s (CGU) to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of 5 years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the 5th year.
Impairment losses are recognised in the Statement of Profit and Loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
1.2.14 Inventories
(i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost or net realisable value. The construction materials and consumables purchased for construction work issued to construction are treated as consumed.
(ii) Construction work in progress
The construction work in progress is valued at lower of cost or net realisable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.
(iii) Finished stock of completed projects
Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realisable value.
(iv) Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realisable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.
(v) Hospitality related operating supplies
Hospitality related operating supplies are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value and are expensed as and when purchased.
1.2.15 Provisions and contingent liabilities
(i) A provision is recognised when:
(a) The Company has a present obligation (legal or constructive) as a result of a past event;
(b) I t is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
(ii) If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(iii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in extreme cases where there is a probable liability that cannot be recognised because it cannot be measured reliably.
(iv) Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.2.16 Borrowing costs
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the company excludes such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
1.2.17 Segment reporting
Based on the "management approach" as defined in Ind AS 108 Operating Segments, the Chairman and Managing Director/Chief Financial Officer evaluates the Company''s performance based on an analysis of various performance indicators by business segment. Segment revenue and expense include amounts which can be directly attributable to the segment and allocable on reasonable basis. Segment assets and liabilities are assets/liabilities which are directly
attributable to the segment or can be allocated on a reasonable basis. Income/expenses/assets/liabilities relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated income/expenses/assets/liabilities.
1.2.18 Employee benefits
(i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and pension fund are charged to the Statement of Profit and Loss.
(ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial valuations carried out at the reporting date and is charged to the Statement of Profit and Loss. The actuarial valuation is computed using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the financial statement with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
(iii) Other employee benefits
Leave encashment is recognised as an expense in the Statement of Profit and Loss as and when they accrue. The Company determines the liability using the projected unit credit method, with actuarial valuations carried out as at the reporting date. Actuarial gains and losses are recognised in the Statement of Other Comprehensive Income.
1.2.19 Earnings per share
Basic earnings per share is calculated by dividing the net profit/(loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit/(loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
.3 USE OF JUDGEMENTS AND ESTIMATES
The preparation of standalone Ind AS financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting estimates and assumptions are recognised prospectively i.e. recognised in the period in which the estimate is revised and future periods affected.
1.3.1 Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have a significant effect on the financial statements:
(i) Revenue recognition from sale of premises
Revenue is recognised only when the Company can measure its progress towards complete satisfaction of the performance obligation. The measurement of progress is estimated by reference to the stage of the projects determined based on the proportion of costs incurred to date (excluding land and finance cost) and the total estimated costs to complete (excluding land and finance cost).
(ii) Classification of property
The Company determines whether a property is classified as investment property or as inventory:
(a) Investment property comprises land and buildings that are not occupied for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are rented to tenants and are not intended to be sold in the ordinary course of business.
(b) Inventory comprises property that is held for sale in the ordinary course of business. Principally these are properties that the Company develops and intends to sell before or on completion of construction.
(iii) Operating lease contracts - the Company as lessor
The Company has entered into leases of its investment properties. The Company has determined based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
(iv) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in tax jurisdictions.
1.3.2 Estimates and assumptions
(i) Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and non-current categories based on the operating cycle of the respective business/projects.
(ii) Impairment of assets
In assessing impairment, management estimates the recoverable amounts of each asset or CGU (in case of non-financial assets) based on expected future cash flows and uses an estimated interest rate to discount them. Estimation relates to assumptions about future cash flows and the determination of a suitable discount rate.
(iii) Useful lives of depreciable/amortisable assets (Property, plant and equipment, intangible assets and investment property)
Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected usage of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the usage of certain assets.
(iv) Inventories
Inventory is stated at the lower of cost or net realisable value (NRV).
NRV for completed inventory property is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realise from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (reference to the recent selling prices) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to complete the construction are estimated by management.
(v) Defined benefit obligation (DBO)
The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
(vi) Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument/assets. Management bases its assumptions on observable data as far as possible but this may not always be available. In that case Management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Mar 31, 2021
1.1 NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited company is incorporated in India under provisions of the Companies Act applicable in India. The Company is engaged primarily in the business of real estate development and hospitality.
The Company is headquartered in Mumbai, India. The shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Its registered office is situated at Commerz, 3rd Floor, International Business Park, Oberoi Garden City, Off Western Express Highway, Goregaon (East), Mumbai- 400 063.
The standalone Ind AS financial statements for the year ended March 31,2021 were authorised and approved for issue by the Board of Directors on May 14, 2021.
1.2 SIGNIFICANT ACCOUNTING POLICIES1.2.1 Basis of preparation
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules 2015 (as amended) and presentation requirements of Division II of Schedule III to the Companies Act, 2013.
The standalone Ind AS financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
The standalone Ind AS financial statements are presented in Indian Rupee ("INR") and all values are presented in INR Lakh and rounded off to the extent of 2 decimals, except when otherwise indicated.
1.2.2 Current/non-current classification
The Company as required by Ind AS 1 presents assets and liabilities in the Balance Sheet based on current/non-current classification.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Company''s normal operating cycle in respect of operations relating to the construction of real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current based on their respective operating cycle.
1.2.3 Foreign currencies(i) Initial recognition
Foreign currency transactions are recorded in the functional currency (Indian Rupee) by applying to the foreign currency amount, the exchange rate between the functional currency and the foreign currency on the date of the transaction.
All monetary items outstanding at year end denominated in foreign currency are converted into Indian Rupees at the reporting date exchange rate. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
The exchange differences arising on such conversion and on settlement of the transactions are recognised in the Statement of Profit and Loss.
(i) Recognition and initial measurement
Property, plant and equipment are stated at cost less accumulated depreciation/amortisation and impairment losses, if any.
Cost comprises the purchase price and any attributable/allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenue earned, if any, during trial run of assets is adjusted against cost of the assets. Cost also includes the cost of replacing part of the plant and equipment.
Borrowing costs relating to acquisition/construction/development of tangible assets, which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
When significant components of property and equipment are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
(ii) Subsequent measurement (depreciation and useful lives)
Depreciation is provided from the date the assets are put to use, on straight line basis as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixtures |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment* |
5 years |
|
Computers |
3 years |
|
Vehicles |
8 years |
*Mobile handsets - 3 years
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
Assets individually costing less than or equal to '' 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
The carrying amount of PPE is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
PPE are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.5 Intangible assets(i) Recognition and initial measurement
Intangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable/allocable incidental cost of bringing the asset to its working condition for its intended use.
(ii) Subsequent measurement (amortisation)
All intangible assets with definite useful life are amortized on a straight line basis over the estimated useful lives.
Computer Software 5 years
The carrying amount of intangible asset is reviewed periodically for impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
Gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
1.2.6 Investment properties(i) Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at cost, including transaction costs. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
(ii) Subsequent measurement (depreciation and useful lives)
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognised and relevant professional qualification and has experience in the category of the investment property being valued.
Investment Properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any, subsequently. Depreciation is provided from the date the assets are put to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
|
Building |
60 years |
|
Building - Temporary structures |
3 years |
|
Plant and machinery |
15 years |
|
Furniture and fixtures |
10 years |
|
Electrical installations and equipment |
10 years |
|
Office equipment1 |
5 years |
|
Computers |
3 years |
|
Lessee specific assets and improvements |
Over lease period or useful life as prescribed in Schedule II, whichever is lower |
When significant components of investment properties are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognised as separate asset. All other repair and maintenance costs are recognised in the Statement of Profit and Loss as incurred.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Statement of Profit and Loss in the period of de-recognition.
1.2.7 Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditures incurred in respect of capital projects under development and includes any attributable/allocable cost and other incidental expenses. Revenues earned, if any, from such capital project before capitalisation are adjusted against the capital work in progress.
1.2.8 Revenue recognition(i) Revenue from contracts with customer
Revenue from contracts with customer is recognised, when control of the goods or services are transferred to the customer, at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised.
Revenue is recognised as follows:
(a) Revenue from real estate projects
The Company recognises revenue, on execution of agreement or letter of allotment and when control of the goods or services are transferred to the customer, at an amount that reflects the consideration (i.e. the transaction price) to which the Company is expected to be entitled in exchange for those goods or services excluding any amount received on behalf of third party (such as indirect taxes). An asset created by the Company''s performance does not have an alternate use and as per the terms of the contract, the Company has an enforceable right to payment for performance completed till date. Hence the Company transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time. The Company recognises revenue at the transaction price which is determined on the basis of agreement or letter of allotment entered into with the customer. The Company recognises revenue for performance obligation satisfied over time only if it can reasonably measure its progress towards complete satisfaction of the performance obligation. The Company would not be able to reasonably measure its progress towards complete satisfaction of a performance obligation if it lacks reliable information that would be required to apply an appropriate method of measuring progress. In those circumstances, the Company recognises revenue only to the extent of cost incurred until it can reasonably measure outcome of the performance obligation.
The Company uses cost based input method for measuring progress for performance obligation satisfied over time. Under this method, the Company recognises revenue in proportion to the actual project cost incurred (excluding land and finance cost) as against the total estimated project cost (excluding land and finance cost).
The management reviews and revises its measure of progress periodically and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognised prospectively in the period in which such changes are determined.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in note 1.2.10 Financial instruments - initial recognition and subsequent measurement.
(b) Revenue from hospitality business
Revenue comprises sale of rooms, food and beverages and allied services relating to hotel operations. Revenue is recognised upon rendering of the service, provided pervasive evidence of an arrangement exists, tariff/rates are fixed or are determinable and collectability is reasonably certain. Revenue from sales of goods or rendering of services is net of indirect taxes, returns and discounts.
(ii) Revenue from lease rentals and related income
Lease income is recognised in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from property management service is recognised at value of service and is disclosed net of indirect taxes, if any.
Finance income is recognised as it accrues using the Effective Interest Rate (EIR) method. Finance income is included in other income in the Statement of Profit and Loss.
When calculating the EIR, the Company estimates the expected cash flow by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Revenue is recognised when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company''s claim.
The determination of whether a contract is (or contains) a lease is based on the substance of the contract at the inception of the lease. The contract is, or contains, a lease if the contract provide lessee, the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee does not have the right to use an identified asset if, at inception of the contract, a lessor has a substantive right to substitute the asset throughout the period of use.
The Company accounts for the lease arrangement as follows:
(i) Where the Company is the lessee
The Company applies single recognition and measurement approach for all leases, except for short term leases and leases of low value assets. On the commencement of the lease, the Company, in its Balance Sheet, recognise the right of use asset at cost and lease liability at present value of the lease payments to be made over the lease term.
Subsequently, the right of use asset are measured at cost less accumulated depreciation and any accumulated impairment loss. Lease liability are measured at amortised cost using the effective interest method. The lease payment made, are apportioned between the finance charge and the reduction of lease liability, and are recognised as expense in the Statement of Profit and Loss.
Lease deposits given are a financial asset and are measured at amortised cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognised over the lease term. Unwinding of discount is treated as finance income and recognised in the Statement of Profit and Loss.
(ii) Where the Company is the lessor
The lessor needs to classify its leases as either an operating lease or a finance lease. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating lease. The Company has only operating lease and accounts the same as follows:
Assets given under operating leases are included in investment properties. Lease income is recognised in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Lease deposits received are financial instruments (financial liability) and are measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Effective Interest Rate (EIR) is the rate that exactly discounts the estimated future cash receipts or payments over the expected life of the financial instruments or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
(i) Financial assets(a) Initial measurement
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.
(b) Subsequent measurementi. Financial assets at amortised cost
Financial assets are measured at the amortised cost, if both of the following criteria are met:
a. These assets are held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
ii. Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI if both of the following criteria are met:
a. These assets are held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Fair value movements are recognised in the Other Comprehensive Income (OCI). On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss.
iii. Financial assets at fair value through profit or loss (FVTPL)
Any financial assets, which do not meet the criteria for categorisation as at amortised cost or as FVTOCI, are classified as FVTPL. Gain or losses are recognised in the Statement of Profit and Loss.
Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination are classified as FVTPL, and measured at fair value with all changes recognised in the Statement of Profit and Loss.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
(d) Impairment of financial assets
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
i. Trade receivables; and
ii. All l ease receivables resulting from transactions within the scope of Ind AS 116.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL 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 entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
(ii) Financial liabilities(a) Initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance cost in the Statement of Profit and Loss.
Intercompany loans not repayable on demand are discounted to its present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the loan and its present value is accounted based on the relationship with the borrower for e.g. in case of subsidiary, the difference is shown as further equity infusion in the subsidiary. The unwinding of discount from the date of loan to the transition date is shown as an income and recognised in "Retained Earnings" of the Lender.
(c) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
A financial liability (or a part of a financial liability) is derecognised from the Company''s financial statement when the obligation specified in the contract is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
(e) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the financial statement if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs:
i. Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
ii. Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
iii. Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.2.11 Cash and cash equivalents
Cash and cash equivalent in the financial statement comprise cash at banks and on hand, demand deposit and short-term deposits, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above and short term liquid investments.
1.2.12 Income taxes(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be refunded from or paid to the taxation authorities using the tax rates and tax laws that are in force at the reporting date.
Current income tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss (either in Other Comprehensive Income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(a) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(b) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognised outside the Statement of Profit and Loss is recognised outside the Statement of Profit and Loss. Such deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Minimum Alternate Tax (''MAT'') paid in a year is charged to the Statement of Profit and Loss as current tax for the year. MAT credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognises MAT credit as an asset in accordance with Ind AS 12, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "Deferred Tax". The Company reviews the MAT Credit asset at each reporting date and reduces to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the MAT to be utilised.
1.2.13 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s fair value less cost of disposals 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for the Company Cash Generating Unit''s (CGU) to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of 5 years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the 5th year.
Impairment losses are recognised in the Statement of Profit and Loss in expense categories.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
1.2.14 Inventories(i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost or net realisable value. The construction materials and consumables purchased for construction work issued to construction are treated as consumed.
(ii) Construction work in progress
The construction work in progress is valued at lower of cost or net realisable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.
(iii) Finished stock of completed projects
Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realisable value.
Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realisable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.
(v) Hospitality related operating supplies
Hospitality related operating supplies are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value and are expensed as and when purchased.
1.2.15 Provisions and contingent liabilities
(i) A provision is recognised when:
(a) The Company has a present obligation (legal or constructive) as a result of a past event;
(b) It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
(ii) If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(iii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in extreme cases where there is a probable liability that cannot be recognised because it cannot be measured reliably.
(iv) Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Pursuant to a clarification issued by the International Accounting Standards Board (''IASB'') in relation to borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the Company has with effect from April 1,2019 excluded such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss. Consequently, for the year ended March 31,2020, there were no projects which were impacted due to the above.
Based on the "management approach" as defined in Ind AS 108 Operating Segments, the Chairman and Managing Director/Chief Financial Officer evaluates the Company''s performance based on an analysis of various performance indicators by business segment. Segment revenue and expense include amounts which can be directly attributable to the segment and allocable on reasonable basis. Segment assets and liabilities are assets/liabilities which are directly attributable to the segment or can be allocated on a reasonable basis. Income/expenses/assets/ liabilities relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated income/expenses/assets/liabilities.
1.2.18 Employee benefits(i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and pension fund are charged to the Statement of Profit and Loss.
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial valuations carried out at the reporting date and is charged to the Statement of Profit and Loss. The actuarial valuation is computed using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the financial statement with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to the Statement of Profit and Loss in subsequent periods.
Leave encashment is recognised as an expense in the Statement of Profit and Loss as and when they accrue. The Company determines the liability using the projected unit credit method, with actuarial valuations carried out as at the reporting date. Actuarial gains and losses are recognised in the Statement of Other Comprehensive Income.
Basic earnings per share is calculated by dividing the net profit/(loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit/(loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.3 USE OF JUDGEMENTS AND ESTIMATES
The preparation of standalone Ind AS financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting estimates and assumptions are recognised prospectively i.e. recognised in the period in which the estimate is revised and future periods affected.
1.3.1 Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have a significant effect on the financial statements:
(i) Revenue recognition from sale of premises
Revenue is recognised only when the Company can measure its progress towards complete satisfaction of the performance obligation. The measurement of progress is estimated by reference to the stage of the projects determined based on the proportion of costs incurred to date (excluding land and finance cost) and the total estimated costs to complete (excluding land and finance cost).
(ii) Classification of property
The Company determines whether a property is classified as investment property or as inventory:
(a) Investment property comprises land and buildings that are not occupied for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are rented to tenants and are not intended to be sold in the ordinary course of business.
(b) Inventory comprises property that is held for sale in the ordinary course of business. Principally these are properties that the Company develops and intends to sell before or on completion of construction.
(iii) Operating lease contracts - the Company as lessor
The Company has entered into leases of its investment properties. The Company has determined based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
(iv) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in tax jurisdictions.
1.3.2 Estimates and assumptions(i) Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and non-current categories based on the operating cycle of the respective business/projects.
In assessing impairment, management estimates the recoverable amounts of each asset or CGU (in case of non-financial assets) based on expected future cash flows and uses an estimated interest rate to discount them. Estimation relates to assumptions about future cash flows and the determination of a suitable discount rate.
(iii) Useful lives of depreciable/amortisable assets (Property, plant and equipment, intangible assets and investment property)
Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected usage of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the usage of certain assets.
Inventory is stated at the lower of cost or net realisable value (NRV).
NRV for completed inventory property is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realise from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (reference to the recent selling prices) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to complete the construction are estimated by management.
(v) Defined benefit obligation (DBO)
The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument/assets. Management bases its assumptions on observable data as far as possible but this may not always be available. In that case Management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Mobile handsets - 3 years
For above classes of assets, based on internal assessment, the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Assets individually costing less than or equal to '' 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
Leasehold land and improvements are amortised on the basis of duration and other terms of lease.
The carrying amount of investment properties is reviewed periodically for impairment based on internal/ external factors. An impairment loss is recognised wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
Mar 31, 2018
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited company is incorporated under provisions of the Companies Act applicable in India. The Company is engaged primarily in the business of real estate development and hospitality.
The Company is headquartered in Mumbai, India. The shares of the Company are listed on the BSE Limited and National Stock Exchange of India Limited. Its registered office is situated at Commerz, 3rd Floor, International Business Park, Oberoi Garden City, Off Western Express Highway, Goregaon (East), Mumbai- 400 063.
The financial statements for the year ended March 31, 2018 were authorised and approved for issue by the Board of Directors on April 24, 2018.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) as notified under section 133 of the Companies Act read with the Companies (Indian Accounting Standards) Rules 2015 (as amended).
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
The financial statements are presented in Indian Rupee ("INR") and all values are rounded to the nearest INR Lakh, except when otherwise indicated.
2.2 Current / non-current classification
The Company as required by Ind AS 1 presents assets and liabilities in the Balance Sheet based on current / noncurrent classification.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Company''s normal operating cycle in respect of operations relating to the construction of real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current based on their respective operating cycle.
2.3 Foreign currencies Initial recognition
Foreign currency transactions are recorded in the functional currency (Indian Rupee) by applying to the foreign currency amount, the exchange rate between the functional currency and the foreign currency on the date of the transaction.
Conversion
All monetary items outstanding at year end denominated in foreign currency are converted into Indian Rupees at the reporting date exchange rate. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences
The exchange differences arising on such conversion and on settlement of the transactions are recognized in the Statement of Profit and Loss.
2.4 Property, plant and equipments (PPE) Recognition and initial measurement
Property, plant and equipments are stated at cost less accumulated depreciation / amortisation and impairment losses, if any.
Cost comprises the purchase price and any attributable / allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenue earned, if any, during trial run of assets is adjusted against cost of the assets. Cost also includes the cost of replacing part of the plant and equipments.
Borrowing costs relating to acquisition / construction / development of tangible assets, which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
When significant components of property and equipments are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognized as separate asset. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
Subsequent measurement (depreciation and useful lives)
Depreciation is provided from the date the assets are put to use, on straight line basis as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
*Mobile handsets - 3 years
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortized on the basis of duration and other terms of lease.
Assets individually costing less than or equal to '' 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
The carrying amount of PPE is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
De-recognition
PPE are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of Profit and Loss in the period of de-recognition.
2.5 Intangible assets Recognition and initial measurement
Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use.
The carrying amount of intangible asset is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
2.6 Investment properties Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at cost, including transaction costs. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent measurement (depreciation and useful lives)
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Though the Company measures investment properties using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognized and relevant professional qualification and has experience in the category of the investment property being valued.
Investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any, subsequently. Depreciation is provided from the date the assets are put to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
*Mobile handsets - 3 years
For above classes of assets, based on internal assessment, the management believes that the useful lives as given above best represent the period over which management expects to use these assets.
Assets individually costing less than or equal to Rs, 0.05 lakh are fully depreciated in the year of purchase except under special circumstances.
Leasehold land and improvements are amortized on the basis of duration and other terms of lease.
The carrying amount of investment properties is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
When significant components of investment properties are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognized as separate asset. All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
De-recognition
Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the Statement of Profit and Loss in the period of de-recognition.
2.7 Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditures incurred in respect of capital projects under development and includes any attributable / allocable cost and other incidental expenses. Revenues earned, if any, from such capital project before capitalization are adjusted against the capital work in progress.
2.8 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognized.
Revenue is recognized as follows:
2.8.1 Revenue from real estate projects
The Company follows the percentage of project completion method for its projects.
Revenue is recognized 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 ("ICAI"). The Company recognizes revenue in proportion to the actual project cost incurred (including land cost) as against the total estimated project cost (including land cost), subject to achieving the threshold level of project cost (excluding land cost) as well as area sold and depending on the type of project. Revenue is recognized net of indirect taxes and on execution of either an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to completion, area available for sale etc. being of a technical nature are reviewed and revised periodically by the management and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognized prospectively in the period in which such changes are determined. Land cost includes the cost of land, land related development rights and premium.
2.8.2 Revenue from hospitality business
Revenue comprises sale of rooms, food and beverages and allied services relating to hotel operations. Revenue is recognized upon rendering of the service, provided pervasive evidence of an arrangement exists, tariff / rates are fixed or are determinable and collectability is reasonably certain. Revenue from sales of goods or rendering of services is net of indirect taxes, returns and discounts.
2.8.3 Revenue from lease rentals and related income
Lease income is recognized in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from property management service is recognized at value of service and is disclosed net of indirect taxes, if any.
2.8.4 Finance income
Finance income is recognized as it accrues using the Effective Interest Rate (EIR) method. Finance income is included in other income in the Statement of Profit and Loss.
2.8.5 Dividend income
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
2.8.6 Other income
Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company''s claim.
2.9 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
2.9.1 Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating lease. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Lease deposits given are a financial asset and are measured at amortized cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognized over the lease term. Unwinding of discount is treated as finance income and recognized in the Statement of Profit & Loss.
2.9.2 Where the Company is the less or
Assets given under operating leases are included in investment properties. Lease income is recognized in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.
Lease deposits received are financial instruments (financial liability) and need to be measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognized over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.
2.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
EIR is the rate that exactly discounts the estimated future cash receipts or payments over the expected life of the financial instruments or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
2.10.1 Financial assets Initial measurement
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.
Subsequent measurement (i) Financial assets at amortized cost
Financial assets are measured at the amortized cost, if both of the following criteria are met:
a. These assets are held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the EIR method. The EIR amortization is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.
(ii) Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI if both of the following criteria are met:
a. These assets are held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Fair value movements are recognized in the Other Comprehensive Income (OCI). On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to the Statement of Profit and Loss.
(iii) Financial assets at fair value through profit or loss (FVTPL)
Any financial assets, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, are classified as at FVTPL. Gain or losses are recognized in the Statement of Profit and Loss.
(iv) Equity instruments
Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination are classified as FVTPL, and measured at fair value with all changes recognized in the Statement of Profit and Loss.
De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
a. Trade receivables; and
b. All lease receivables resulting from transactions within the scope of Ind AS 17.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL 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 entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
2.10.2 Financial liabilities Initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
Intercompany loans not repayable on demand are discounted to its present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the loan and its present value is accounted based on the relationship with the borrower for e.g. in case of subsidiary, the difference is shown as further equity infusion in the subsidiary. The unwinding of discount from the date of loan to the transition date is shown as an income and recognized in "Retained Earnings" of the Lender.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
De-recognition
A financial liability is derecognized from the Company''s Balance Sheet when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit or Loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
2.11 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.12 Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand, demand deposit and short-term deposits, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
The amendments to Ind AS 7 require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Company has provided the information for both the current and the comparative period in Cash Flow Statement.
2.13 Income taxes
2.13.1 Current income tax
Current income tax are measured at the amount expected to be paid to the taxation authorities using the tax rates and tax laws that are in force at the reporting date.
Current income tax relating to items recognized outside the Statement of Profit and Loss is recognized outside the Statement of Profit and Loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
2.13.2 Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
(i) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(ii) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognized outside the Statement of Profit and Loss is recognized outside the Statement of Profit and Loss. Such deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Minimum Alternate Tax (''MAT'') credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognizes MAT credit as an asset in accordance with Ind AS 12, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "Deferred Tax". The Company reviews the MAT Credit asset at each reporting date and reduces to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the MAT to be utilized.
2.14 Impairment of non-financial assets
The carrying amounts of assets are reviewed at each reporting date if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s fair value less cost of disposals 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in orderly transaction between market participants at the measurement date. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for the Company Cash Generating Unit''s (CGU) to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses are recognized in the Statement of Profit & Loss in expense categories.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
2.15 Inventories
2.15.1 Construction materials and consumables
The construction materials and consumables are valued at lower of cost or net realizable value. The construction materials and consumables purchased for construction work, issued to construction are treated as consumed.
2.15.2 Construction work in progress
The construction work in progress is valued at lower of cost or net realizable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.
2.15.3 Finished stock of completed projects
Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realizable value.
2.15.4 Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.
2.15.5 Hospitality related operating supplies
Hospitality related operating supplies are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value and are expensed as and when purchased.
2.16 Share based payments - Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
That cost is recognized, together with a corresponding increase in Share-Based Payment (SBP) reserves in equity, over the period in which the performance and / or service conditions are fulfilled in employee benefits expense. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The Statement of Profit and Loss expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share
The amendments in Ind AS 102 addresses three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled.
The Company applied these amendments without restating prior periods. However, their application has no effect on the Company''s financial position and performance as the Company had no such transaction.
2.17 Provisions and contingent liabilities
(i) A provision is recognized when:
- The Company has a present obligation (legal or constructive) as a result of a past event;
- It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
- A reliable estimate can be made of the amount of the obligation.
- If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
(ii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in extreme cases where there is a probable liability that cannot be recognized because it cannot be measured reliably.
(iii) Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
2.18 Borrowing costs
Borrowing costs that are directly attributable to the acquisition / construction of qualifying assets or for long - term project development are capitalized as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognized as an expense, in the period in which they are incurred.
2.19 Segment reporting
Based on the "management approach" as defined in Ind AS 108 - Operating Segments, the Chairman and Managing Director / Chief Financial Officer evaluates the Company''s performance based on an analysis of various performance indicators by operating segment. Segment revenue and expense include amounts which can be directly attributable to the segment and allocable on reasonable basis. Segment assets and liabilities are assets / liabilities which are directly attributable to the segment or can be allocated on a reasonable basis. Income / expenses / assets / liabilities relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated income / expenses / assets / liabilities.
2.20 Employee benefits
2.20.1 Defined contribution plans
Retirement benefits in the form of contribution to provident fund and pension fund are charged to the Statement of Profit and Loss.
2.20.2 Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial valuations carried out at reporting date and is charged to the Statement of Profit and Loss. The actuarial valuation is computed using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
2.20.3 Other employee benefits
Leave encashment is recognized as an expense in the Statement of Profit and Loss account as and when they accrue. The Company determines the liability using the projected unit credit method, with actuarial valuations carried out as at Balance Sheet date. Re - measurement gains and losses are recognized in the statement of other comprehensive income.
2.21 Earnings per share
Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
3. USE OF JUDGMENTS AND ESTIMATES
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting estimates and assumptions are recognized prospectively i.e. recognized in the period in which the estimate is revised and future periods affected.
3.1 Significant management judgments
The following are significant management judgments in applying the accounting policies of the Company that have a significant effect on the financial statements.
3.1.1 Revenue recognition of premises
Revenue is recognized using the percentage of completion method as construction progresses. The percentage of completion is estimated by reference to the stage of the projects determined based on the proportion of costs incurred to date and the total estimated costs to complete.
3.1.2 Classification of property
The Company determines whether a property is classified as investment property or as inventory:
(i) Investment property comprises land and buildings that are not occupied for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are rented to tenants and are not intended to be sold in the ordinary course of business.
(ii) Inventory comprises property that is held for sale in the ordinary course of business. Principally these are properties that the Company develops and intends to sell before or on completion of construction.
3.1.3 Operating lease contracts - the Company as less or
The Company has entered into leases of its investment properties. The Company has determined based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
3.1.4 Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in tax jurisdictions.
3.2 Estimates and assumptions
3.2.1 Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and non-current categories based on the operating cycle of the respective business / projects.
3.2.2 Impairment of assets
In assessing impairment, management estimates the recoverable amounts of each asset or CGU (in case of non-financial assets) based on expected future cash flows and uses an estimated interest rate to discount them. Estimation relates to assumptions about future cash flows and the determination of a suitable discount rate.
3.2.3 Useful lives of depreciable / amortizable assets (Property, plant and equipments, intangible assets and investment property)
Management reviews its estimate of the useful lives of depreciable / amortizable assets at each reporting date, based on the expected usage of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the usage of certain assets.
3.2.4 Inventories
Inventory is stated at the lower of cost or net realizable value (NRV).
NRV for completed inventory property is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realize from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (reference to the recent selling prices) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to complete the construction are estimated by management.
3.2.5 Defined benefit obligation (DBO)
The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
3.2.6 Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument / assets. Management bases its assumptions on observable data as far as possible but this may not always be available. In that case Management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
Under a DCF method, forecast cash flows are discounted back to the present date, generating a net present value for the cash flow stream of the business. A terminal value at the end of the explicit forecast period is then determined and that value is also discounted back to the Valuation Date to give an overall value for the business.
- A Discounted cash flow methodology typically requires the forecast period to be of such a length to enable the business to achieve a stabilized level of earnings, or to be reflective of an entire operation cycle for more cyclical industries.
- The rate at which the future cash flows are discounted ("the discount rate") should reflect not only the time value of money, but also the risk associated with the business future operations. The discount rate most generally employed is Weighted Average Cost of Capital ("WACC"), reflecting an optimal as opposed to actual financing structure.
- In calculating the terminal value, regard must be had to the business'' potential for further growth beyond the explicit forecast period. The "Constant Growth Model", which applies an expected constant level of growth to the cash flow forecast in the last year of the forecast period and assumes such growth is achieved in perpetuity, is a common method. These results
Mar 31, 2017
1. NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited company is incorporated under the Companies Act 1956. The Company is engaged primarily in the business of real estate development and hospitality.
The Company is headquartered in Mumbai, India. The shares of the Company are listed on the BSE Limited and National Stock Exchange of India Limited. Its registered office is situated at Commerz, 3rd Floor, International Business Park, Oberoi Garden City, Off Western Express Highway, Goregaon (East), Mumbai- 400 063.
The financial statements for the year ended March 31, 2017 were authorized and approved for issue by the Board of Directors on May 04, 2017.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards as notified under section 133 of the Companies Act 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules 2015 by Ministry of Corporate Affairs (''MCA'') as amended by the Companies (Indian Accounting Standards) Rules, 2016.
For all periods up to and including the year ended March 31, 2015 the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP) as amended from time to time.
The financial statements for the year ended March 31, 2017 are the Company''s first Ind AS financial statements. The Company has adopted Ind AS standards effective from April 01, 2016 with comparatives for year ending March 31, 2016 and April 01, 2015 being restated and the adoptions were carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. All applicable Ind AS have been applied consistently and retrospectively wherever required. Please refer to note 4.2 for information on how the Company has adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
2.2 Current/non-current classification
The Company''s normal operating cycle in respect of operations relating to the construction of real estate projects may vary from project to project depending upon the size of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and hospitality business is based on 12 months period. Assets and liabilities have been classified into current and non-current based on their respective operating cycle.
2.3 Foreign currencies Initial recognition
Foreign currency transactions are recorded in the functional currency (Indian Rupee) by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency on the date of the transaction.
Conversion
All monetary items outstanding at year end denominated in foreign currency are converted into Indian Rupees at the reporting date exchange rate. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences
The exchange differences arising on such conversion and on settlement of the transactions are recognized in the statement of profit and loss.
2.4 Property, plant and equipment (PPE) Transition to Ind AS
Under the previous Indian GAAP property plant and equipment were carried in the balance sheet at cost less accumulated depreciation / amortization and impairment losses, if any. The Company has elected to regard those values of property, plant and equipment as deemed cost at the date of transition to Ind AS (April 01, 2015).
Recognition and initial measurement
Property, plant and equipment are stated at cost less accumulated depreciation/amortization and impairment losses, if any.
Cost comprises the purchase price and any attributable / allocable cost of bringing the asset to its working condition for its intended use. The cost also includes direct cost and other related incidental expenses. Revenue earned, if any, during trial run of assets is adjusted against cost of the assets. Cost also includes the cost of replacing part of the plant and equipment.
Borrowing costs relating to acquisition / construction / development of tangible assets, which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Subsequent measurement (depreciation and useful lives)
When significant components of property and equipment are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognized as separate asset. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.
Depreciation is provided from the date the assets are ready to be put to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013.
Depreciation method, useful life and residual value are reviewed periodically.
Leasehold land and improvements are amortized on the basis of duration and other terms of lease.
The carrying amount of PPE is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
De-recognition
PPE are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement of profit and loss in the period of de-recognition.
2.5 Intangible assets Transition to Ind AS
Under the previous Indian GAAP, intangible assets, were carried in the balance sheet at cost less accumulated depreciation / amortization and impairment losses, if any. The Company has elected to regard those values of intangible assets as deemed cost at the date of transition to Ind AS (April 01, 2015).
Recognition and initial measurement
Intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Cost comprises the acquisition price, development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use.
The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.
Subsequent measurement (Amortization)
All intangible assets with definite useful life are amortized on a straight line basis over the estimated useful lives not exceeding 5 years.
The carrying amount of intangible asset is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
2.6 Investment properties Transition to Ind AS
Under the previous Indian GAAP investment properties were carried in the balance sheet at cost less accumulated depreciation / amortization and impairment losses, if any. The Company has elected to regard those values of investment properties as deemed cost at the date of transition to Ind AS (April 01, 2015).
Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at cost, including transaction costs. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer who holds a recognized and relevant professional qualification and has experience in the category of the investment property being valued.
Subsequent measurement (depreciation and useful lives)
Investment Properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any, subsequently. Depreciation is provided from the date the assets are ready to be put to use, on straight line method as per the useful life of the assets as prescribed under Part C of Schedule II of the Companies Act, 2013 except for the following class of assets where the management has estimated useful life which differs from the useful life prescribed under the Act.
Lessee specific assets and improvements Over lease period or useful life as prescribed in Schedule II, whichever is lower
For above classes of assets, based on internal assessment, the management believes that the useful lives as given above best represent the period over which management expects to use these assets.
Leasehold land and improvements are amortized on the basis of duration and other terms of lease.
The carrying amount of Investment Property is reviewed periodically for impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of assets exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use.
When significant components of Investment Properties are required to be replaced at intervals, recognition is made for such replacement of components as individual assets with specific useful life and depreciation, if these components are initially recognized as separate asset. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.
De-recognition
Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the statement of profit and loss in the period of de-recognition.
2.7 Capital work in progress
Capital work in progress is stated at cost less impairment losses, if any. Cost comprises of expenditures incurred in respect of capital projects under development and includes any attributable / allocable cost and other incidental expenses. Revenues earned, if any, from such capital project before capitalization are adjusted against the capital work in progress.
2.8 Revenue recognition
2.8.1 Revenue from real estate projects
The Company follows the percentage of project completion method for its projects.
The Company recognizes revenue in proportion to the actual project cost incurred (including land cost) as against the total estimated project cost (including land cost), subject to achieving the threshold level of project cost (excluding land cost) as well as area sold, in line with the "Revised Guidance Note on Accounting for Real Estate Transaction" (for entities to whom Ind AS is applicable) and depending on the type of project.
Revenue is recognized net of indirect taxes and on execution of either an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to completion, area available for sale etc. being of a technical nature are reviewed and revised periodically by the management and are considered as change in estimates and accordingly, the effect of such changes in estimates is recognized prospectively in the period in which such changes are determined.
Land cost includes the cost of land, land related development rights and premium.
2.8.2 Revenue from hospitality
Room revenue is recognized based on occupancy. Revenue from sale of food and beverages and other allied services is recognized as and when the services are rendered. Revenue includes excise duty and the same is recognized net of trade discounts and sales tax / value added tax (VAT), if any.
2.8.3 Revenue from lease rentals and related income
Lease income is recognized in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from property management service is recognized at value of service and is disclosed net of indirect taxes, if any.
2.8.4 Interest income
For all financial instruments measured at amortized cost, interest income is recognized using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial assets. Interest income is included in other income in the statement of profit and loss.
2.8.5 Dividend income
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
2.8.6 Other income
Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company''s claim.
2.9 Leases
2.9.1 Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating lease. Operating lease payments are recognized as an expense in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Lease deposits given are a financial asset and are measured at amortized cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognized over the lease term. Unwinding of discount is treated as finance income and recognized in the profit & loss account.
2.9.2 Where the Company is the less or
Assets given under operating leases are included in Investment Properties. Lease income is recognized in the statement of profit and loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.
Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.
Lease deposits received are financial instruments (financial liability) and need to be measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognized over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the effective interest rate (EIR) method.
2.10 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
2.10.1 Financial assets Initial measurement
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset.
Subsequent measurement (i) Financial assets at amortized cost
Financial assets are measured at the amortized cost, if both of the following criteria are met:
a. These assets are held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the EIR method. The EIR amortization is included in other income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.
(ii) Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are classified as FVTOCI if both of the following criteria are met:
a. These assets are held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets; and
b. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Fair value movements are recognized in the other comprehensive income (OCI). On de-recognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to the statement of profit and loss.
(iii) Financial assets at fair value through profit or loss (FVTPL)
Any financial assets, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, are classified as at FVTPL. Gain or losses are recognized in the statement of profit and loss.
(iv) Equity instruments
Equity instruments which are held for trading and contingent consideration recognized by an acquirer in a business combination are classified as FVTPL, and measured at fair value with all changes recognized in the statement of profit and loss.
De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition.
Impairment of financial assets
The Company follows ''simplified approach'' for recognition of impairment loss allowance on:
a. Trade receivables; and
b. All lease receivables resulting from transactions within the scope of Ind AS 17.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime Expected Credit Loss (ECL) at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL 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 entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
2.10.2 Financial liabilities Initial measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings and financial guarantee contracts.
Subsequent measurement
Financial liabilities are subsequently carried at amortized cost using the EIR method. For trade and other payables maturing within operating cycle, the carrying amounts approximate the fair value due to the short maturity of these instruments.
De-recognition
A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
Loan and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method.
Intercompany loans are discounted to its present value using incremental borrowing rate applicable to the borrower entity. The difference between the carrying value of the loan and its present value is accounted based on the relationship with the borrower for e.g. in case of subsidiary, the difference is shown as further equity infusion in the subsidiary. The unwinding of discount from the date of loan to the transition date is shown as an income and recognized in "Retained earnings" of the Lender.
2.10.3 Fair value measurement
The Company measures financial instruments at fair value on initial recognition and uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
2.11 Derivative financial instruments Initial recognition and subsequent measurement
The Company uses derivative financial instruments (forward currency contracts) to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss.
2.12 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand, demand deposit and short-term deposits, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management process.
2.13 Income taxes
2.13.1 Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities using the tax rates and tax laws that are in force at the reporting date.
Current income tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
The Company offsets current tax assets and current tax liabilities where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
2.13.2 Deferred tax
Deferred income tax is recognized using the balance sheet approach.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
(i) When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit or loss.
(ii) In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside the statement of profit and loss. Such deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Minimum Alternate Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and reduces to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the MAT to be utilized.
2.14 Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted market prices or other available fair value indicators.
2.15 Inventories
2.15.1 Construction materials and consumables
The construction materials and consumables are valued at lower of cost or net realizable value. The construction materials and consumables purchased for construction work issued to the construction work in progress are treated as consumed.
2.15.2 Construction work in progress
The construction work in progress is valued at lower of cost or net realizable value. Cost includes cost of land, development rights, rates and taxes, construction costs, borrowing costs, other direct expenditure, allocated overheads and other incidental expenses.
2.15.3 Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is valued at lower of cost or net realizable value.
2.15.4 Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a moving weighted average basis, net of taxes) or net realizable value. Cost includes all expenses incurred in bringing the goods to their present location and condition.
2.15.5 Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and maintenance supplies are expensed as and when purchased.
2.16 Share based payments - Equity-settled transactions
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.
2.17 Provisions and contingent liabilities
(i) A provision is recognized when:
- The Company has a present obligation (legal or constructive) as a result of a past event;
- It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
- A reliable estimate can be made of the amount of the obligation.
(ii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably may not, require an outflow of resources. A contingent liability also arises in extreme cases where there is a probable liability that cannot be recognized because it cannot be measured reliably.
(iii) Where there is a possible obligation or a present obligation such that the likelihood of outflow of resources is remote, no provision or disclosure is made.
2.18 Borrowing costs
Borrowing costs that are directly attributable to the acquisition / construction of qualifying assets or for long -term project development are capitalized as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognized as an expense, in the period in which they are incurred.
2.19 Segment reporting
Based on the "management approach" as defined in Ind AS 108 - Operating Segments, the Chairman and Managing Director / Chief Operating Decision Maker evaluates the Company''s performance based on an analysis of various performance indicators by business segment. Segment revenue and expense include amounts which can be directly attributable to the segment and allocable on reasonable basis. Segment assets and liabilities are assets / liabilities which are directly attributable to the segment or can be allocated on a reasonable basis. Income / expenses / assets / liabilities relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated income / expenses / assets / liabilities.
2.20 Employee benefits
2.20.1 Defined contribution plans
Retirement benefits in the form of contribution to provident fund and pension fund are charged to the statement of profit and loss.
2.20.2 Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial valuations carried out at reporting date and is charged to the statement of profit and loss. The actuarial valuation is computed using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
2.20.3 Other employee benefits
Leave encashment is recognized as an expense in the statement of profit and loss account as and when they accrue. The Company determines the liability using the projected unit credit method, with actuarial valuations carried out as at balance sheet date. Actuarial gains and losses are recognized in the statement of other comprehensive income.
2.21 Earnings per share
Basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit / (loss) for the year attributable to equity shareholders and the weighted average numbers of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
3. USE OF JUGDEMENTS AND ESTIMATES
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.
Estimates and underlying assumptions are reviewed at each reporting date. Any revision to accounting estimates and assumptions are recognized prospectively i.e. recognized in the period in which the estimate is revised and future periods affected.
3.1 Significant management judgments
The following are significant management judgments in applying the accounting policies of the Company that have a significant effect on the financial statements.
3.1.1 Revenue recognition
Revenue is recognized using the percentage of completion method as construction progresses. The percentage of completion is estimated by reference to the stage of the projects determined based on the proportion of costs incurred to date and the total estimated costs to complete.
3.1.2 Classification of property
The Company determines whether a property is classified as investment property or as inventory:
(i) Investment property comprises land and buildings that are not occupied for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are rented to tenants and are not intended to be sold in the ordinary course of business.
(ii) Inventory comprises property that is held for sale in the ordinary course of business. Principally these are properties that the Company develops and intends to sell before or on completion of construction.
3.1.3 Operating lease contracts - the Company as less or
The Company has entered into leases of its investment properties. The Company has determined based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.
3.1.4 Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.
3.2 Estimates and assumptions 3.2.1 Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and non-current categories based on the operating cycle of the respective business / projects.
3.2.2 Impairment of assets
In assessing impairment, management estimates the recoverable amounts of each asset or CGU (in case of non-financial assets) based on expected future cash flows and uses an estimated interest rate to discount them. Estimation relates to assumptions about future cash flows and the determination of a suitable discount rate.
3.2.3 Useful lives of depreciable / amortizable assets (Property, plant and equipment, intangible assets and investment property)
Management reviews its estimate of the useful lives of depreciable / amortizable assets at each reporting date, based on the expected usage of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the usage of certain assets.
3.2.4 Inventories
Inventory is stated at the lower of cost or net realizable value (NRV).
NRV for completed inventory property is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realize from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (reference to the recent selling prices) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to complete the construction are estimated by management.
3.2.5 Defined benefit obligation (DBO)
The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
3.2.6 Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument / assets. Management bases its assumptions on observable data as far as possible but this may not always be available. In that case management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
4. FIRST TIME ADOPTION OF IND AS
The date of transition to Ind AS is April 01, 2015. The Company applied Ind AS 101 First-time Adoption of Indian Accounting Standards'' in preparing these first Ind AS financial statements. The effects of the transition to Ind AS on equity, total comprehensive income and reported cash flows are presented in this section and are further explained in the accompanying notes.
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017 together with the comparative period data as at and for the year ended March 31, 2016 and April 01, 2015 being restated as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 01, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made and the exemptions applied by the Company in restating its previous Indian GAAP financial statements, including the balance sheet as at April 01, 2015 and the financial statements as at and for the year ended March 31, 2016.
4.1 First-time adoption exemptions applied
Upon transition, Ind AS 101 permits certain exemptions from full retrospective application of Ind AS. The Company has applied the mandatory exceptions and certain optional exemptions, in preparing these financial statements, as set out below:
4.1.1 Mandatory exemptions applied by the Company
(i) As per Ind AS 109, financial assets and liabilities that had been de-recognized before the date of transition to Ind AS under previous Indian GAAP have not been recognized under Ind AS.
(ii) As per Ind AS 109, impairment of financial assets needs to be applied retrospectively. Company has reasonable and supportable information to determine the credit risk and it has concluded that the credit risk remains the same on the date of transition which was assessed to suchinstrument on the date of its initial recognition. Hence there is no impairment which is to be given effect retrospectively.
4.1.2 Optional exemptions applied by the Company
(i) Share based payment transactions
Ind AS 101 provides optional exemption not to apply Ind AS 102 to all equity instruments that vested before that date of transition. Company has issued Stock Options under Employee Stock Option Plan (ESOP 2009). However, all the options have been vested before the transition date i.e. April 01, 2015. Therefore, Company has availed the exemption.
(ii) Property, plant and equipment (PPE), Intangible assets (IA) and Investment properties (IP)
Ind AS 101 provides optional exemption to have a deemed cost as a starting point for the items of PPE, IA and IP instead of cost determined as per the requirement of Ind AS 16. Company has opted to carry forward the PPE, IA and IP under Ind AS at deemed costs i.e. carrying value under previous Indian GAAP as on April 01, 2015.
(iii) Fair value measurement of financial assets or financial liabilities at initial recognition
Ind AS 101 provides optional exemption to apply Ind AS 109 prospectively. Company has availed the said exemption.
Mar 31, 2016
NATURE OF OPERATIONS
Oberoi Realty Limited (the ''Company'' or ''ORL''), a public limited
company, is engaged primarily in the business of real estate development
and hospitality.
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards notified by Companies
(Accounts) Rules, 2014, (as amended) and the relevant provisions of the
Companies Act, 201 3. The financial statements have been prepared under
the historical cost convention on an accrual basis in accordance with
the accounting principles generally accepted in India. The accounting
policy has been consistently applied by the Company.
B. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events, plans and actions, actual results
could differ from these estimates. Any revision to accounting estimates
and assumptions are recognised prospectively.
C. Tangible assets, intangible assets and capital work in progress
Tangible assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable / allocable cost of bringing the asset to its working
condition for its intended use. The cost also includes direct cost and
other related incidental expenses. Revenues earned, if any during trial
run of assets is adjusted against cost of the assets.
Intangible assets are stated at cost less accumulated amortisation and
impairment losses, if any. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of
bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if
any. Cost comprises of expenditures incurred in respect of capital
projects under development and includes any attributable / allocable
cost and other incidental expenses. Revenues earned, if any, before
capitalisation from such capital project are adjusted against the
capital work in progress.
Borrowing costs relating to acquisition / construction / development of
tangible assets, intangible assets and capital work in progress which
takes substantial period of time to get ready for its intended use are
also included to the extent they relate to the period till such assets
are ready to be put to use.
D. Depreciation and amortisation
i) Tangible assets
(a) Depreciation is provided from the date the assets are ready to be
put to use, on straight line method as per the useful life of the
assets as prescribed under Part C of Schedule II of the Companies Act,
201 3 except for the following class of assets where the management has
estimated useful life which differs from the useful life prescribed
under the Act.
Hence the useful lives for these assets are different from the useful
lives as prescribed under Part C of Schedule II of the Companies Act,
2013.
Depreciation method, useful life and residual value are reviewed
periodically.
(b) Assets individually costing less than or equal to Rs. 0.05 Lakh are
fully depreciated in the year of purchase except under special
circumstances.
ii) Intangible assets
Intangible assets are amortised using straight line method over the
estimated useful life, not exceeding 5 years. Amortisation method,
useful life and residual value are reviewed periodically.
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
E. Impairment of tangible / intangible assets
The carrying amount of tangible assets / intangible assets is reviewed
periodically for any indication of impairment based on internal /
external factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use.
F. Investments
Investments are classified into long-term (non-current) and short-term
(current) investments. Investments intended to be held for not more
than a year are classified as short-term investments. All other
investments are classified as long-term investments. Long-term
investments are stated at cost less permanent diminution in value, if
any. Short-term investments are stated at the lower of cost or fair
value.
G. Valuation of Inventories
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work in
progress are treated as consumed.
ii) Construction work in progress
The construction work in progress is valued at lower of cost or net
realisable value. Cost includes cost of and, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is
valued at lower of cost or net realisable value.
iv) Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
H. Segment Reporting
The Company''s reporting segments are identified based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which are
directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated income / expenses /
assets / liabilities.
I. Revenue recognition
i) Revenue from real estate projects
The Company follows the percentage of project completion method for its
projects. The revenue recognition policy is as under:
The Company recognises revenue in proportion to the actual project cost
incurred (including land cost) as against the total estimated project
cost (including land cost), subject to achieving the threshold level of
project cost (excluding land cost) as well as area sold, in line with
the Guidance Note issued by ICAI and depending on the type of project.
Revenue is recognised net of indirect taxes and on execution of either
an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to
completion, area available for sale etc. being of a technical nature
are reviewed and revised periodically by the management and are
considered as change in estimates and accordingly, the effect of such
changes in estimates is recognised prospectively in the period in which
such changes are determined.
Land cost includes the cost of land, land related development rights
and premium.
ii) Revenue from hospitality
Room revenue is recognised based on occupancy. Revenue from sale of
food and beverages and other allied services is recognised as and when
the services are rendered. Revenue is recognised net of trade
discounts and indirect taxes, if any.
iii) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term, unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
Revenue from property management service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income
Dividend income is recognised when the right to receive dividend is
established.
Other incomes are accounted on accrual basis, except interest on
delayed payment by debtors and liquidated damages which is accounted on
acceptance of the Company''s claim.
J. Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency
(Indian Rupee) by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency on the
date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian rupees at the year-end exchange rate. The exchange differences
arising on such conversion and on settlement of the transactions are
recognised in the statement of profit and loss. Non-monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
K. Leases
i) Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating lease. Operating lease payments are recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the lease.
ii) Where the Company is the lessor
Assets representing lease arrangements given under operating leases are
included in fixed assets. Lease income is recognised in the statement
of profit and loss on straight line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the lease.
Initial direct costs are recognised immediately in the statement of
profit and loss.
L. Taxation
i) Provision for income tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing difference between book and tax
profits is accounted for using the tax rates and laws that have been
enacted as on the balance sheet date.
iii) Deferred tax assets arising on the temporary timing differences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax (''MAT'') credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the Company recognises MAT credit as an asset in accordance with
the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit
Entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
be able to utilise the MAT Credit Entitlement within the period
specified under the Income-tax Act, 1 961.
M. Employee stock option scheme
The employee share based payments are accounted on the basis of
''intrinsic value of option'' representing the excess of the market price
on the date of grant over the exercise price of the shares granted
under the ''Employee Stock Option Scheme'' of the Company and is
amortised as deferred employees compensation on a straight line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
N. Provisions and Contingent liabilities
i) A provision is recognised when
(a) The Company has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outflow of resources. A contingent liability also
arises in extreme cases where there is a probable liability that cannot
be recognised because it cannot be measured reliably.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outflow of resources is remote, no provision or
disclosure is made.
O. Borrowing costs
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
P. Employee benefits
i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to statement of profit and loss.
ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at balance sheet date and is charged to the
statement of profit and loss. The actuarial valuation is performed
using the projected unit credit method.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss.
iii) Other employee benefits
Leave encashment is recognised as an expense in the statement of profit
and loss as and when they accrue. The Company determines the liability
using the projected unit credit method, with actuarial valuations
carried out as at balance sheet date. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
Q. Earnings per share
Basic earnings per share is calculated by dividing the net profit /
(loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit/ (loss) for the year attributable to equity shareholders and the
weighted average numbers of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2015
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards notified by Companies
(Accounts) Rules, 2014, (as amended) and the relevant provisions of the
Companies Act, 2013. The financial statements have been prepared under
the historical cost convention on an accrual basis in accordance with
the accounting principles generally accepted in India. The accounting
policy has been consistently applied by the Company.
B. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events, plans and actions, actual results
could differ from these estimates. Any revision to accounting estimates
and assumptions are recognised prospectively.
C. Tangible assets, intangible assets and capital work in progress
Tangible assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable / allocable cost of bringing the asset to its working
condition for its intended use. The cost also includes direct cost and
other related incidental expenses. Revenues earned, if any during trial
run of assets is adjusted against cost of the assets.
Intangible assets are stated at cost less accumulated amortisation and
impairment losses, if any. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of
bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if
any. Cost comprises of expenditures incurred in respect of capital
projects under development and includes any attributable / allocable
cost and other incidental expenses. Revenues earned, if any, before
capitalisation from such capital project are adjusted against the
capital work in progress.
Borrowing costs relating to acquisition / construction / development of
tangible assets, intangible assets and capital work in progress which
takes substantial period of time to get ready for its intended use are
also included to the extent they relate to the period till such assets
are ready to be put to use.
D. Depreciation and amortisation
i) Tangible assets
(a) Depreciation is provided from the date the assets are ready to be
put to use, on straight line method as per the useful life of the
assets as prescribed under Part C of Schedule II of the Companies Act,
2013 except for the following class of assets where the management has
estimated useful life which differs from the useful life prescribed
under the Act.
(b) Assets individually costing less than or equal to H0.05 Lakh are
fully depreciated in the year of purchase except under special
circumstances.
ii) Intangible assets
Intangible assets are amortised using straight line method over the
estimated useful life, not exceeding 5 years. Amortisation method,
useful life and residual value are reviewed periodically.
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
E. Impairment of tangible / intangible assets
The carrying amount of tangible assets / intangible assets is reviewed
periodically for any indication of impairment based on internal /
external factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use.
F. Investments
Investments are classified into long-term (non-current) and short-term
(current) investments. Investments intended to be held for not more
than a year are classified as short-term investments. All other
investments are classified as long-term investments. Long-term
investments are stated at cost less permanent diminution in value, if
any. Short-term investments are stated at the lower of cost or fair
value.
G. Valuation of Inventories
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work in
progress are treated as consumed.
ii) Construction work in progress
The construction work in progress is valued at lower of cost or net
realisable value. Cost includes cost of land, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is
valued at lower of cost or net realisable value.
iv) Food and beverages
Stock of food and beverages are valued at lower of cost (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
H. Segment Reporting
The Company''s reporting segments are identified based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which
are directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated income / expenses /
assets / liabilities.
I. Revenue recognition
i) Revenue from real estate projects
The Company follows the percentage of project completion method for its
projects. The revenue recognition policy is as under:
(a) Project for which revenue is recognised for the first time on or
after April 1,2012
In case of real estate project which commences on or after April 1,
2012 and also for real estate projects which have already commenced but
where revenue is being recognised for the first time on or after April
1,2012, the Company recognises revenue in proportion to the actual
project cost incurred (including land cost) as against the total
estimated project cost (including land cost), subject to achieving the
threshold level of project cost (excluding land cost) as well as area
sold, in line with the Guidance Note issued by ICAI and depending on
the type of project.
(b) Project for which revenue recognition has commenced prior to April
1,2012
In this scenario, the Company recognises revenue in proportion to the
actual project cost incurred (excluding land cost) as against the total
estimated project cost (excluding land cost) subject to completion of
construction work to a certain level depending on the type of the
project.
Revenue is recognised net of indirect taxes and on execution of either
an agreement or a letter of allotment. The estimates relating to
percentage of completion, costs to completion, area available for sale
etc. being of a technical nature are reviewed and revised periodically
by the management and are considered as change in estimates and
accordingly, the effect of such changes in estimates is recognised
prospectively in the period in which such changes are determined.
Land cost includes the cost of land, land related development rights
and premium.
ii) Revenue from hospitality
Room revenue is recognised based on occupancy. Revenue from sale of
food and beverages and other allied services is recognised as and when
the services are rendered.
Revenue is recognised net of trade discounts and indirect taxes, if
any.
iii) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term, unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
Revenue from property management service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income
Dividend income is recognised when the right to receive dividend is
established.
Other incomes are accounted on accrual basis, except interest on
delayed payment by debtors and liquidated damages which is accounted on
acceptance of the Company''s claim.
J. Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency
(Indian Rupee) by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency on the
date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian rupees at the year-end exchange rate. The exchange differences
arising on such conversion and on settlement of the transactions are
recognised in the statement of profit and loss. Non- monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
K. Leases
i) Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating lease. Operating lease payments are recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the lease.
ii) Where the Company is the lessor
Assets representing lease arrangements given under operating leases are
included in fixed assets. Lease income is recognised in the statement
of profit and loss on straight line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the lease.
Initial direct costs are recognised immediately in the statement of
profit and loss.
L. Taxation
i) Provision for income tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing difference between book and tax
profits is accounted for using the tax rates and laws that have been
enacted as on the balance sheet date.
iii) Deferred tax assets arising on the temporary timing differences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax (''MAT'') credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the Company recognises MAT credit as an asset in accordance with
the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit
Entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
be able to utilise the MAT Credit Entitlement within the period
specified under the Income-tax Act, 1961.
M. Employee stock option scheme
The employee share based payments are accounted on the basis of
''intrinsic value of option'' representing the excess of the market price
on the date of grant over the exercise price of the shares granted
under the ''Employee Stock Option Scheme'' of the Company and is
amortised as deferred employees compensation on a straight line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
N. Provisions and Contingent liabilities
i) A provision is recognised when
(a) The Company has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outflow of resources. A contingent liability also
arises in extreme cases where there is a probable liability that cannot
be recognised because it cannot be measured reliably.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outflow of resources is remote, no provision or
disclosure is made.
O. Borrowing costs
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
P. Employee benefits
i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to statement of profit and loss.
ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at balance sheet date and is charged to the
statement of profit and loss. The actuarial valuation is performed
using the projected unit credit method.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss.
iii) Other employee benefits
Leave encashment is recognised as an expense in the statement of profit
and loss as and when they accrue. The Company determines the liability
using the projected unit credit method, with actuarial valuations
carried out as at balance sheet date. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
Q. Earnings per share
Basic earnings per share is calculated by dividing the net profit /
(loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit / (loss) for the year attributable to equity shareholders and
the weighted average numbers of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
B. Terms / rights attached to equity shares
The Company has only one class of equity shares having par value of H10
per share. Each shareholder of equity shares is entitled to one vote
per share. The Company declares dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2015, the amount of per share dividend
recognised as proposed for distribution to equity shareholders is H2
(H2), which is subject to approval of shareholders in ensuing Annual
General Meeting.
D. Shares reserved for issue under options
The Company instituted an Employees Stock Option Scheme (''ESOP 2009'')
pursuant to the Board and Shareholders'' resolution dated December 04,
2009. As per ESOP 2009, the Company is authorised to grant 14,43,356
options comprising equal number of equity shares in one or more
tranches to the eligible employees of the Company and its subsidiaries.
The employee will have the option to exercise the right within three
years from the date of vesting of options. Under ESOP 2009, 13,49,553
options have been granted, out of which as on date of balance sheet
7,32,534 options are outstanding.
The employee share based payments have been accounted using the
intrinsic value method measured by a difference between the market
price of the underlying equity shares as at the date of grant and the
exercise price. Since the market price of the underlying equity shares
on the grant date is same as exercise price of the option, the
intrinsic value of option is determined as H Nil. Hence no compensation
expense has been recognised. Under the fair value method, the basic and
diluted EPS would have been higher by Re.0.11.
Mar 31, 2014
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
in accordance with the accounting principles generally accepted in
India. The accounting policy has been consistently applied by the
Company.
B. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events, plans and actions, actual results
could differ from these estimates. Any revision to accounting estimates
and assumptions are recognised prospectively.
D. Tangible assets, intangible assets and capital work in progress
Tangible assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable / allocable cost of bringing the asset to its working
condition for its intended use. The cost also includes direct cost and
other related incidental expenses. Revenues earned, if any during trial
run of assets is adjusted against cost of the assets.
Intangible assets are stated at cost less accumulated amortisation and
impairment losses, if any. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of
bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if
any. Cost comprises of expenditures incurred in respect of capital
projects under development and includes any attributable / allocable
cost and other incidental expenses. Revenues earned, if any, before
capitalisation from such capital project are adjusted against the
capital work in progress.
Borrowing costs relating to acquisition / construction / development of
tangible assets, intangible assets and capital work in progress which
takes substantial period of time to get ready for its intended use are
also included to the extent they relate to the period till such assets
are ready to be put to use.
D. Depreciation and amortisation i) Tangible assets
(a) Depreciation is provided from the date the assets are ready to be
put to use, on straight line method as per the useful life of the
assets estimated by the management or at the rates prescribed under
Schedule XIV of the Companies Act, 1956, whichever is higher. The
higher depreciation rates used are as under :
Depreciation method, useful life and residual value are reviewed
periodically.
(b) Assets individually costing less than or equal to H 0.05 Lakh are
fully depreciated in the year of purchase except under special
circumstances.
ii) Intangible assets
Intangible assets are amortised using straight line method over the
estimated useful life, not exceeding 5 years. Amortisation method,
useful life and residual value are reviewed periodically.
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
E. Impairment of tangible / intangible assets
The carrying amount of tangible assets / intangible assets is reviewed
periodically for any indication of impairment based on internal /
external factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use.
F. Investments
Investments are classified into long-term and current investments.
Investments intended to be held for not more than a year are classified
as current investments. All other investments are classified as
long-term investments. Long term investments are stated at cost less
permanent diminution in value, if any. Current investments are stated
at the lower of cost or market value.
G. Valuation of Inventories
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work in
progress are treated as consumed.
ii) Construction work in progress
The construction work in progress is valued at lower of cost or net
realisable value. Cost includes cost of land, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is
valued at lower of cost or market value.
iv) Food and beverages
Stock of food and beverages are valued at lower of cost, (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
H. Segment Reporting
The Company''s reporting segments are identified based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which
are directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated income / expenses /
assets / liabilities.
I. Revenue recognition
i) Revenue from real estate projects
The Company follows the percentage of project completion method for its
projects. The revenue recognition policy is as under:
(a) Project for which revenue is recognised for the frst time on or
after April 1, 2012
In case of real estate project which commences on or after April 1,
2012 and also for real estate projects which have already commenced but
where revenue is being recognised for the first time on or after April
1, 2012, the Company recognises revenue in proportion to the actual
project cost incurred (including land cost) as against the total
estimated project cost (including land cost), subject to achieving the
threshold level of project cost (excluding land cost) as well as area
sold, in line with the Guidance Note and depending on the type of
project.
(b) Project for which revenue recognition has commenced prior to April
1, 2012
In this scenario, the Company recognises revenue in proportion to the
actual project cost incurred (excluding land cost) as against the total
estimated project cost (excluding land cost) subject to completion of
construction work to a certain level depending on the type of the
project.
Revenue is recognised net of indirect taxes and on execution of either
an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to
completion, area available for sale etc. being of a technical nature
are reviewed and revised periodically by the Management and are
considered as change in estimates and accordingly, the effect of such
changes in estimates is recognised prospectively in the period in which
such changes are determined.
Land cost includes the cost of land, land related development rights
and premium.
ii) Revenue from hospitality
Room revenue is recognised based on occupancy. Revenue from sale of
food and beverages and other allied services is recognised as and when
the services are rendered.
Revenue is recognised net of trade discounts and indirect taxes, if
any.
iii) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term, unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of indirect
taxes, if any.
Revenue from property management service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income
Dividend income is recognised when the right to receive dividend is
established.
Other incomes are accounted on accrual basis, except interest on
delayed payment by debtors which is accounted on acceptance of the
Company''s claim.
J. Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency
(Indian rupee) by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency on the
date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian rupees at the year-end exchange rate. The exchange differences
arising on such conversion and on settlement of the transactions are
recognised in the statement of profit and loss. Non- monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
K. Leases
i) Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating lease. Operating lease payments are recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the lease.
ii) Where the Company is the lessor
Assets representing lease arrangements given under operating leases are
included in fixed assets. Lease income is recognised in the statement
of profit and loss on straight line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the lease. Initial direct costs are recognised
immediately in the statement of profit and loss.
L. Taxation
i) Provision for income tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing difference between book and tax
profits is accounted for using the tax rates and laws that have been
enacted as on the balance sheet date.
iii) Deferred tax assets arising on the temporary timing differences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax (''MAT'') credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the Company recognises MAT credit as an asset in accordance with
the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit
Entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
be able to utilise the MAT Credit Entitlement within the period
specified under the Income-tax Act, 1961.
M. Employee stock option scheme
The employee share based payments are accounted on the basis of
''intrinsic value of option'' representing the excess of the market price
on the date of grant over the exercise price of the shares granted
under the ''Employee Stock Option Scheme'' of the Company and is
amortised as deferred employees compensation on a straight line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
N. Provisions and Contingent liabilities
i) A provision is recognised when
(a) The Group has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation.
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outflow of resources. A contingent liability also
arises in extremely cases where there is a probable liability that
cannot be recognised because it cannot be measured reliably.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outflow of resources is remote, no provision or
disclosure is made.
O. Borrowing costs
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying fixed assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
P. Employee benefits
i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to statement of profit and loss.
ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at balance sheet date and is charged to the
statement of profit and loss. The actuarial valuation is performed
using the projected unit credit method.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss.
iii) Other employee benefits
Leave encashment is recognised as an expense in the statement of profit
and loss as and when they accrue. The Company determines the liability
using the projected unit credit method, with actuarial valuations
carried out as at balance sheet date. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
Q. Earnings per share
Basic earnings per share is calculated by dividing the net profit /
(loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit / (loss) for the year attributable to equity shareholders and
the weighted average numbers of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
D. Shares reserved for issue under options
The Company instituted an Employees Stock Option Scheme (''ESOP 2009'')
pursuant to the Board and Shareholders'' resolution dated December 04,
2009. As per ESOP 2009, the Company is authorised to grant 14,43,356
options comprising equal number of equity shares in one or more
tranches to the eligible employees of the Company and its subsidiaries.
The employee will have the option to exercise the right within three
years from the date of vesting of options. Under ESOP 2009, 13,49,553
options have been granted.
The employee share based payments have been accounted using the
intrinsic value method measured by a difference between the market
price of the underlying equity shares as at the date of grant and the
exercise price. Since the market price of the underlying equity shares
on the grant date is same as exercise price of the option, the
intrinsic value of option is determined as Nil. Hence no compensation
expense has been recognised. Under the fair value method, the basic and
diluted EPS would have been lowered by H 0.02
NOTE 29 : RELATED PARTY DISCLOSURES
A. Name of related parties and related party relationship
i) Related parties where control exists
Subsidiaries
Oberoi Constructions Limited
Oberoi Mall Limited
Kingston Property Services Limited
Kingston Hospitality and Developers Private Limited
Sight Realty Private Limited
Buoyant Realty Private Limited
Perspective Realty Private Limited
Expressions Realty Private Limited
Incline Realty Private Limited
ii) Related parties with whom transactions have taken place during the
year
Jointly controlled entities
Sangam City Township Private Limited Astir Realty LLP I-Ven Realty
Limited
Joint venture of subsidiaries
Key management personnel and their relatives
Oasis Realty Vikas Oberoi Bindu Oberoi Ranvir Oberoi Santosh Oberoi
Gayatri Oberoi
Entities where key management personnel have significant influence
R S Estate Developers Private Limited Oberoi Foundation
Mar 31, 2013
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
in accordance with the accounting principles generally accepted in
India. The accounting policy has been consistently applied by the
Company.
B. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management''s
best knowledge of current events, plans and actions, actual results
could differ from these estimates. Any revision to accounting estimates
and assumptions are recognised prospectively.
C. Tangible assets, intangible assets and capital work in progress
Tangible assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable / allocable cost of bringing the asset to its working
condition for its intended use. The cost also includes direct cost and
other related incidental expenses. Revenues earned, if any during trial
run of assets is adjusted against cost of the assets.
Intangible assets are stated at cost less accumulated amortisation and
impairment losses, if any. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of
bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if
any. Cost comprises of expenditures incurred in respect of capital
projects under development and includes any attributable / allocable
cost and other incidental expenses. Revenues earned, if any, before
capitalisation from such capital project are adjusted against the
capital work in progress.
Borrowing costs relating to acquisition / construction / development of
tangible assets, intangible assets and capital work in progress which
takes substantial period of time to get ready for its intended use are
also included to the extent they relate to the period till such assets
are ready to be put to use.
D. Depreciation and amortisation
i) Tangible assets
(a) Depreciation is provided from the date the assets are ready to be
put to use, on straight line method as per the useful life of the
assets estimated by the management or at the rates prescribed under
Schedule XIV of the Companies Act, 1956, whichever is higher. The
higher depreciation rates used are as under :
Portable cabins 25% p.a
Mobile handsets and computers 33% p.a
Vehicles 20% p.a
Lessee specific equipment''s and improvements over lease period
Depreciation method, useful life and residual value are reviewed
periodically.
(b) Assets individually costing less than or equal to Rs. 0.05 Lakh are
fully depreciated in the year of purchase except under special
circumstances.
ii) Intangible assets
Intangible assets are amortised using straight line method over the
estimated useful life, not exceeding 5 years. Amortisation method,
useful life and residual value are reviewed periodically
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
E. Impairment of tangible / intangible assets
The carrying amount of tangible assets / intangible assets is reviewed
periodically for any indication of impairment based on internal /
external factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use.
F. Investments
Investments are classified into long-term and current investments.
Investments intended to be held for not more than a year are classified
as current investments. All other investments are classified as
long-term investments. Long term investments are stated at cost less
permanent diminution in value, if any. Current investments are stated
at the lower of cost or market value.
G. Valuation of inventories
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work in
progress are treated as consumed.
ii) Construction work in progress
The construction work in progress is valued at lower of cost or net
realisable value. Cost includes cost of land, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is
valued at lower of cost or market value.
iv) Food and beverages
Stock of food and beverages are valued at lower of cost, (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
H. Segment reporting
The Company''s reporting segments are identified based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which
are directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated income / expenses /
assets / liabilities.
I. Revenue recognition
i) Revenue from real estate projects
The Company follows the percentage of project completion method for its
projects. The revenue recognition policy is as under:
(a) Project for which revenue is recognised for the first time on or
after April 1, 2012
The Institute of Chartered Accountants of India has issued Guidance
Note on Accounting for Real Estate Transactions (Revised 2012) in
connection with the revenue recognition for a real estate project which
commences on or after April 1, 2012 and also to real estate projects
which have already commenced but where revenue is being recognised for
the first time on or after April 1, 2012.
In this scenario, the Company recognises revenue in proportion to the
actual project cost incurred (including land cost) as against the total
estimated project cost (including land cost), subject to achieving the
threshold level of project cost (excluding land cost) as well as area
sold, in line with the Guidance Note and depending on the type of
project.
(b) Project for which revenue recognition has commenced prior to April
1, 2012
In this scenario, the Company recognises revenue in proportion to the
actual project cost incurred (excluding land cost) as against the total
estimated project cost (excluding land cost) subject to completion of
construction work to a certain level depending on the type of the
project.
Revenue is recognised net of indirect taxes and on execution of either
an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to
completion, area available for sale etc. being of a technical nature
are reviewed and revised periodically by the Management and are
considered as change in estimates and accordingly, the effect of such
changes in estimates is recognised prospectively in the period in which
such changes are determined.
Land cost includes the cost of land, land related development rights
and premium.
ii) Revenue from hospitality
Room revenue is recognised based on occupancy. Revenue from sale of
food and beverages and other allied services is recognised as and when
the services are rendered.
Revenue is recognised net of trade discounts and indirect taxes, if
any.
iii) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term, unless there is another
systematic basis which is more representative of the time pattern of
the lease. Revenue from lease rental is disclosed net of Indirect
taxes, if any.
Revenue from property management service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income
Dividend income is recognised when the right to receive dividend is
established.
Other incomes are accounted on accrual basis, except interest on
delayed payment by debtors which is accounted on acceptance of the
Company''s claim.
J. Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency
(Indian rupee) by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency on the
date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian rupees at the year-end exchange rate. The exchange differences
arising on such conversion and on settlement of the transactions are
recognised in the statement of profit and loss. Non- monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
K. Leases
i) Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating lease. Operating lease payments are recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where the Company is the lessor
Assets representing lease arrangements given under operating leases are
included in fixed assets. Lease income is recognised in the statement
of profit and loss on straight line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the Lease.
Initial direct costs are recognised immediately in the statement of
profit and loss.
L. Taxation
i) Provision for income tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing difference between book and tax
profits is accounted for using the tax rates and laws that have been
enacted as on the balance sheet date.
iii) Deferred tax assets arising on the temporary timing differences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax (''MAT'') credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the Company recognises MAT credit as an asset in accordance with
the Guidance Note on Accounting for Credit Available in respect of
Minimum Alternative Tax under the Income-tax Act, 1961, the said asset
is created by way of credit to the statement of profit and loss and
shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit
Entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
be able to utilise the MAT Credit Entitlement within the period
specified under the Income-tax Act, 1961.
M. Employee stock option scheme
The employee share based payments are accounted on the basis of
''intrinsic value of option'' representing the excess of the market price
on the date of grant over the exercise price of the shares granted
under the ''Employee Stock Option Scheme'' of the Company and is
amortised as deferred employees compensation on a straight line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999.
N. Provisions and Contingent liabilities
i) A provision is recognised when
(a) The Company has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outflow of resources. A contingent liability also
arises in extremely cases where there is a probable liability that
cannot be recognised because it cannot be measured reliably.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outflow of resources is remote, no provision or
disclosure is made.
O. Borrowing costs
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying fixed assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
P. Employee benefits
i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to statement of profit and loss.
ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at balance sheet date and is charged to the
statement of profit and loss. The actuarial valuation is performed
using the projected unit credit method. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
iii) Other employee benefits
Leave encashment is recognised as an expense in the statement of profit
and loss as and when they accrue. The Company determines the liability
using the projected unit credit method, with actuarial valuations
carried out as at balance sheet date. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
Q. Earnings per share
Basic earnings per share is calculated by dividing the net profit /
(loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit / (loss) for the year attributable to equity shareholders and
the weighted average numbers of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2012
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the mandatory Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006, (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
B. Changes in presentation and disclosures of financial statements
During the year ended March 31, 2012, the revised schedule VI notified
under the Companies Act, 1956, has become applicable, for preparation
and presentation of 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 financial
statements. The Company has also reclassified the previous year figures
in accordance with the requirements to conform to current year's
classification, wherever necessary.
C. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon
management's best knowledge of current events, plans and actions,
actual results could differ from these estimates. Any revision to
accounting estimates and assumptions are recognised prospectively.
D. Tangible assets, intangible assets and capital work in progress
Tangible assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable / allocable cost of bringing the asset to its working
condition for its intended use. The cost also includes direct cost and
other related incidental expenses. Revenues earned, if any during trial
run of assets is adjusted against cost of the assets.
Intangible assets are stated at cost less accumulated amortisation and
impairment losses, if any. Cost comprises the acquisition price,
development cost and any attributable / allocable incidental cost of
bringing the asset to its working condition for its intended use.
Capital work in progress is stated at cost less impairment losses, if
any. Cost comprises of expenditures incurred in respect of capital
projects under development and includes any attributable / allocable
cost and other incidental expenses. Revenues earned, if any, before
capitalisation from such capital project are adjusted against the
capital work in progress.
Borrowing costs relating to acquisition / construction / development of
tangible assets, intangible assets and capital work in progress which
takes substantial period of time to get ready for its intended use are
also included to the extent they relate to the period till such assets
are ready to be put to use.
(b) Assets individually costing less than or equal to Rs 0.05 lakh are
fully depreciated in the year of purchase except under special
circumstances.
ii) Intangible assets
Intangible assets are amortised using straight line method over the
estimated useful life, not exceeding 5 years. Amortisation method,
useful life and residual value are reviewed periodically.
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
E. Impairment of tangible / intangible assets
The carrying amount of tangible assets / intangible assets is reviewed
periodically for any indication of impairment based on internal /
external factors. An impairment loss is recognised wherever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset's net selling price
and value in use.
F. Investments
Investments are classified into long-term and current investments.
Investments intended to be held for not more than a year are classified
as current investments. All other investments are classified as
long-term investments. Longterm investments are stated at cost less
permanent diminution in value, if any. Current investments are stated
at the lower of cost or market value.
G. Valuation of inventories
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work in
progress are treated as consumed.
ii) Construction work in progress
The construction work in progress is valued at lower of cost or net
realisable value. Cost includes cost of land, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects and stock in trade of units is
valued at lower of cost or market value.
iv) Food and beverages
Stock of food and beverages are valued at lower of cost, (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
H. Segment reporting
The Company's reporting segments are identified based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which
are directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are reflected as unallocated income / expenses /
assets / liabilities.
I. Revenue recognition i) Revenue from projects
The Company follows the percentage of project completion method for its
projects. Under this method, the Company recognises revenue in
proportion to the actual cost incurred as against the total estimated
cost of the project under execution subject to completion of construction
work to a certain level depending on the type of the project.
Cost of land and / or development rights is not included in computing
the stage of percentage of project completion. Revenue is recognised
on execution of either an agreement or a letter of allotment.
The estimates relating to percentage of completion, costs to
completion, area available for sale etc. being of a technical nature
are reviewed and revised periodically by the management and are
considered as change in estimates and accordingly, the effect of such
changes in estimates is recognised prospectively in the period in which
such changes are determined.
Revenue is recognised net of indirect taxes.
ii) Revenue from hospitality
Room revenue is recognised based on occupancy. Revenue from sale of
food and beverages and other allied services is recognised as and when
the services are rendered.
Revenue is recognised net of trade discounts and indirect taxes.
iii) Revenue from lease rentals and related income
Lease income is recognised in the statement of profit and loss on
straight line basis over the lease term, unless there is another
systematic basis which is more representative of the time pattern of the
lease. Revenue from lease rental is disclosed net of Indirect taxes, if
any.
Revenue from property management service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income
Dividend income is recognised when the right to receive dividend is
established.
Other income is accounted on accrual basis, except interest on delayed
payment by debtors which is accounted on acceptance of the Company's
claim.
J. Foreign currency transactions
Foreign currency transactions are recorded in the reporting currency
(Indian rupee) by applying to the foreign currency amount the exchange
rate between the reporting currency and the foreign currency on the
date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian rupees at the year-end exchange rate. The exchange differences
arising on such conversion and on settlement of the transactions are
recognised in the statement of profit and loss. Non- monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
K. Leases
i) Where the Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating lease. Operating lease payments are recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where the Company is the lessor
Assets representing lease arrangements given under operating leases are
included in fixed assets. Lease income is recognised in the statement
of profit and loss on straight line basis over the lease term, unless
there is another systematic basis which is more representative
of the time pattern of the Lease.
Initial direct costs are recognised immediately in the statement of
profit and loss.
L. Taxation
i) Provision for income tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing difference between book and tax
profits is accounted for using the tax rates and laws that have been
enacted as on the balance sheet date.
iii) Deferred tax assets arising on the temporary timing differences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax ('MAT') credit is recognised as an asset
only when and to the extent there is convincing evidence that the
Company will pay normal income tax during the specified period.
M. Employee stock option scheme
The employee share based payments are accounted on the basis of
'intrinsic value of option' representing the excess of the market
price on the date of grant over the exercise price of the shares
granted under the 'Employee Stock Option Scheme' of the Company and
is amortised as deferred employees compensation on a straight line
basis over the vesting period in accordance with the SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999.
N. Contingent liabilities
i) A provision is recognised when
(a) The Company has a present obligation as a result of a past event;
(b) It is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outflow of resources.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outflow of resources is remote, no provision or
disclosure is made.
O. Borrowing costs
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying fixed assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
P. Employee benefits
i) Defined contribution plans
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to statement of profit and loss.
ii) Defined benefit plans
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at balance sheet date and is charged to the
statement of profit and loss. The actuarial valuation is performed
using the projected unit credit method.
Actuarial gains and losses are recognised immediately in the statement
of profit and loss.
iii) Other employee benefits
Leave encashment is recognised as an expense in the statement of profit
and loss as and when they accrue. The Company determines the liability
using the projected unit credit method, with actuarial valuations
carried out as at balance sheet date. Actuarial gains and losses are
recognised immediately in the statement of profit and loss.
Q. Earnings per share
Basic earnings per share is calculated by dividing the net profit /
(loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net
profit / (loss) for the year attributable to equity shareholders and
the weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2011
A. Basis of Accounting:
The Consolidated Financial Statements have been prepared to comply in
all material respects with the Accounting Standards notifi ed by
Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956. The Consolidated
Financial Statements have been prepared under the historical cost
convention on an accrual basis.
B. Principles of Consolidation:
The Consolidated Financial Statements include the financial statements
of the Company, its subsidiaries and joint ventures. The Consolidated
Financial Statements have been prepared in accordance with Accounting
Standards AS-21 Consolidated Financial Statements and AS-27
Financial Reporting of Interests in Joint Ventures, other applicable
accounting standards, as applicable, notifi ed by the Companies
Accounting Standards Rules, 2006 (as amended).
The Consolidated Financial Statements have been prepared using uniform
accounting policies for like transactions and other events, in similar
circumstances, to the extent possible on the following basis:
i) Subsidiaries
(a) The Consolidated Financial Statements have been prepared on a line
by line basis by adding together the book values of like items of
assets, liabilities, income and expenses after fully eliminating intra-
group balances / transactions and resulting elimination of unrealised
Profits and losses, if any.
(b) Minority interest, if any, in the Net Assets of consolidated
subsidiaries consist of:
- The amount of equity attributable to minority shareholders as at the
date of its investment or the date immediately preceding the date of
investments in the subsidiary; and
- The minority shareholders share of movements in equity since the
date the holding subsidiary relationship came into existence.
ii) Joint Ventures:
The Consolidated Financial Statements have been prepared using the
proportionate consolidation method and accordingly, Companys share of
the assets, liabilities, income and expenses of jointly controlled
operations / entities / assets is consolidated as per AS - 27
"Financial Reporting of Interests in Joint Ventures".
The excess of cost, if any, to the Company of its investments in the
subsidiary / joint venture over the Companys portion of equity of the
subsidiary / joint venture, as at the date of its investment or the
date immediately preceding the date of investments is recognised in the
Consolidated Financial Statements as Goodwill, which is amortised over
the period of expected revenue stream from the project, however such
period would not exceed ten years.
The excess, if any of Companys portion of equity of the subsidiary /
joint venture over the cost to the Company of its investments in the
subsidiary / joint venture as at the date of its investment or the date
immediately preceding the date of investments is treated as Capital
Reserve.
C. Use of Estimates:
The preparation of Consolidated Financial Statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that af ect the reported amounts of assets
and liabilities and disclosure of contingent liabilities as at the date
of the Consolidated Financial Statements and the results of operations
during the reporting period. Although these estimates are based upon
managements best knowledge of current events, plans and actions,
actual results could dif er from these estimates. Any revision to
accounting estimates and assumptions are recognised prospectively.
D. Fixed Assets / Capital work-in-Progress:
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition /
construction of Fixed Assets which takes substantial period of time to
get ready for its intended use are also included to the extent they
relate to the period till such assets are ready to be put to use. The
cost also includes direct cost and other related incidental expenses.
Revenues earned, if any, during trial run of assets is adjusted against
cost of the assets.
Capital work-in-progress represents expenditure incurred in respect of
capital projects under developments and is valued at cost. Cost
includes cost of land / development rights, rates and taxes,
construction costs, borrowing costs, other direct expenditure,
allocated overheads and other related incidental expenses. Capital
Work-in-progress also includes advances, if any, to contractors /
vendors.
E. Depreciation / Amortisation:
ii) Intangible Assets
Intangible assets are amortised using Straight Line method over the
estimated useful life, not exceeding 5 years.
iii) Leasehold land and improvements are amortised on the basis of
duration and other terms of lease.
F. Impairment of Fixed Assets:
The carrying amount of Fixed Assets is reviewed periodically for any
indication of impairment based on internal / external factors. An
impairment loss is recognised wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater
of the assets net selling price and value in use.
G. Investments:
Investments are classifi ed into long-term and current investments.
Investments intended to be held for not more than a year are classifi
ed as current investments. All other investments are classifi ed as
long-term investments. Current investments are stated at the lower of
cost or market value. Long term investments are stated at cost less
permanent diminution in value, if any.
H. Valuation of Inventories:
i) Construction materials and consumables
The construction materials and consumables are valued at lower of cost
or net realisable value. The construction materials and consumables
purchased for construction work issued to the construction work-in-
progress are treated as consumed.
ii) Construction Work-in-progress
The construction work-in-progress is valued at lower of cost or net
realisable value. Cost includes cost of land, development rights, rates
and taxes, construction costs, borrowing costs, other direct
expenditure, allocated overheads and other incidental expenses.
iii) Finished stock of completed projects (ready units)
Finished stock of completed projects (ready units) is valued at lower
of cost or market value.
iv) Food and Beverages
Stock of food and beverages are valued at lower of cost, (computed on a
moving weighted average basis, net of taxes) or net realizable value.
Cost includes all expenses incurred in bringing the goods to their
present location and condition.
v) Hospitality related operating supplies
Hospitality related operating supplies such as guest amenities and
maintenance supplies are expensed as and when purchased.
I. Segment Reporting:
The Groups reporting segments are identifi ed based on activities,
risk and reward structure, organisation structure and internal
reporting systems. Segment revenue and expense include amounts which
can be directly attributable to the segment and allocable on reasonable
basis. Segment assets and liabilities are assets / liabilities which
are directly attributable to the segment or can be allocated on a
reasonable basis. Income / expenses / assets / liabilities relating to
the enterprise as a whole and not allocable on a reasonable basis to
business segments are refl ected as unallocated income / expenses /
assets / liabilities.
J. Revenue Recognition:
i) Revenue from Projects
The Group follows the Percentage of Project Completion Method for its
projects. Under this method, the Group recognises revenue in proportion
to the actual cost incurred as against the total estimated cost of the
project under execution subject to completion of construction work to a
certain level depending on the type of the project.
Cost of Land and / or Development Rights is not included in computing
the percentage of project completion.
Revenue is recognised on execution of either an agreement or a letter
of allotment.
The estimates relating to percentage of completion, costs to
completion, area available for sale etc. being of a technical nature
are reviewed and revised periodically by the management and are
considered as change in estimates and accordingly, the ef ect of such
changes in estimates is recognised prospectively in the period in which
such changes are determined.
Revenue is recognised net of indirect taxes.
ii) Revenue from Hospitality:
Room revenue is recognized based on occupancy. Revenue from sale of
food and beverages and other allied services is recognized as and when
the services are rendered.
Revenue is recognised net of trade discounts and indirect taxes.
iii) Revenue from lease rentals and related income:
Lease income is recognised in the Profit and Loss Account on Straight
Line basis over the lease term, unless there is another systematic
basis which is more representative of the time pattern of the lease.
Revenue from lease rentals is disclosed net of indirect taxes, if any.
Revenue from Property Management Service is recognised at value of
service and is disclosed net of indirect taxes, if any.
iv) Other income:
Dividend income is recognised when the right to receive dividend is
established.
Other Incomes is accounted on accrual basis, except interest on delayed
payment by debtors which is accounted on acceptance of the Groups
claim.
K. Foreign Currency Transactions:
Foreign currency transactions are recorded in the reporting currency
(Indian Rupees), by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of the transaction.
All monetary items denominated in foreign currency are converted into
Indian Rupees at the year-end exchange rate. The exchange dif erences
arising on such conversion and on settlement of the transactions are
recognised in the Profit and Loss Account. Non- monetary items in
terms of historical cost denominated in a foreign currency are reported
using the exchange rate prevailing on the date of the transaction.
L. Leases:
i) Where a Group entity is the lessee:
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Profit and Loss Account on Straight Line basis over the lease
term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where a Group entity is the lessor:
Assets representing Lease arrangements given under operating leases are
included in Fixed Assets. Lease income is recognized in the Profit and
Loss Account on Straight Line basis over the lease term, unless there
is another systematic basis which is more representative of the time
pattern of the Lease.
Initial direct costs are recognised immediately in the Profit and Loss
Account.
M. Taxation:
i) Provision for Income-tax is made under the liability method after
availing exemptions and deductions at the rates applicable under the
Income-tax Act, 1961.
ii) Deferred tax resulting from timing dif erence between book and tax
Profits is accounted for using the tax rates and laws that have been
enacted as of the Balance Sheet date.
iii) Deferred tax assets arising on the temporary timing dif erences
are recognised only if there is reasonable certainty of realisation.
iv) Minimum Alternate Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Group will
pay normal Income-tax during the specifi ed period.
N. Employee Stock Option Scheme:
The employee share based payments are accounted on the basis of
intrinsic value of option representing the excess of the market price
on the date of grant over the exercise price of the shares granted
under the Employee Stock Option Scheme of the Company and is
amortised as deferred employees compensation on a Straight Line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
O. Contingent Liabilities:
i) A provision is recognised when:
(a) The Group has a present obligation as a result of a past event;
(b) It is probable that an outfl ow of resources embodying economic
benefi ts will be required to settle the obligation; and
(c) A reliable estimate can be made of the amount of the obligation
ii) A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably may
not, require an outfl ow of resources.
iii) Where there is a possible obligation or a present obligation such
that the likelihood of outfl ow of resources is remote, no provision or
disclosure is made.
P. Borrowing Costs:
Borrowing costs that are directly attributable to the acquisition /
construction of qualifying Fixed Assets or for long - term project
development are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the
activities that are necessary to prepare the assets for their intended
use are in progress.
Other borrowing costs are recognised as an expense, in the period in
which they are incurred.
Q. Employee Benefi ts:
i) Defi ned contribution plans:
Retirement benefits in the form of contribution to provident fund and
pension fund are charged to Profit and Loss Account.
ii) Defined benefit plans:
Gratuity is in the nature of a defined benefit plan.
Provision for gratuity is calculated on the basis of actuarial
valuations carried out at Balance Sheet date and is charged to the
Profit and Loss Account. The actuarial valuation is performed using
the Projected Unit Credit method.
Actuarial gains and losses are recognised immediately in the Profit and
Loss Account.
iii) Other employee benefits:
Leave encashment is recognised as an expense in the Profit and Loss
Account as and when they accrue. The Group determines the liability
using the Projected Unit Credit method, with actuarial valuations
carried out as at Balance Sheet date. Actuarial gains and losses are
recognised immediately in the Profit and Loss Account.
R. Earnings Per Share
Basic Earnings Per Share is calculated by dividing the Net Profit /
(Loss) for the year attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by weighted
average number of equity shares outstanding during the year.
For the purpose of calculating Diluted Earnings Per Share, the Net
Profit / (Loss) for the year attributable to equity shareholders and
the weighted average number of shares outstanding during the year are
adjusted for the ef ects of all dilutive potential equity shares.
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