Mar 31, 2023
D CORPORATE INFORMATION
M/s. Prestige Estates Projects Limited ("the Companyâ) was incorporated on June 04, 1997 as a company under the Companies Act, 1956 ("the 1956 Act''''). The Company is engaged in the business of real estate development.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bengaluru, Karnataka, India. Its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The financial statements have been authorised for issuance by the Company''s Board of Directors on May 30, 2023.
H SIGNIFICANT ACCOUNTING POLICIES2.1 Statement of compliance
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards ("Ind ASâ), the provisions of the Companies Act, 2013 ("the Actâ) (as amended from time to time) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III).
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than Rupees 0.5 million due to rounding off).
2.3 Changes in accounting policies and disclosures
The accounting policies adopted and methods of computation followed are consistent with those of the previous financial year.
There were certain amendments to standards and interpretations which are applicable for the first time for the year ended March 31, 2023, but either the same are not relevant or do not have an impact on the
financial statements of the Company. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
Significant accounting judgements, estimates and assumptions used by management are as below:
- Fair value measurements (Refer note 2.5),
- Determination of performance obligations and timing of revenue recognition on revenue from real estate development (Refer note 2.6),
- Accounting for revenue and land cost for projects executed through joint development arrangement (Refer note 2.6),
- Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates (Refer note 2.6),
- Useful lives of investment property; property, plant and equipment and intangible assets (Refer note 2.13, 2.15 and 2.16),
- Impairment of tangible and intangible assets other than goodwill (Refer note 2.17),
- Net realisable value of inventory (Refer note 2.18), and
- Accounting, classification and presentation of assets and liabilities (''disposal group'') held for sale, including timing of recognition of sale and deferred consideration (Refer notes 2.26 and 51).
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account
the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1 , 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.6 Revenue Recognitiona. Revenue from contracts with customers
Revenue from contracts with customers 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 expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).
i. Recognition of revenue from sale of real estate inventory property
Revenue from real estate development of residential or commercial unit is recognised at the point in time, when the control of the asset is transferred to the customer, which generally coincides with either of the two conditions as stated below -
- on transfer of legal title of the residential or commercial unit to the customer; or
- on transfer of physical possession of the residential or commercial unit to the customer.
Sale of residential and commercial units consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated with each other.
The performance obligation in relation to real estate development is satisfied upon completion of project work and transfer of control of the asset to the customer.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to/from the customer.
In respect of Joint development (''JD'') arrangements wherein the land owner/ possessor provides land and in lieu of land owner providing land, the Company transfers certain percentage of constructed area/ revenue proceeds, the revenue from development and transfer of constructed area to land owner is recognised over time
using percentage-of-completion method (''POC method'') of accounting. Project costs include fair value of such land received and the same is accounted on launch of the project.
When the fair value of the land received cannot be measured reliably, the revenue and cost, is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred.
In case of JD arrangements, where performance obligation is satisfied over time, the Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
ii. Recognition of revenue from contractual projects
Revenue from contractual project is recognised over time, using an input method with reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.
The Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
The stage of completion on a project is measured on the basis of proportion of the contract work based upon the contracts/ agreements entered into by the Company with its customers.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately when such probability is determined.
iii. Recognition of revenue from room rentals, food, beverages, maintenance income and other allied services
Revenues from the room rentals during a guest''s stay at the hotel is recognised based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
In respect of the maintenance income, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Company. The Company applies the time elapsed method to measure progress. Membership fee is recognised on a straight line basis over the period of membership.
iv. Recognition of revenue from other operating activities
Revenue from project management fees is recognised over period of time as per terms of the contract.
Revenue from assignment is recognised at the point in time as per terms of the contract. Revenue from marketing is recognised at the point in time basis efforts expended.
v. Contract Balances
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contracts in which the goods or services transferred are lower than the amount billed to the customer, the difference is recognised as "Unearned revenueâ and presented in the Balance Sheet under "Other current liabilitiesâ.
The Company pays sales commission for contracts that they obtain to sell certain units of property and capitalises the incremental costs of obtaining a contract. These costs are amortised on a systematic basis that is consistent with the transfer of the property to the customer. Capitalised costs to obtain such contracts are presented separately as a current asset in the Balance Sheet. b Revenue from property rental, facility and hire charges
The Company''s policy for recognition of revenue from operating leases is described in note 2.8 below.
c Share in profit/ loss of Limited liability partnership (LLP) and partnership firms
Share of profit / loss from partnership firm and LLP is recognised based on the financial information provided and confirmed by the respective firms which is recorded under Partners Current Account. d Interest income
Interest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
e Dividend income
Revenue is recognised when the shareholders'' or unit holders'' right to receive payment is established, which is generally when shareholders approve the dividend.
2.7 Advance paid towards land procurement
Advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other current assets during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories. Management is of the view that these advances are given under normal trade practices and are neither in the nature of loans nor advance in the nature of loans.
The Company assesses at contract inception whether a contract is, or contains, a lease. A contract is or contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Contingent rents are recognised as revenue in the period in which they are earned.
b. The Company as lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises right-of-use assets and lease liabilities at the lease commencement date. The right-of-use assets is initially measured at cost which includes the initial amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
The lease liabilities is initially measured at the present value of lease payments to be made over the lease term, discounted using the Company''s incremental borrowing rate. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in Statement of Profit and Loss.
The Company applies the short-term lease recognition exemption to its short-term leases of assets (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated
to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset, is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
a. Short-term obligations
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
b. Long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees upto the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c. Post-employment obligations
The Company operates the following postemployment schemes:
The Company''s contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have
terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
d. Other Defined Contribution Plan
The Company''s contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit and Loss is recognised outside Statement of Profit and Loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit / loss.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
2.13 Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
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 and the cost of the item can be measured
reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project / property, plant and equipment up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalised as incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
Depreciation method, estimated useful lives and residual values
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on property, plant and equipment is provided using written-down value method over the useful lives of assets estimated by the Management. The Management estimates the useful lives for the property, plant and equipment as follows:
Particulars |
Useful lives estimated by the management |
Building # * |
58 Years |
Plant and machinery * |
20 Years |
Office Equipment* |
20 Years |
Furniture and fixtures * |
15 Years |
Vehicles* |
10 Years |
Computers and Accessories* |
6 Years |
# includes certain assets that has been assessed with useful lives of 15 years.
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement - plant and machinery and leasehold improvement -furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-inprogress until construction and installation are complete and the asset is ready for its intended use.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirements for cost model. The cost of Investment property includes the cost of replacing parts and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in Statement of Profit and Loss as incurred.
Investment properties are depreciated using written-down value method over the useful lives. Investment properties - Building generally have a useful life of 5860 years and plant and machinery have a useful life of 20 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
The fair value of investment property is disclosed in the notes. Fair values are determined based on evaluation performed by accredited external independent valuers. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognised.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets, comprising of software are amortised on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when asset is derecognised.
2.17 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss.
Related to contractual and real estate activity
Direct expenditure relating to construction activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the Statement of Profit and Loss. Direct and other expenditure is determined based on specific identification to the construction and real estate activity. Cost incurred/ items purchased specifically for projects are taken as consumed as and when incurred/ received.
Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
Finished goods - Flats & Plots: Valued at lower of cost and net realisable value.
Land inventory - Valued at lower of cost and net realisable value.
Inventory also comprises of stock of food and beverages and operating supplies and is carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. However, inventory held for use in production of finished goods is not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
2.19 Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.
2.20 Financial Instruments A Initial recognition
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognised at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Management is of the view that Financial assets such as Refundable deposits, Current account in partnership firms and other advances arises under normal trade practices and are neither in the nature of loans nor advance in the nature of loans.
B Subsequent measurement
a. Non-derivative financial instruments
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a
business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognised in other comprehensive income.
Financial assets at fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities are subsequently carried at amortised cost using the effective interest method, except for contingent consideration recognised in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognised as a deduction from equity, net of any tax effects.
C Derecognition of financial instruments
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 derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognised from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
D Impairment of financial assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in Statement of Profit and Loss.
2.21 Operating cycle and basis of classification of assets
and liabilities
a. The real estate development projects undertaken by the Company is generally run over a period ranging upto 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as current since they form part of working capital of the respective projects. Refer Note 49 (III) for the maturity profile for such financial liabilities.
b. Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realised /
are contractually repayable within 12 months from the Balance Sheet date and as non-current, in other cases.
Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
2.22 Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Cash and cash equivalents includes balances in Escrow Account which shall be used only for specified purpose as defined under Real Estate (Regulation and Development) Act, 2016.
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.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events
such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
Statement of Cash flows is prepared under Ind AS 7 ''Statement of Cash flows'' specified under Section 133 of the Act. Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature.
2.26 Non-current assets held for sale and discontinued operations
The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and current tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded as met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups), its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset or disposal group to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset (or disposal group),
- An active programme to locate a buyer and complete the plan has been initiated (if applicable),
- The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
- The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Property, plant and equipment, investment property and intangible assets are not depreciated or amortised, once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately from other items in the Balance Sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed off, or is classified as held for sale, and:
- Represents a separate major line of business or geographical area of operations;
- Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
- Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Statement of Profit and Loss.
Q RECENT ACCOUNTING PRONOUNCEMENTS
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2023 dated March 31, 2023 to amend the following Ind AS which are effective from April 01, 2023.
Ind AS 1, Presentation of Financial Statements
An entity shall disclose material accounting policy information. Accounting policy information is material if, when considered together with other information included in an entity''s financial statements, it can reasonably be expected to influence decisions that the
primary users of general purpose financial statements make on the basis of those financial statements. The Company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 8, Accounting policies, Change in Accounting Estimates and Errors
Definition of ''change in account estimate'' has been replaced by revised definition of ''accounting estimate''. As per revised definition, accounting estimates are monetary amounts in the financial statements that are subject to measurement uncertainty. An entity develops an accounting estimate to achieve the objective set out by the accounting policy. Developing accounting estimates involves the use of judgements or assumptions based on the latest available, reliable information.
An entity may need to change an accounting estimate if changes occur in the circumstances on which the accounting estimate was based or as a result of new information, new developments or more experience.
By its nature, a change in an accounting estimate does not relate to prior periods and is not the correction of an error. The Company has evaluated the amendment and there is no impact on its financial statements.
Deferred tax related to leases and decommissioning, restoration and similar liabilities
Ind AS 12, Income Taxes, exempt an entity from recognising a deferred tax asset or liability in particular circumstances. Despite this exemption, an entity shall recognise a deferred tax assetâto the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilisedâand a deferred tax liability for all deductible and taxable temporary differences associated with
(i) right-of-use assets and lease liabilities; and
(ii) decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset;
The Company has evaluated the amendment and there is no impact on its financial statements.
Mar 31, 2022
M/s. Prestige Estates Projects Limited ("the Company") was incorporated on 4 June 1997 as a company under the Companies Act, 1956 ("the 1956 Act"). The Company is engaged in the business of real estate development.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bengaluru, Karnataka, India. Its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The financial statements have been authorised for issuance by the Companyâs Board of Directors on 26 May 2022.
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards ("Ind AS"), the provisions of the Companies Act, 2013 ("the Act") (as amended from time to time) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III).
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than Rupees 0.5 Million due to rounding off).
The accounting policies adopted and methods of computation followed are consistent with those of the previous financial year.
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are
recognised in the periods in which the results are known / materialise.
Significant accounting judgements, estimates and assumptions used by management are as below:
⢠Fair value measurements (Refer note 2.5),
⢠Determination of performance obligations and timing of revenue recognition on revenue from real estate development (Refer note 2.6),
⢠Accounting for revenue and land cost for projects executed through joint development arrangement (Refer note 2.6),
⢠Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates (Refer note 2.6),
⢠Useful lives of investment property; property, plant and equipment and intangible assets (Refer note 2.13, 2.15 and 2.16),
⢠Impairment of tangible and intangible assets other than goodwill (Refer note 2.17)
⢠Net realisable value of inventory (Refer note 2.18), and
⢠Accounting, classification and presentation of assets and liabilities (âdisposal groupâ) held for sale, including timing of recognition of sale and deferred consideration (Refer notes 2.26 and 52a).
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
Revenue from contracts with customers 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 expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).
Revenue from real estate development of residential or commercial unit is recognised at the point in time, when the control of the asset is transferred to the customer, which generally coincides with either of the two conditions as stated below -
⢠on transfer of legal title of the residential or commercial unit to the customer; or
⢠on transfer of physical possession of the residential or commercial unit to the customer.
Sale of residential and commercial units consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated with each other.
The performance obligation in relation to real estate development is satisfied upon completion of project work and transfer of control of the asset to the customer.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above,
which is other than for provision of finance to/from the customer.
In respect of Joint development (âJDâ) arrangements wherein the land owner/ possessor provides land and in lieu of land owner providing land, the Company transfers certain percentage of constructed area/ revenue proceeds, the revenue from development and transfer of constructed area to land owner is recognised over time using percentage-of-completion method (âPOC methodâ) of accounting. Project costs include fair value of such land received and the same is accounted on launch of the project.
When the fair value of the land received cannot be measured reliably, the revenue and cost, is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred.
I n case of JD arrangements, where performance obligation is satisfied over time, the Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
Revenue from contractual project is recognised over time, using an input method with reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.
The Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
The stage of completion on a project is measured on the basis of proportion of the contract work based upon the contracts/ agreements entered into by the Company with its customers.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately when such probability is determined.
iii. Recognition of revenue from room rentals, food, beverages, maintenance income and other allied services
Revenues from the room rentals during a guestâs stay at the hotel is recognised based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
In respect of the maintenance income, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Company. The Company applies the time elapsed method to measure progress.
Membership fee is recognised on a straight line basis over the period of membership.
Revenue from project management fees is recognised over period of time as per terms of the contract.
Revenue from assignment is recognised at the point in time as per terms of the contract.
Revenue from marketing is recognised at the point in time basis efforts expended.
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contracts in which the goods or services transferred are lower than the amount billed to the customer, the difference is recognised as "Unearned revenue" and presented in the Balance Sheet under "Other current liabilities".
The Company pays sales commission for contracts that they obtain to sell certain units of property and capitalises the incremental costs of obtaining a contract. These costs are amortised on a systematic basis that is consistent with the transfer of the property to the customer. Capitalised costs to obtain such contracts are presented separately as a current asset in the Balance Sheet.
The Companyâs policy for recognition of revenue from operating leases is described in note 2.8 below.
Share of profit / loss from partnership firms and LLPs is recognised based on the financial information provided and confirmed by the respective firms which is recorded under Partners Current Account.
d. Interest income
I nterest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
e. Dividend income
Revenue is recognised when the shareholdersâ or unit holdersâ right to receive payment is established, which is generally when shareholders approve the dividend.
Advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other current assets during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories. Management is of the view that these advances are given under normal trade practices and are neither in the nature of loans nor advance in the nature of loans.
The Company assesses at contract inception whether a contract is, or contains, a lease. A contract is or contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
a. The Company as lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Contingent rents are recognised as revenue in the period in which they are earned.
b. The Company as lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises right-of-use assets and lease liabilities at the lease commencement date. The right-of-use assets is initially measured at cost which includes the initial amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
The lease liabilities is initially measured at the present value of lease payments to be made over the lease term, discounted using the Companyâs incremental borrowing rate. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Companyâs estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in Statement of Profit and Loss.
The Company applies the short-term lease recognition exemption to its short-term leases of assets (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset, is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or
reported in previous financial statements, are recognised as income or as expense in the year in which they arise.
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) i n case of non-accumulating compensated absences, when the absences occur.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees upto the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The Company operates the following postemployment schemes:
The Companyâs contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
The Companyâs contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
I ncome tax expense represents the sum of the tax currently payable and deferred tax.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit and Loss is recognised outside Statement of Profit and Loss (either in other comprehensive income (OCI) or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
b. Deferred tax
Deferred tax is recognised on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit / loss.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
2.13 Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
Subsequent costs are included in the assetâs 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 and the cost of the item can be measured reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project / property, plant and equipment up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalised as incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other noncurrent assets.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on property, plant and equipment is provided using written-down value method over the useful lives of assets estimated by the Management. The Management estimates the useful lives for the property, plant and equipment as follows:
Particulars |
Useful lives estimated by the management |
Building # * |
58 Years |
Plant and machinery * |
20 Years |
Office Equipment* |
20 Years |
Furniture and fixtures * |
15 Years |
Vehicles* |
10 Years |
Computers and Accessories* |
6 Years |
# includes certain assets that has been assessed with useful lives of 15 years.
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement - plant and machinery and leasehold improvement -furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction
costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model. The cost of Investment property includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in Statement of Profit and Loss as incurred.
I nvestment properties are depreciated using written-down value method over the useful lives. Investment properties - Building generally have a useful life of 5860 years and plant and machinery have a useful life of 20 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
The fair value of investment property is disclosed in the notes. Fair values are determined based on evaluation performed by accredited external independent valuers.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognised.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets, comprising of software are amortized on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when asset is derecognized.
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss.
Direct expenditure relating to construction activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the Statement of Profit and Loss. Direct and other expenditure is determined based on specific identification to the construction and real estate activity. Cost incurred/ items purchased specifically for projects are taken as consumed as and when incurred/ received.
Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
Finished goods - Flats & Plots: Valued at lower of cost and net realisable value.
Land inventory - Valued at lower of cost and net realisable value.
Inventory also comprises of stock of food and beverages and operating supplies and is carried at the lower of
cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. However, inventory held for use in production of finished goods is not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Management is of the view that Financial assets such as Refundable deposits, Current account in partnership firms and other advances arises under normal trade practices and are neither in the nature of loans nor advance in the nature of loans.
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in Statement of Profit and Loss.
2.21 Operating cycle and basis of classification of assets and liabilities
a. The real estate development projects undertaken by the Company is generally run over a period ranging upto 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as current since they form part of working capital of the respective projects. Refer Note 50 (III) for the maturity profile for such financial liabilities.
b. Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realised / are contractually repayable within 12 months from the Balance Sheet date and as non-current, in other cases.
Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
Financial assets at fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
D Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
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 Companyâs cash management.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
Statement of Cash flows is prepared under Ind AS 7 âStatement of Cash flowsâ specified under Section 133 of the Act. Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature.
The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and current tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded as met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups), its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset or disposal group to be highly probable when:
⢠The appropriate level of management is committed to a plan to sell the asset (or disposal group),
⢠An active programme to locate a buyer and complete the plan has been initiated (if applicable),
⢠The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
⢠The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
⢠Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Property, plant and equipment, investment property and intangible assets are not depreciated or amortised, once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
⢠Represents a separate major line of business or geographical area of operations;
⢠Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
⢠Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit and loss.
3 REGROUPING BASED ON âAMENDED SCHEDULE INâ OF COMPANIES ACT, 2013
Appropriate regrouping have been made in the financial statements, where ever required by reclassification of the corresponding items of income, expenses, assets, liabilities and cash flows, in order to bring them in line with the nomenclature and classification as per the audited financial statements of the Company for the year ended March 31, 2022, prepared in accordance with the Schedule III of Companies Act, 2013, as amended (the âAmended Schedule IIIâ), requirements of Ind AS 1 and other Ind AS principles.
4 RECENT ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below.
I nd AS 16 - Property Plant and equipment - The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company has evaluated the amendment and there is no impact on its financial statements.
I nd AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment specifies that the âcost of fulfillingâ a contract comprises the âcosts that relate directly to the contractâ. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct
labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The Company has evaluated the amendment and the impact is not expected to be material.
I nd AS 109 - Financial Instruments and Ind AS 107 -Financial Instruments: Disclosures - The amendment focuses on the potential financial reporting issues that may arise when interest rate benchmarking reforms are either reformed or replaced. The key reliefs provided by the amendments are: Changes to contractual cash flows - When changing the basis for determining contractual cash flows for financial assets and liabilities (including lease liabilities), the reliefs have the effect that the changes that are required by an interest rate benchmark reform will not result in an immediate gain or loss in the Statement of profit and loss. The Company has evaluated the amendment and the impact is not expected to be material.
Mar 31, 2021
1. CORPORATE INFORMATION
M/s. Prestige Estates Projects Limited (âthe Company'') was incorporated on June 4, 1997 as a company under the Companies Act, 1956 (''the 1956 Act''). The Company is engaged in the business of real estate development.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bengaluru, Karnataka, India. Its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The financial statements have been authorised for issuance by the Company''s Board of Directors on June 8, 2021.
2. SIGNIFICANT ACCOUNTING POLICIES2.1 Statement of compliance
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards (''Ind AS''), the provisions of the Companies Act, 2013 (''the Act'') (as amended from time to time) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (Ind AS compliant Schedule III).
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than '' 0.5 million due to rounding off).
2.3 Changes in accounting policies and disclosures
The accounting policies adopted and methods of computation followed are consistent with those of the previous financial year.
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgements,
estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
Significant accounting judgements, estimates and assumptions used by management are as below:
- Useful lives of Investment Property; Property, Plant and Equipment and Intangible Assets (Refer note 2.13, 2.15 & 2.16),
- Determination of performance obligations and timing of revenue recognition on revenue from real estate development (Refer note 2.6),
- Accounting for revenue and land cost for projects executed through joint development arrangement (Refer note 2.6),
- Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates (Refer note 2.6),
- Net realisable value of inventory (Refer note 2.18)
- I mpairment of tangible and intangible assets other than goodwill (Refer note 2.17 and note 54), and
- Fair value measurements (Refer note 2.5)
- Accounting, classification and presentation of assets and liabilities (''disposal group'') held for sale, including timing of recognition of sale and deferred consideration (Refer notes 2.26 and 50).
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
a) Revenue from contracts with customers
Revenue from contracts with customers 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 expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer (if any).
i. Recognition of revenue from sale of real estate inventory property
Revenue from real estate development of residential or commercial unit is recognised at the point in time, when the control of the asset is transferred to the customer, which generally coincides with either of the two conditions as stated below -
- on transfer of legal title of the residential or commercial unit to the customer; or
- on transfer of physical possession of the residential or commercial unit to the customer.
Sale of residential and commercial units consists of sale of undivided share of land and constructed area
to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated with each other.
The performance obligation in relation to real estate development is satisfied upon completion of project work and transfer of control of the asset to the customer.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to/from the customer.
In respect of Joint development (âJDâ) arrangements wherein the land owner/possessor provides land and in lieu of land owner providing land, the Company transfers certain percentage of constructed area/ revenue proceeds, the revenue from development and transfer of constructed area to land owner is recognised over time using percentage-of-completion method (âPOC methodâ) of accounting. Project costs include fair value of such land received and the same is accounted on launch of the project.
When the fair value of the land received cannot be measured reliably, the revenue and cost, is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred.
I n case of JD arrangements, where performance obligation is satisfied over time, the Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
ii. Recognition of revenue from contractual projects
Revenue from contractual project is recognised over time, using an input method with reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work
performed to date relative to the estimated total contract costs.
The Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
The stage of completion on a project is measured on the basis of proportion of the contract work based upon the contracts/agreements entered into by the Company with its customers.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately when such probability is determined.
iii. Recognition of revenue from room rentals, food, beverages, maintenance income and other allied services
Revenues from the room rentals during a guestâs stay at the hotel is recognised based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
In respect of the maintenance income, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Company. The Company applies the time elapsed method to measure progress.
Membership fee is recognised on a straight-line basis over the period of membership.
iv. Recognition of revenue from other operating activities
Revenue from project management fees is recognised over period of time as per terms of the contract.
Revenue from assignment is recognised at the point in time as per terms of the contract.
Revenue from marketing is recognised at the point in time basis efforts expended.
v. Contract Balances
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e. only the passage of time is required before payment of the consideration is due).
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contracts in which the goods or services transferred are lower than the amount billed to the customer, the difference is recognised as âUnearned revenueâ and presented in the Balance Sheet under âOther current liabilitiesâ.
The Company pays sales commission for contracts that they obtain to sell certain units of property and capitalises the incremental costs of obtaining a contract. These costs are amortised on a systematic basis that is consistent with the transfer of the property to the customer. Capitalised costs to obtain such contracts are presented separately as a current asset in the Balance Sheet.
b) Revenue from property rental, facility and hire charges
The Companyâs policy for recognition of revenue from operating leases is described in note 2.8 below.
c) Share in profit/loss of Limited liability partnership (LLP) and partnership firms
Share of profit/loss from partnership firm and LLP is recognised based on the financial information provided and confirmed by the respective firms which is recorded under Partners Current Account.
d) Interest income
I nterest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
e) Dividend income
Revenue is recognised when the shareholdersâ or unit holdersâ right to receive payment is established, which is generally when shareholders approve the dividend.
2.7 Advance paid towards land procurement
Advances paid by the Company to the seller/intermediary towards outright purchase of land is recognised as land advance under other current assets during the course of obtaining clear and marketable title, free
from all encumbrances and transfer of Legal title to the Company, whereupon it is transferred to Land stock under inventories.
The Company assesses at contract inception whether a contract is, or contains, a lease. A contract is or contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Contingent rents are recognised as revenue in the period in which they are earned.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises right-of-use assets and lease liabilities at the lease commencement date. The right-of-use assets is initially measured at cost which includes the initial amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
The lease liabilities is initially measured at the present value of lease payments to be made over the lease term, discounted using the Companyâs incremental borrowing rate. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Companyâs estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in Statement of Profit and Loss.
The Company applies the short-term lease recognition exemption to its short-term leases of assets (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments
on short-term leases are recognised as expense on a straight-line basis over the lease term.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset, is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) i n case of non-accumulating compensated absences, when the absences occur.
b) Long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c) Post-employment obligations
The Company operates the following postemployment schemes:
The Companyâs contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
d) Other Defined Contribution Plan
The Companyâs contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
I ncome tax expense represents the sum of the tax
currently payable and deferred tax.
a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit and Loss is recognised outside 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.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax Liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
2.13Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
Subsequent costs are included in the assetâs 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 and the cost of the item can be measured reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project/property, plant and equipment up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalised as incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets.
Depreciation method, estimated useful lives and residual values
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on property, plant and equipment is provided using written-down value method over the useful lives of assets estimated by the Management. The Management estimates the useful lives for the property, plant and equipment as follows:
Particulars |
Useful lives estimated by the management |
Building * |
58 Years |
Plant and machinery * |
20 Years |
Office Equipment* |
20 Years |
Furniture and fixtures * |
15 Years |
Vehicles* |
10 Years |
Computers and Accessories* |
6 Years |
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement - plant and machinery and leasehold improvement -furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
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 asset is derecognised.
2.17Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss.
Depreciation is not provided on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model. The cost of Investment property includes the cost of replacing parts and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in Statement of Profit and Loss as incurred.
Investment properties are depreciated using written-down value method over the useful lives. Investment properties - Building generally have a useful life of 58-60 years and plant and machinery have a useful life of 20 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
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.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognised.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets, comprising of software are amortised on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset. Gains or losses arising from de-recognition of an
Related to contractual and real estate activity Direct expenditure relating to construction activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the Statement of Profit and Loss. Direct and other expenditure is determined based on specific identification to the construction and real estate activity. Cost incurred/ items purchased specifically for projects are taken as consumed as and when incurred/received.
Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
Finished goods - Flats & Plots: Valued at lower of cost and net realisable value.
Land inventory - Valued at lower of cost and net realisable value.
Inventory also comprises of stock of food and beverages and operating supplies and is carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. However, inventory held for use in production of finished goods is not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
2.19 Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.
A. Initial recognition
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognised at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
a) Non-derivative financial instruments
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognised in other comprehensive income.
Financial assets at fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities
Financial liabilities are subsequently carried at amortised cost using the effective interest method, except for contingent consideration recognised in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
I nvestments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognised as a deduction from equity, net of any tax effects.
C. Derecognition of financial instruments
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 derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognised from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
D. Impairment of financial assets
The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised
is recognised as an impairment gain or loss in Statement of Profit and Loss.
2.21Operating cycle and basis of classification of assets and liabilities
a) The real estate development projects undertaken by the Company is generally run over a period ranging up to 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as current since they form part of working capital of the respective projects. Refer Note 48 (III) for the maturity profile for such financial liabilities.
b) Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realised / are contractually repayable within 12 months from the Balance Sheet date and as non-current, in other cases.
Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
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 Companyâs cash management.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
Statement of Cash flows is prepared under Ind AS 7 âStatement of Cash flowsâ specified under Section 133 of the Act. Cash flows are reported using the indirect method, whereby profit/(loss) before tax is adjusted for the effects of transactions of non-cash nature.
2.26 Non-current assets held for sale and discontinued operations
The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and current tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale will be made or that the
decision to sell will be withdrawn. Management must be committed to the sale and the sale expected within one year from the date of classification.
The criteria for held for sale classification is regarded met only when the assets or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups), its sale is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale of the asset or disposal group to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset (or disposal group),
- An active programme to locate a buyer and complete the plan has been initiated (if applicable),
- The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
- The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Property, plant and equipment, investment property and intangible assets are not depreciated or amortised, once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:
- Represents a separate major line of business or geographical area of operations;
- Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
- Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit and loss.
3. RECENT ACCOUNTING PRONOUNCEMENTS a) New and amended standards
There are no new standards that are notified,but not
effective, up to the date of issuance of the Companyâs
financial statements.
(i) Amendments to Ind AS 116: COVID-19 - Related Rent Concessions
The amendments provide relief to lessees from applying Ind AS 116 guidance on lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19 related rent concession the same way it would account for the change under Ind AS 116, if the change were not a lease modification.
The amendments are applicable for annual reporting periods beginning on or after the April 1, 2020. In case, a lessee has not yet approved the financial statements for issue before the issuance of this amendment, then the same may be applied for annual reporting periods beginning on or after the April 1, 2019. This amendment had no significant impact on the standalone financial statements of the Company.
(ii) Amendments to Ind AS 1 and Ind AS 8:
Definition of Material
The amendments provide a new definition of material that states, âinformation is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.â The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the standalone financial statements of, nor is there expected to be any nature impact to the Company.
These amendments are applicable prospectively for annual periods beginning on or after the April 1,
2020. The amendments to the definition of material are not expected to have a significant impact on the Companyâs standalone financial statements.
b) On March 24, 2021, the Ministry of Corporate Affairs (âMCAâ) through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. Key amendments relating to Division II which relate to companies whose financial statements are required to comply with Companies (Indian Accounting Standards) Rules 2015 are:
⢠Lease liabilities should be separately disclosed under the head âfinancial liabilitiesâ, duly distinguished as current or non-current.
⢠Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
⢠Specified format for disclosure of shareholding of promoters.
⢠Specified format for ageing schedule of trade receivables, trade payables, capital work-inprogress and intangible asset under development.
⢠If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
⢠Specific disclosure under âadditional regulatory requirementâ such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loans and advances to promoters, directors, key managerial personnel (KMP) and related parties, details of benami property held etc.
⢠Additional disclosures relating to Corporate Social Responsibility (CSR), undisclosed income and crypto or virtual currency specified under the head âadditional informationâ in the notes forming part of the financial statements.
The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
Mar 31, 2019
NOTES FORMING PART OF FINANCIAL STATEMENTS
1 CORPORATE INFORMATION
M/s. Prestige Estates Projects Limited ("the Company") was incorporated on June 4, 1997 as a company under the Companies Act, 1956 ("the 1956 Act"). The Company is engaged in the business of real estate development.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bengaluru, Karnataka, India. Its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The financial statements have been authorised for issuance by the Company''s Board of Directors on 27 May, 2019.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards ("Ind AS"), the provisions of the Companies Act, 2013 ("the Act") (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules, 2016.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than Rupees 0.5 Million due to rounding off).
2.3 Changes in accounting policies and disclosures
The accounting policies adopted and methods of computation followed are consistent with those of the previous financial year, except for items disclosed below. Ind AS 115 Revenue From Contracts with Customers
On March 28, 2018, the Ministry of Corporate Affairs (MCA) has notified Indian Accounting Standard (Ind AS) 115, Revenue from Contracts with Customers.
Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Guidance Note on Accounting for Real Estate Transactions (Ind AS) issued by the Institute of Chartered Accountants of India, Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The application of Ind AS 115 has impacted the Company''s accounting for recognition of revenue from real estate projects.
The Company has applied the modified retrospective method to contracts that were not completed as of 1 April 2018 and has given impact of Ind AS 115 application by debit to retained earnings as at the said date. Accordingly the comparatives have not been restated and hence not comparable with previous year figures. The effect of adopting Ind AS 115 as at 1 April 2018 is described in Note 52.
2.4 Use of Estimates
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
Significant accounting judgements, estimates and assumptions used by management are as below:
- Useful lives of Investment Property; Property, Plant and Equipment and Intangible Assets (Refer note 2.13.2.15 & 2.16).
- Determination of performance obligations and timing of revenue recognition on revenue from real estate development (Refer note 2.6).
- Accounting for revenue and land cost for projects executed through joint development arrangement (Refer note 2.6).
- Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates (Refer note 2.6),
- Fair value measurements (Refer note 2.5)
2.5 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.6 Revenue Recognition
a. Revenue from contracts with customers
Revenue from contracts with customers 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 expects to be entitled in exchange for those goods or services. Revenue is measured based on the transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with the customer. The Company presents revenue from contracts with customers net of indirect taxes in its statement of profit and loss.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).
i. Recognition of revenue From sale of real estate inventory property
Revenue from real estate development of residential or commercial unit is recognised at the point in time, when the control of the asset is transferred to the customer, which generally coincides with either of the two conditions as stated below -
- on transfer of legal title of the residential or commercial unit to the customer; or
- on transfer of physical possession of the residential or commercial unit to the customer
Sale of residential and commercial units consists of sale of undivided share of land and constructed area to the customer, which have been identified by the Company as a single performance obligation, as they are highly interrelated with each other.
The performance obligation in relation to real estate development is satisfied upon completion of project work and transfer of control of the asset to the customer.
For contracts involving sale of real estate unit, the Company receives the consideration in accordance with the terms of the contract in proportion of the percentage of completion of such real estate project and represents payments made by customers to secure performance obligation of the Company under the contract enforceable by customers. Such consideration is received and utilised for specific real estate projects in accordance with the requirements of the Real Estate (Regulation and Development) Act, 2016. Consequently, the Company has concluded that such contracts with customers do not involve any financing element since the same arises for reasons explained above, which is other than for provision of finance to/from the customer.
In respect of Joint development (''JD'') arrangements, revenue is recognised over time using percentage-of-completion method (''POC method'') of accounting. In JD arrangements the land owner/ possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. The project costs include fair value of land being offered for the project and revenue from the development and transfer of constructed area/ revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis on launch of the project.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred.
In case of JD arrangements, where performance obligation is satisfied over time, the Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
ii. Recognition of revenue from contractual projects
Revenue from contractual project is recognised over time, using an input method with reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.
The Company recognises revenue only when it can reasonably measure its progress in satisfying the performance obligation. Until such time, the Company recognises revenue to the extent of cost incurred, provided the Company expects to recover the costs incurred towards satisfying the performance obligation.
The stage of completion on a project is measured on the basis of proportion of the contract work based upon the contracts/ agreements entered into by the Company with its customers.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately when such probability is determined.
iii. Recognition of revenue From room rentals, Food, beverages, maintenance income and other allied services
Revenues from the room rentals during a guest''s stay at the hotel is recognised based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
In respect of the maintenance income, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Company. The Company applies the time elapsed method to measure progress.
Membership fee is recognised on a straight line basis over the period of membership.
iv. Recognition of revenue From other operating activities
Revenue from project management fees is recognised over period of time as per terms of the contract.
Revenue from assignment is recognised at the point in time as per terms of the contract.
Revenue from marketing is recognised at the point in time basis efforts expended.
v. Contract Balances
Contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contracts in which the goods or services transferred are lower than the amount billed to the customer, the difference is recognised as "Unearned revenue" and presented in the Balance Sheet under "Other current liabilities".
vi. Contract cost assets
The Company pays sales commission for contracts that they obtain to sell certain units of property and capitalises the incremental costs of obtaining a contract. These costs are amortised on a systematic basis that is consistent with the transfer of the property to the customer. Capitalised costs to obtain such contracts are presented separately as a current asset in the Balance Sheet.
b Revenue From property rental, Facility and hire charges
The Company''s policy for recognition of revenue from operating leases is described in note 2.8 below.
c Share in profit/ loss of Limited liability partnership (LLP) and partnership Firms
Share of profit / loss from partnership firm and LLP is recognised based on the financial information provided and confirmed by the respective firms which is recorded under Partners Current Account.
d Interest income
Interest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
e Dividend income
Revenue is recognised when the shareholders'' or unit holders'' right to receive payment is established, which is generally when shareholders approve the dividend.
2.7 Advance paid towards land procurement
Advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other current assets during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories.
2.8 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
a. The Company as lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the Company''s expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
b. The Company as lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases, such increases are recognised in the year in which such obligations arise.
2.9 Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset, is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.
2.11 Employee Benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
a. Short-term obligations
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
b. Long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees upto the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c. Post-employment obligations
The Company operates the following post-employment schemes:
i. Defined Contribution Plan:
The Company''s contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
ii. Defined Benefit Plan:
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
d. Other Defined Contribution Plan
The Company''s contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
2.12 Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
a. Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit and Loss is recognised outside 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.
b. Deferred tax
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
c. Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entity will pay normal income tax. Accordingly, MAT is recognised as an asset under Deferred tax asset/ liability in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the entity. The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
2.13 Property, plant and equipment Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1st April, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
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 and the cost of the item can be measured reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project / property, plant and equipment up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalised as incurred.
Depreciation method, estimated useful lives and residual values
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on property, plant and equipment is provided using written-down value method over the useful lives of assets estimated by the Management. The Management estimates the useful lives for the fixed assets as follows:
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives For these assets is different From the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement -plant and machinery and leasehold improvement - furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
2.14 Capital work-in-progress
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
2.15 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirements for cost model. The cost of Investment property includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Investment properties are depreciated using written-down value method over the useful lives. Investment properties -Building generally have a useful life of 58-60 years and plant and machinery have a useful life of 20 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
For transition to Ind AS, the Company has elected to continue with the carrying value of its investment property recognised as of April 1, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
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.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognised.
Particulars |
Useful lives estimated by the management |
Building * |
58 Years |
Plant and machinery* |
20 Years |
Office Equipment* |
20 Years |
Furniture and fixtures * |
15 Years |
Vehicles* |
10 Years |
Computers and Accessories* |
6 Years |
2.16 Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets, comprising of software are amortized on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when asset is derecognized.
Goodwill arising on merger is being amortised over the period of 5 years in accordance with the accounting treatment as specified in the merger scheme as approved by the National Company Law Tribunal (NCLT).
2.17 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss.
2.18 Inventories
Related to contractual and real estate activity
Direct expenditure relating to construction activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its in tended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the Statement of Profit and Loss. Direct and other expenditure is determined based on specific identification to the construction and real estate activity. Cost incurred/ items purchased specifically for projects are taken as consumed as and when incurred/ received.
Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
Finished goods - Flats & Plots: Valued at lower of cost and net realisable value.
Land inventory: Valued at lower of cost and net realisable value.
Inventory also comprises of stock of food and beverages and operating supplies and is carried at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. However, inventory held for use in production of finished goods is not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
2.19 Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
2.20 Financial Instruments A Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. A regular way purchase or sale of financial assets are accounted for at trade date.
B Subsequent measurement
a. Non-derivative financial instruments
Financial assets carried at amortised cost A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
Financial assets at Fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
b. Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
C Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
D Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in Statement of Profit and Loss. the interpretation from its effective date and does not expect any material effect on its financial statements.
c. Amendments to Ind AS 109: Prepayment Features with Negative Compensation
The amendments relate to the existing requirements in Ind AS 109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The amendments should be applied retrospectively and are effective for annual periods beginning on or after 1 April 2019. The Company does not expect any material effect on its financial statements.
d. Amendments to Ind AS 19: Plan Amendment, Curtailment or Settlement
The amendments clarify that if a plan amendment, curtailment or settlement occurs, it is mandatory that the current service cost and the net interest for the period after the re-measurement are determined using the assumptions used for the re-measurement. The amendments apply to any future plan amendments, curtailments, or settlements occurring on or after the beginning of the first annual reporting period that begins on or after 1 April 2019. The Company does not expect any material effect on its financial statements.
e. Annual improvement to Ind AS (2018)
These improvements include:
i. Amendments to Ind AS 12: Income Taxes
The amendment relating to income tax consequences of dividend clarify that an entity recognises the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. An entity applies these amendments for annual reporting periods beginning on or after 1 April 2019. Since the Company''s current practice is in line with these amendments, the Company does not expect any effect on its financial statements.
ii. Amendments to Ind AS 23: Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.
An entity applies these amendments for annual reporting periods beginning on or after 1 April 2019. Since the Company''s current practice is in line with these amendments, the Company does not expect any effect on its financial statements.
Mar 31, 2018
1.1 Statement of compliance
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards (âInd ASâ), the provisions of the Companies Act, 2013 (âthe Actâ) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules, 2016.
1.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than Rupees 0.5 million due to rounding off).
1.3 Use of Estimates
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.
Significant accounting judgements, estimates and assumptions used by management are as below:
- Useful lives of Investment Property; Property, Plant and Equipment and Intangible Assets (Refer note 2.12, 2.14 & 2.15).
- Accounting for revenue and land cost for projects executed through joint development arrangement (Refer note 2.5).
- Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates (Refer note 2.5).
- Fair value measurements (Refer note 2.4).
1.4 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
1.5 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Companyâs activities as described below:
a. Recognition of Revenue from Real Estate Developmental Projects:
Revenue from real estate developmental projects under development is recognised based on âPercentage Completion Methodâ.
The Percentage Completion Method is applied when the stage of completion of the project reaches a reasonable level of development. Reasonable level of development is achieved when the following criteria specified in the Guidance Note on Accounting for Real Estate Transactions (Ind AS) issued by the Institute of Chartered Accountants of India are met:
i. All critical approvals necessary for commencement of the project have been obtained.
ii. The expenditure incurred on construction and development costs is not less than 25 % of the total construction and development costs for the project.
iii. Atleast 25% of the saleable project area is secured by contracts or agreements with buyers.
iv. Atleast 10 % of the contract value as per the agreements of sale or any other legally enforceable documents are realised at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts.
For computation of revenue, the stage of completion is arrived at with reference to the entire project costs incurred including land costs, borrowing costs and construction and development costs as compared to the estimated total costs of the project. The percentage completion method is applied on a cumulative basis in each reporting period and the estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognised in the period such changes are determined. The changes to estimates also include changes arising out of cancellation of contracts. In such cases any revenues attributable to such contracts previously recognised are reversed.
When it is probable that total project costs will exceed total eligible project revenues, the expected loss is recognised as an expense immediately when such probability is determined.
Further, for projects executed through joint development arrangements, wherein the land owner/possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. The project costs include fair value of land being offered for the project and revenue from the development and transfer of constructed area/revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis on launch of the project.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.
b. Recognition of revenue from sale of plots and completed units
Revenue from sale of plots and completed units is recognised upon transfer of all significant risks and rewards of ownership in the property to the buyer and are net of adjustments on account of cancellation.
c. Recognition of revenue from contractual projects
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
The stage of completion on a project is measured on the basis of proportion of the contract work/ based upon the contracts/ agreements entered into by the Company with its customers.
d. Recognition of Revenue from facilities, rental, maintenance income and allied services:
Facility and hire charges, property maintenance income and other related services are recognised on accrual basis as per the terms and conditions of relevant agreements.
The Companyâs policy for recognition of revenue from operating leases is described in note 2.7 (a) below.
Revenues from the room rentals during a guestâs stay at the hotel is recognised based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
Membership fee is recognised on a straight line basis over the period of membership.
e. Share in profit/ loss of Limited liability partnership (LLP) and partnership firms
Share of profit / loss from partnership firm and LLP is recognised based on the financial information provided and confirmed by the respective firms.
f. Dividend income
Revenue is recognised when the shareholdersâor unit holdersâright to receive payment is established, which is generally when shareholders approve the dividend.
g. Interest income
Interest income, including income arising from other financial instruments, is recognised using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
The Company collects taxes such as goods and service tax/ Sales tax/value added tax, service tax, etc. on behalf of the Government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from revenue.
1.6 Advance paid towards land procurement
Advances paid by the Company to the seller/ intermediary towards outright purchase of land is recognised as land advance under other current assets during the course of obtaining clear and marketable title, free from all encumbrances and transfer of legal title to the Company, whereupon it is transferred to land stock under inventories.
1.7 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
a. The Company as lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the Companyâs expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.
b. The Company as lessee
Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, such increases are recognised in the year in which such obligations arise.
1.8 Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset, is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
1.9 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.
1.10 Employee Benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
a. Short-term obligations
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) i n case of non-accumulating compensated absences, when the absences occur.
b. Long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of expected future payments to be made in respect of services provided by employees upto the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c. Post-employment obligations
The Company operates the following postemployment schemes:
i. Defined Contribution Plan:
The Companyâs contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
ii. Defined Benefit Plan:
The liability or assets recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of Profit and Loss as past service cost.
d. Other Defined Contribution Plan
The Companyâs contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
1.11 Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
a. Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognised outside Statement of Profit and Loss is recognised outside 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.
b. Deferred tax
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Current tax and deferred tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 future taxable profits will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
c. Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entity will pay normal income tax. Accordingly, MAT is recognised as an asset under Deferred tax asset/ liability in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the entity. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
1.12 Property, plant and equipment
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1st April, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Subsequent costs are included in the assetâs 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 and the cost of the item can be measured reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project / property, plant and equipment up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalised as incurred.
Depreciation method, estimated useful lives and residual values
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on property, plant and equipment is provided using written-down value method over the useful lives of assets estimated by the Management. The Management estimates the useful lives for the fixed assets as follows:
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement - plant and machinery and leasehold improvement -furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
1.13 Capital work-in-progress
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
1.14Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model. The cost of Investment property includes the cost of replacing parts and borrowing costs for longterm construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Investment properties are depreciated using written-down value method over the useful lives. Investment properties generally have a useful life of 58-60 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
For transition to Ind AS, the Company has elected to continue with the carrying value of its investment property recognised as of April 1, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
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.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognised.
1.15 Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets, comprising of software are amortized on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when asset is derecognized.
1.16 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in Statement of Profit and Loss.
1.17 Inventories
Related to contractual and real estate activity
Direct expenditure relating to construction activity is inventorised. Other expenditure (including borrowing costs) during construction period is inventorised to the extent the expenditure is directly attributable cost of bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs) incurred during the construction period which is not directly attributable for bringing the asset to its working condition for its intended use is charged to the Statement of Profit and Loss. Direct and other expenditure is determined based on specific identification to the construction and real estate activity. Cost incurred/ items purchased specifically for projects are taken as consumed as and when incurred/ received.
Work-in-progress - Real estate projects (including land inventory): Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognised. Real estate work-in-progress is valued at lower of cost and net realisable value.
Finished goods - Flats & Plots: Valued at lower of cost and net realisable value.
Land inventory: Valued at lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. However, inventory held for use in production of finished goods is not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
1.18 Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
1.19 Financial Instruments
A Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
B Subsequent measurement
a. Non-derivative financial instruments
Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
Financial assets at fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
b. Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
C Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
D Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in Statement of Profit and Loss.
1.20 Operating cycle and basis of classification of assets and liabilities
a. The real estate development projects undertaken by the Company is generally run over a period ranging upto 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as current since they form part of working capital of the respective projects. Refer Note 49 (III) for the maturity profile for such financial liabilities.
b. Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realised / are contractually repayable within 12 months from the Balance Sheet date and as non-current, in other cases.
Current versus non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
1.21 Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
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 Companyâs cash management.
1.22 Earnings per share
Basic earnings per share has been computed by dividing profit attributable to owners of the Company by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and dilutive potential shares, except where the result would be anti-dilutive.
1.23 Dividends
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the companyâs Board of Directors.
1.24 Statement of cash flows
Statement of Cash flows is prepared under Ind AS 7 âStatement of Cashflowsâspecified under Section 133 of the Act. Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature.
Mar 31, 2017
1 CORPORATE INFORMATION
M/s. Prestige Estates Projects Limited ("the Company") was incorporated on June 4, 1997 as a company under the Companies Act, 1956 ("the 1956 Act''''). The Company is engaged in the business of real estate development.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bengaluru, Karnataka, India. Its shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The financial statements have been authorized for issuance by the Company''s Board of Directors on May 30, 2017.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards ("Ind AS"), the provisions of the Companies Act, 2013 ("the Act") (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules, 2016.
The Company has adopted all the applicable Ind AS and the adoption was carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Sec 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. Refer Note 4 for the details of first-time adoption exemptions availed by the Company.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost and accrual basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest million Indian Rupees as per the requirement of Schedule III, unless otherwise stated (0 represents amounts less than Rupees 0.5 Million due to rounding off).
2.3 Use of Estimates
The preparation of the financial statements in conformity with Ind AS requires the Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities), income and expenses and accompanying disclosures. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
Significant accounting judgments, estimates and assumptions used by management are as below:
- Useful lives of Investment Property, Property Plant and Equipment and Intangible Assets.
- Accounting for revenue and land cost for projects executed through joint development arrangement.
- Computation of percentage completion for projects in progress, project cost, revenue and saleable area estimates.
- Fair value measurements.
2.4 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.5 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities as described below:
a. Recognition of Revenue from Real Estate Developmental Projects: Revenue from real estate developmental projects under development is recognized based on ''Percentage Completion Method''.
The Percentage Completion Method is applied when the stage of completion of the project reaches a reasonable level of development. Reasonable level of development is achieved when the following criteria specified in the Guidance Note on Accounting for Real Estate Transactions (Ind AS) issued by the Institute of Chartered Accountants of India are met:
i. All critical approvals necessary for commencement of the project have been obtained.
ii. The expenditure incurred on construction and development costs is not less than 25 % of the construction and development costs.
iii. At least 25% of the saleable project area is secured by contracts or agreements with buyers.
iv. At least 10 % of the contract value as per the agreements of sale or any other legally enforceable documents are realized at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts.
For computation of revenue, the stage of completion is arrived at with reference to the entire project costs incurred including land costs, borrowing costs and construction and development costs as compared to the estimated total costs of the project. The percentage completion method is applied on a cumulative basis in each reporting period and the estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. The changes to estimates also include changes arising out of cancellation of contracts. In such cases any revenues attributable to such contracts previously recognized are reversed.
When it is probable that total project costs will exceed total eligible project revenues, the expected loss is recognized as an expense immediately when such probability is determined.
Further, for projects executed through joint development arrangements, wherein the land owner/ possessor provides land and the Company undertakes to develop properties on such land and in lieu of land owner providing land, the Company has agreed to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. The project costs include fair value of land being offered for the project and revenue from the development and transfer of constructed area/ revenue sharing arrangement in exchange of such development rights/ land is being accounted on gross basis.
The revenue is measured at the fair value of the land received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the land received cannot be measured reliably, the revenue is measured at the fair value of the estimated construction service rendered to the landowner, adjusted by the amount of any cash or cash equivalents transferred. The fair value so estimated is considered as the cost of land in the computation of percentage of completion for the purpose of revenue recognition as discussed above.
b. Recognition of revenue from sale of plots and completed units
Revenue from sale of plots and completed units is recognized upon transfer of all significant risks and rewards of ownership in the property to the buyer and are net of adjustments on account of cancellation.
c. Recognition of revenue from contractual projects
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognized as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately.
The stage of completion on a project is measured on the basis of proportion of the contract work/ based upon the contracts/ agreements entered into by the Company with its customers.
d. Recognition of Revenue from facilities, rental, maintenance income and allied services:
Facility and hire charges, property maintenance income and other related services are recognized on accrual basis as per the terms and conditions of relevant agreements.
The Company''s policy for recognition of revenue from operating leases is described in note 2.6 (a) below.
Revenues from the room rentals during a guest''s stay at the hotel is recognized based on occupation and revenue from sale of food and beverages and other allied services, as the services are rendered.
Membership fee is recognized on a straight line basis over the period of membership.
e. Share in profit/ loss of Limited liability partnership (LLP) and partnership firms
Share of profit / loss from partnership firm and LLP is recognized based on the financial information provided and confirmed by the respective firms.
f. Dividend income
Revenue is recognized when the shareholders'' or unit holders'' right to receive payment is established, which is generally when shareholders approve the dividend.
g. Interest income
Interest income, including income arising from other financial instruments, is recognized using the effective interest rate method. Interest on delayed payment by customers are accounted when reasonable certainty of collection is established.
2.6 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
a. The Company as less or
Rental income from operating leases is generally recognized on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the Company''s expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue.
b. The Company as lessee
Rental expense from operating leases is generally recognized on a straight-line basis over the term of the relevant lease except where the rentals are structured solely to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue.
2.7 Borrowing Costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset, is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
2.8 Foreign Currency Transactions
All transactions in foreign currency are recorded on the basis of the exchange rate prevailing as on the date of transaction. The difference, if any, on actual payment / realization is recorded to the Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currency are restated at rates prevailing at the year-end. The net loss or gain arising out of such conversion is dealt with in the Statement of Profit and Loss.
2.9 Employee Benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.
a. Short-term obligations
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
b. Long-term employee benefit obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of expected future payments to be made in respect of services provided by employees up the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in Statement of Profit and Loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
c. Post-employment obligations
The Company operates the following postemployment schemes:
i. Defined Contribution Plan:
The Company''s contribution to provident fund is considered as defined contribution plan and is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
ii. Defined Benefit Plan:
The liability or assets recognized in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in the employee benefit expenses in the Statement of Profit and Loss.
Remeasurement gains and loss arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in Other Comprehensive Income. They are included
in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in Statement of Profit and Loss as past service cost.
d. Other Defined Contribution Plan
The Company''s contribution to employee state insurance scheme is charged as an expense based on the amount of contribution required to be made. The Company has no further payment obligations once the contributions have been paid.
2.10 Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
a. Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current tax relating to items recognized outside Statement of Profit and Loss is recognized outside 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.
b. Deferred tax
Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill.
Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss).
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current tax and deferred tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
c. Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entity will pay normal income tax. Accordingly, MAT is recognized as an asset under Deferred tax asset/ liability in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the entity.
2.11Property, plant and equipment Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
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 and the cost of the item can be measured reliably. Cost of the asset includes expenditure that is directly attributable to the acquisition and installation, including interest on borrowing for the project / property, plant and equipment''s up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalized as incurred.
* For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in Statement of Profit and Loss.
In respect of leasehold building, leasehold improvement - plant and machinery and leasehold improvement - furniture and fixtures, depreciation has been provided over lower of useful lives or leasable period.
2.12 Capital work-in-progress
Projects under which tangible assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable borrowing costs.
Depreciation is not provided on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
2.13 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirements for cost model.
Investment properties are depreciated using written-down value method over the useful lives. Investment properties generally have a useful life of 58-60 years. The useful life has been determined based on internal assessment and independent technical evaluation carried out by external valuer, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement.
For transition to Ind AS, the Company has elected to continue with the carrying value of its investment property recognized as of April 1, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
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.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Statement of Profit and Loss in the period in which the property is derecognized.
2.14 Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets, comprising of software are amortized on the basis of written down value method over a period of 6 years, which is estimated to be the useful life of the asset.
2.15 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in Statement of Profit and Loss.
2.16 Inventories
Stock of units in completed projects and work-in-progress are valued at lower of cost and net realizable value. Cost is aggregate of land cost, materials, contract works, direct expenses, provisions and apportioned borrowing costs and is net of material''s scrap receipts.
2.17 Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements but are disclosed.
2.18 Financial Instruments 2.18a Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through Statement of Profit and Loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
2.18b Subsequent measurement
a. Non-derivative financial instruments Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
Financial assets at fair value through profit and loss (FVPL)
A financial asset which is not classified in any of the above categories are subsequently fair valued through Statement of Profit and Loss.
Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through Statement of Profit and Loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
Investments in Subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost in the financial statements.
b. Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
2.18 c Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.18d Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through Statement of Profit and Loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in Statement of Profit and Loss.
2.19 Operating cycle and basis of classification of assets and liabilities
a. The real estate development projects undertaken by the Company is generally run over a period ranging upto 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as current since they form part of working capital of the respective projects. Refer Note 50 (III) for the maturity profile for such financial liabilities.
b. Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realized / are contractually repayable within 12 months from the Balance Sheet date and as non-current, in other cases.
Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period;
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
I There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
2.20 Cash and cash equivalents
Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
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.
2.21 Earnings per share
Basic earnings per share has been computed by dividing profit attributable to owners of the Company by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and dilutive potential shares, except where the result would be anti-dilutive.
2.22 Dividends
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.
2.23 Statement of cash flows
Statement of Cash flows is prepared under Ind AS 7 ''Statement of Cash flows'' specified under Section 133 of the Act. Cash flows are reported using the indirect method, whereby profit / (loss) before tax and is adjusted for the effects of transactions of non-cash nature.
3 RECENT ACCOUNTING PRONOUNCEMENTS
Standards issued but not yet effective
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment,'' respectively. The amendments are applicable to the Company from April 1, 2017. Amendment to Ind AS 7:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.
Amendment to Ind AS 102:
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.
Ind AS 102 Share based payment is not applicable to the Company, hence the amendment has no impact on the Company.
4 FIRST-TIME ADOPTION - MANDATORY EXEMPTIONS, OPTIONAL EXEMPTIONS
These are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS Balance Sheet as at April 1, 2015 (the Company''s date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or India GAAP).
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exemptions applied in the transition for previous GAAP to Ind AS.
Ind AS optional exemptions 4.1 Deemed Cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment''s covered by Ind AS 16 Property, plant and equipment''s as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and Investment property covered by Ind AS 40 Investment property.
The Company has elected to measure all of its property, plant and equipment, intangible assets and investment property on the transition date at their previous GAAP carrying value.
4.2 Leases
Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.
The Company has elected to apply this exemption for such contracts/ arrangements.
4.3 Investment in Subsidiaries, Joint Ventures and Associates (Ind AS 101 Exemption)
The company has availed the optional exemption under "Ind AS 101 First time Adoption of Indian Accounting standards" with respect to Investments in subsidiaries, joint ventures and associates. Accordingly, the previous GAAP carrying amount of such investments as on transition date has been taken as deemed cost.
Ind AS Mandatory exemptions 4.4 Estimates
As entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.
Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP
a. Investment in equity instruments carried at FVPL;
b. Investment in debt instruments carried at FVPL; and
c. Impairment of financial assets based on expected credit loss method.
4.5 De-recognition of financial assets and liabilities
Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initial accounting for those transactions.
The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.
Note:
(i) The Company''s investment properties consists of commercial properties in India. The Management has determined that the investment properties consist of two classes of assets - office and retail - based on the nature, characteristics and risks of each property.
(ii) As at March 31, 2017 and March 31, 2016, the fair values of the properties are Rs, 3,734 Million and Rs, 11,593 Million respectively. These valuations are based on valuations performed by Jones Lang Lasalle Property Consultants India Private Limited, an accredited independent valuer. A valuation model in accordance with that recommended by the International Valuation Standards Committee has been applied. The fair valuation has been carried out by the Management for material investment properties.
(iii) The Company has no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements. Investment property with carrying amount of Rs, 1,104 Million (March 31, 2016: Rs, 3,384 Million; April 1, 2015: Rs, 2,395 Million) have been pledged to secure borrowings of the Company (See Note 23 & 27). The investment property have been pledged as security for bank loans under a mortgage.
(iv) The fair value of the Company''s investment properties have been arrived at using discounted cash flow method. Under discounted cash flow method, cash flow projections based on reliable estimates of cash flow are discounted. The main inputs used are rental growth rate, expected vacancy rates, terminal yields and discount rates which are based on comparable transactions and industry data.
(vi) Investment properties under construction
Capital work-in progress includes investment properties under construction amounting to Rs, 1,650 Million as at March 31, 2017 ( March 31, 2016 - Rs, 180 Million, April 1, 2015 - Rs, 92 Million). The Management is of the view that the fair value of investment properties under construction cannot be realiably measured and hence fair value disclosures pertaining to investment properties under construction have not been provided.
23d Refer Note No.29 for current maturities of long-term debt.
23e During the year ended March 31, 2016, the Company issued 500 secured redeemable non-convertible debentures (A Rating) of Rs, 1,00,00,000 each in three tranches, having tenor upto five years, aggregating Rs, 5,000 Million on a private placement basis. These debenture are secured by exclusive charge by way of mortgage over certain projects of the Company (hereinafter referred to as "mortgaged property"), exclusive charge over receivables from sale of mortgaged property and exclusive charge over debt
service reserve account and escrow accounts of mortgaged property. The debentures are repayable in three tranches, Tranche 1 - Rs, 1,500 Million on July 24, 2018, Tranche 2 - Rs, 3,000 Million on Jul 24, 2020 and Tranche 3 - Rs, 500 Million on April 23, 2018 and carry a coupon rate of 11.35%, 11.40% and 11.35% respectively. The Company has a call option to redeem Tranche 2 debenture at the end of 3rd year from the date of allotment i.e. July 24, 2018. The Company has created debenture redemption reserve as per Section 71 of the Companies Act, 2013, on a pro rata basis amounting to Rs, 541 Million (March 31, 2016 - 221 Million, April 1, 2015 - Nil)
27b Security Details :
Mortgage of certain immovable properties of the company including inventories and undivided share of land belonging to the Company.
Charge over receivables of various projects.
Pledge of certain Mutual Funds held by the Company (as at March 31, 2016 and April 1, 2015)
Lien against fixed deposits.
27c Repayment and other terms :
Repayable within 1 - 54 instalments commencing from August 2014.
Mortgage of certain immovable properties belonging to and Corporate Guarantee from two subsidiary companies, two wholly owned subsidiary companies and three firms in which the Company is a partner.
Personal guarantee of certain directors of the Company.
These secured loans are subject to interest rates ranging from 10.00 % to 13.50 % per annum.
27d Unsecured loans are subject to interest rates ranging from 10% to 15% per annum.
(i) The company avails input credit for service tax and hence no service tax expense is accrued.
38b Notes relating to Corporate Social Responsibility expenses
(a) Gross amount required to be spent by the company during the year - Rs,102 Million (March 31, 2016 - Rs,100 Million)
3. The Company enters into construction contracts with its vendors. The final amounts payable under such contracts will be based on actual measurements and negotiated rates, which are determinable as and when the work under the said contracts are completed.
4. The Company has entered into agreements with land owners under which the Company is required to make payments based on the terms/ milestones stipulated under the respective agreements.
5. The Company has entered into joint development agreements with owners of land for its construction and development. Under the agreements the Company is required to pay certain payments/ deposits to the owners of the land and share in built up area/ revenue from such developments in exchange of undivided share in land as stipulated under the agreements.
6. The Company has made commitment to subscribe to further capital in certain of its subsidiaries, associates and jointly controlled entities based on operations of such entities.
b As a less or
The Company has given Investment properties, plant and machineries and furniture and fixtures owned by the Company under operating lease, which include (a) leases that are renewable on a yearly basis, (b) cancellable at the Company''s option and (c) other long-term leases. The lessee does not have an option to purchase the property at the expiry of the lease term. Further the Company has taken certain properties under lease and has also given such properties on lease under similar terms under which the Company has taken it on lease.
Mar 31, 2016
1 Corporate Information, Basis of preparation of Financial Statements and significant accounting policies
(i) Corporate Information
M/s. Prestige Estates Projects Limited (âthe Company") was incorporated on 4th June 1997 as a Company under the Companies Act, 1956 (âthe 1956 Act''''). The registered office of the Company is in The Falcon House, No.1, Main Guard Cross Road, Bangalore - 560 001, India. The Company is engaged in the business of real estate development.
(ii) Basis for preparation of financial statements and significant accounting policies
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, (âthe Act"). The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year and are as follows:
A. Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
B. Revenue recognition
(i) Revenue from real estate developmental projects under development is recognized based on ''Percentage Completion Method''.
The Percentage Completion Method is applied when the stage of completion of the project reaches a reasonable level of development. For projects that commenced on or after 1st April 2012 or where revenue on a project is being recognized for the first time on or after that date, the threshold for ''reasonable level of development'' is considered to have been met when the criteria specified in the Guidance Note on Accounting for Real Estate Transactions (Revised 2012) issued by the Institute of Chartered Accountants of India are satisfied, i.e., when:
(a) All critical approvals necessary for commencement of the project have been obtained.
(b) The expenditure incurred on construction and development costs is not less than 25 % of the construction and development costs.
(c) At least 25% of the saleable project area is secured by contracts or agreements with buyers.
(d) At least 10 % of the total revenue as per the agreements of sale or any other legally enforceable documents are realized at the reporting date in respect of each of the contracts and it is reasonable to expect that the parties to such contracts will comply with the payment terms as defined in the contracts.
For projects that commenced prior to 31st March 2012 and where sales have occurred prior to that date ''reasonable level of development'' is considered to have occurred when the project costs (excluding land cost) incurred is in the range of 20% to 30% of the total estimated costs of the project (excluding land cost).
For computation of revenue, the stage of completion is arrived at with reference to the entire project costs incurred including land costs, borrowing costs and construction and development costs as compared to the estimated total costs of the project. The percentage completion method is applied on a cumulative basis in each reporting period and the estimates of saleable area and costs are revised periodically by the management. The effect of such changes to estimates is recognized in the period such changes are determined. The changes to estimates also include changes arising out of cancellation of contracts and cases where the property or part thereof is subsequently earmarked for own use or for rental purposes. In such cases any revenues attributable to such contracts previously recognized are reversed and the costs in relation thereto are carried forward and accounted in accordance with the accounting policy for Inventory or Fixed Assets, as applicable.
When it is probable that total project costs will exceed total eligible project revenues, the expected loss is recognized as an expense immediately when such probability is determined.
(ii) Sale of plots and completed units is recognized at the sale consideration when all significant risks and rewards of ownership in the property is transferred to the buyer and are net of adjustments on account of cancellation.
(iii) Facility charges, management charges, rental, hire charges, sub lease and maintenance income are recognized on accrual basis as per the terms and conditions of relevant agreements.
(iv) Recognition of revenue from contractual projects: Revenue from contractual projects undertaken is recognized on the basis of independent certification obtained in terms of the contract.
(v) Interest income is accounted on accrual basis except for interest on delayed payments by the customers, which are accounted on receipt basis.
(vi) Dividend income is recognized when right to receive is established.
(vii) Share of profit / loss from partnership firm is recognized based on the financial information provided and confirmed by the respective firms.
C. Inventories
Stock of units in completed projects and work-in-progress are valued at lower of cost and net realizable value. Cost is aggregate of land cost, materials, contract works, direct expenses, provisions and apportioned borrowing costs and is net of material scrap receipts.
D. Cash flow statement
Cash flow statement is prepared under Accounting Standard 3 ''Cash Flow Statements'' specified under Section 133 of the Act. ''Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature.
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
E. Fixed Assets (Tangible and Intangible assets)
Fixed assets are stated at cost, including expenses incurred to bring the asset to present condition. Cost includes all costs relating to the acquisition and installation of fixed assets including interest on borrowing for the project / fixed asset up to the date the asset is put to use. Any cost incurred relating to settlement of claims regarding titles to the properties is accounted for and capitalized as incurred.
F. Capital work-in-progress
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost comprising direct cost, related incidental expenses and attributable interest.
G. Impairment of Fixed Assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any, if indication of impairment exists. The following intangible assets are tested for impairment each financial year even if there is no indication that the asset is impaired:
(a) an intangible asset that is not yet available for use; and (b) an intangible asset that is amortized over a period exceeding ten years from the date when the asset is available for use.
If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount. The impairment loss is recognized as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets such reversal is not recognized.
Cost of leasehold land is amortized over the period of lease.
In respect of leasehold building, leasehold improvement plant & machinery and leasehold improvement furniture & fixtures, depreciation has been provided over the leasable period.
taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013.
The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
I. Investments
Long-term investments are carried at cost and provision is made to recognize any decline, other than temporary, in the value of such investment. Cost of investments includes acquisition charges such as brokerage, fee and duties.
Current investments are stated at lower of cost and fair value.
J. Foreign Currency transactions
All transactions in foreign currency are recorded on the basis of the exchange rate prevailing as on the date of transaction. The difference, if any, on actual payment / realization is recorded to the statement of profit & loss. Monetary assets and liabilities denominated in foreign currency are restated at rates prevailing at the year-end. The net loss or gain arising out of such conversion is dealt with in the statement of profit and loss.
Gain or loss on forward contracts / options which are not entered into to hedge the foreign currency risk of existing assets or liabilities but entered into to hedge the foreign currency risks of future transaction in respect of which firm commitments are made or which are highly probable forecast transaction, is recognized on settlement of such forward contracts / options and adjusted against the borrowing cost to the extent eligible for capitalization and the balance is charged to statement of profit and loss.
K. Employee Benefits
Employee benefits include provident fund and employee state insurance scheme, gratuity and compensated absences.
(i) Defined Contribution Plan
The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when the services are rendered by the employees.
(ii) Defined Benefit Plan
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected
Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the statement of profit and loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
(iii) Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and
(b) in case of non-accumulating compensated absences, when the absences occur.
(iv) Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date.
L. Borrowing cost
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the statement of profit and loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the statement of profit and loss during extended periods when active development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes a 12 months or more to get ready for its intended use or sale and includes the real estate properties developed by the Company.
M. Operating leases
Leases, where the less or effectively retains substantially all the risks and benefits of ownership of the leased asset, are classified as operating leases. Operating lease receipts / payments are recognized as an income / expense in the statement of profit and loss on a straight-line basis over the lease term.
N. Earnings Per Share
The basic and diluted earnings per share is computed by dividing the net profit / loss attributable to equity share holders for the year by the weighted average number of equity shares outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of earnings per share are adjusted for all the periods presented.
O. Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
P. Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
Q. Operating cycle and basis of classification of assets and liabilities
a) The real estate development projects undertaken by the Company generally run over a period ranging up to 5 years. Operating assets and liabilities relating to such projects are classified as current based on an operating cycle of 5 years. Borrowings in connection with such projects are classified as short-term (i.e current) since they are payable over the term of the respective projects.
b) Assets and liabilities, other than those discussed in paragraph (a) above, are classified as current to the extent they are expected to be realized / are contractually repayable within 12 months from the Balance sheet date and as non-current, in other cases.
R. Share issue expenses
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilization in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account is expensed in the Statement of Profit and Loss.
Mar 31, 2015
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956
Act"), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year and are as follows:
A. Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
B. Revenue recognition
(i) Revenue from real estate developmental projects under development
is recognised based on 'Percentage Completion Method'.
The Percentage Completion Method is applied when the stage of
completion of the project reaches a reasonable level of development.
For projects that commenced on or after 1st April 2012 or where revenue
on a project is being recognised for the first time on or after that
date, the threshold for 'reasonable level of development' is considered
to have been met when the criteria specified in the Guidance Note on
Accounting for Real Estate Transactions (Revised 2012) issued by the
Institute of Chartered Accountants of India are satisfied, i.e., when:
(a) All critical approvals necessary for commencement of the project
have been obtained.
(b) The expenditure incurred on construction and development costs is
not less than 25 % of the construction and development costs.
(c) Atleast 25% of the saleable project area is secured by contracts or
agreements with buyers.
(d) Atleast 10 % of the total revenue as per the agreements of sale or
any other legally enforceable documents are realised at the reporting
date in respect of each of the contracts and it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
For projects that commenced prior to 31st March 2012 and where sales
have occurred prior to that date 'reasonable level of development' is
considered to have occurred when the project costs (excluding land
cost) incurred is in the range of 20% to 30% of the total estimated
costs of the project (excluding land cost).
For computation of revenue, the stage of completion is arrived at with
reference to the entire project costs incurred including land costs,
borrowing costs and construction and development costs as compared to
the estimated total costs of the project. The percentage completion
method is applied on a cumulative basis in each reporting period and
the estimates of saleable area and costs are revised periodically by
the management. The effect of such changes to estimates is recognised
in the period such changes are determined. The changes to estimates
also include changes arising out of cancellation of contracts and cases
where the property or part thereof is subsequently earmarked for own
use or for rental purposes. In such cases any revenues attributable to
such contracts previously recognised are reversed and the costs in
relation thereto are carried forward and accounted in accordance with
the accounting policy for Inventory or Fixed Assets, as applicable.
When it is probable that total project costs will exceed total eligible
project revenues, the expected loss is recognised as an expense
immediately when such probability is determined.
(ii) Sale of plots and completed units is recognised at the sale
consideration when all significant risks and rewards of ownership in
the property is transferred to the buyer and are net of adjustments on
account of cancellation.
(iii) Facility charges, management charges, rental, hire charges, sub
lease and maintenance income are recognised on accrual basis as per the
terms and conditions of relevant agreements.
(iv) Recognition of revenue from contractual projects:
Revenue from contractual projects undertaken is recognised on the basis
of independent certification obtained in terms of the contract.
(v) Interest income is accounted on accrual basis except for interest
on delayed payments by the customers, which are accounted on receipt
basis.
(vi) Dividend income is recognised when right to receive is
established.
(vii) Share of profit / loss from partnership firm is recognised based
on the financial information provided and confirmed by the respective
firms.
C. Inventories
Stock of units in completed projects and work-in-progress are valued at
lower of cost and net realisable value. Cost is aggregate of land cost,
materials, contract works, direct expenses, provisions and apportioned
borrowing costs and is net of material scrap receipts.
D. Cash flow statement
Cash flow statement is prepared under Accounting Standard 3 'Cash Flow
Statements' specified under Section 133 of the Companies Act, 2013,
read with Rule 7 of the Companies (Accounts) Rules, 2014 and the
relevant provisions of the Companies Act, 2013 ("the 2013 Act")/
Companies Act, 1956 ("the 1956 Act"), as applicable. 'Cash flows are
reported using the indirect method, whereby profit / (loss) before
extraordinary items and tax is adjusted for the effects of transactions
of non-cash nature.
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
E. Fixed Assets (Tangible and Intangible assets)
Fixed assets are stated at cost, including expenses incurred to bring
the asset to present condition. Cost includes all costs relating to the
acquisition and installation of fixed assets including interest on
borrowing for the project / fixed asset up to the date the asset is put
to use. Any cost incurred relating to settlement of claims regarding
titles to the properties is accounted for and capitalised as incurred.
F. Capital work-in-progress
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost comprising direct cost, related
incidental expenses and attributable interest.
G. Impairment of Fixed Assets
The carrying values of assets / cash generating units at each balance
sheet date are reviewed for impairment if any indication of impairment
exists. The following intangible assets are tested for impairment each
financial year even if there is no indication that the asset is
impaired: (a) an intangible asset that is not yet available for use;
and (b) an intangible asset that is amortised over a period exceeding
ten years from the date when the asset is available for use.
If the carrying amount of the assets exceed the estimated recoverable
amount, an impairment is recognised for such excess amount. The
impairment loss is recognised as an expense in the Statement of Profit
and Loss, unless the asset is carried at revalued amount, in which case
any impairment loss of the revalued asset is treated as a revaluation
decrease to the extent a revaluation reserve is available for that
asset.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash flows to their present value based on an appropriate
discount factor.
When there is indication that an impairment loss recognised for an
asset (other than a revalued asset) in earlier accounting periods no
longer exists or may have decreased, such reversal of impairment loss
is recognised in the Statement of Profit and Loss, to the extent the
amount was previously charged to the Statement of Profit and Loss. In
case of revalued assets such reversal is not recognised.
H. Depreciation and amortisation
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value. Depreciation
on tangible assets is provided on the written-down value method over
the useful lives of assets estimated by the Management. The Management
estimates the useful lives for the fixed assets are as follows:
Building * 58 Years
Plant and machinery * 20 Years
Office Equipment* 20 Years
Furniture and fixtures * 15 Years
Vehicles* 10 Years
Computers and Accessories* 6 Years
Cost of leasehold land is amortised over the period of lease.
In respect of leasehold building, leasehold improvement plant &
machinery and leasehold improvement furniture & fixtures, depreciation
has been provided over the leasable period.
b. Amortisation on intangible assets are provided under the written
down value method based on useful lives estimated by management as
follows :
Computer Software * 6 Years
* For these class of assets, based on internal assessment and
independent technical evaluation carried out by external valuers,
taking into account the nature of the asset, the estimated usage of the
asset, the operating conditions of the asset, past history of
replacement, the Management believes that the useful lives as given
above best represent the period over which the Management expects to
use these assets. Hence the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II to the
Companies Act, 2013.
The estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
I. Investments
Long-term investments are carried at cost and provision is made to
recognise any decline, other than temporary, in the value of such
investment. Cost of investments includes acquisition charges such as
brokerage, fee and duties.
Current investments are stated at lower of cost and fair value.
J. Foreign Currency transactions
All transactions in foreign currency are recorded on the basis of the
exchange rate prevailing as on the date of transaction. The difference,
if any, on actual payment / realisation is recorded to the statement of
profit & loss. Monetary assets and liabilities denominated in foreign
currency are restated at rates prevailing at the year-end. The net loss
or gain arising out of such conversion is dealt with in the statement
of profit and loss.
Gain or loss on forward contracts / options which are not entered into
to hedge the foreign currency risk of existing assets or liabilities but
entered into to hedge the foreign currency risks of future transaction
in respect of which firm commitments are made or which are highly
probable forecast transaction, is recognised on settlement of such
forward contracts / options and adjusted against the borrowing cost to
the extent eligible for capitalisation and the balance is charged to
statement of profit and loss.
K. Employee Benefits
Employee benefits include provident fund and employee state insurance
scheme, gratuity and compensated absences.
(i) Defined Contribution Plan
The Company's contribution to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made and when the services are rendered by the employees.
(ii) Defined Benefit Plan
For defined benefit plans in the form of gratuity fund, the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the statement
of profit and loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognised in the balance sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
(iii) Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
(iv) Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the balance sheet date.
L. Borrowing cost
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the statement of profit and loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
statement of profit and loss during extended periods when active
development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes a 12 months or
more to get ready for its intended use or sale and includes the real
estate properties developed by the Company.
M. Operating leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased asset, are classified as
operating leases. Operating lease receipts / payments are recognised as
an income / expense in the statement of profit and loss on a
straight-line basis over the lease term.
N. Earning Per Share
The basic and diluted earning per share is computed by dividing the net
profit / loss attributable to equity share holders for the year by the
weighted average number of equity shares outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of
earnings per share are adjusted for all the periods presented.
O. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
P. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Q. Operating cycle and basis of classification of assets and
liabilities
a) The real estate development projects undertaken by the Company
generally run over a period ranging upto 5 years. Operating assets and
liabilities relating to such projects are classified as current based
on an operating cycle of 5 years. Borrowings in connection with such
projects are classified as short-term (i.e current) since they are
payable over the term of the respective projects.
b) Assets and liabilities, other than those discussed in paragraph (a)
above, are classified as current to the extent they are expected to be
realised / are contractually repayable within 12 months from the
Balance sheet date and as non-current, in other cases.
Mar 31, 2014
(i). Corporate Information
M/s. Prestige Estates Projects Limited ("the Company") was incorporated
on June 4, 1997 as a company under the Companies Act, 1956 (the
"Act''''). The registered office of the Company is in The Falcon House,
No.1, Main Guard Cross Road, Bangalore - 560 001, India. The Company is
engaged in the business of real estate development.
(ii). Basis for preparation of financial statements and significant
accounting policies
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. The
financial statements have been prepared on accrual basis under the
historical cost convention. The significant accounting policies adopted
in the preparation of the financial statements are consistent with
those followed in the previous year and are as follows:
A. USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
b. REVENUE RECOGNITION
(i) Revenue from real estate developmental projects under development
is recognised based on ''Percentage Completion Method''. The Percentage
Completion Method is applied when the stage of completion of the
project reaches a reasonable level of development. For projects that
commenced on or after April 1, 2012 or where revenue on a project is
being recognised for the first time on or after that date, the
threshold for ''reasonable level of development'' is considered to have
been met when the criteria specified in the Guidance Note on Accounting
for Real Estate Transactions (Revised 2012) issued by the Institute of
Chartered Accountants of India are satisfied, i.e., when:
(a) All critical approvals necessary for commencement of the project
have been obtained.
(b) The expenditure incurred on construction and development costs is
not less than 25 % of the construction and development costs.
(c) Atleast 25% of the saleable project area is secured by contracts or
agreements with buyers.
(d) Atleast 10 % of the total revenue as per the agreements of sale or
any other legally enforceable documents are realised at the reporting
date in respect of each of the contracts and it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
For projects that commenced prior to March 31, 2012 and where sales
have occurred prior to that date ''reasonable level of development'' is
considered to have occurred when the project costs (excluding land
cost) incurred is in the range of 20% to 30% of the total estimated
costs of the project (excluding land cost). For computation of
revenue, the stage of completion is arrived at with reference to the
entire project costs incurred including land costs, borrowing costs and
construction and development costs as compared to the estimated total
costs of the project. The percentage completion method is applied on a
cumulative basis in each reporting period and the estimates of saleable
area and costs are revised periodically by the management. The effect
of such changes to estimates is recognised in the period such changes
are determined. The changes to estimates also include changes arising
out of cancellation of contracts and cases where the property or part
thereof is subsequently earmarked for own use or for rental purposes.
In such cases any revenues attributable to such contracts previously
recognised are reversed and the costs in relation thereto are carried
forward and accounted in accordance with the accounting policy for
Inventory or Fixed Assets, as applicable.
When it is probable that total project costs will exceed total eligible
project revenues, the expected loss is recognised as an expense
immediately when such probability is determined.
(ii) Sale of plots and completed units is recognised at the sale
consideration when all significant risks and rewards of ownership in
the property is transferred to the buyer and are net of adjustments on
account of cancellation.
(iii) Facility charges, management charges, rental, hire charges, sub
lease and maintenance income are recognised on accrual basis as per the
terms and conditions of relevant agreements.
(iv) Recognition of revenue from contractual projects:
Revenue from contractual projects undertaken is recognised on the basis
of independent certification obtained in terms of the contract.
(v) Interest income is accounted on accrual basis except for interest
on delayed payments by the customers, which are accounted on receipt
basis.
(vi) Dividend income is recognised when right to receive is
established.
(vii) Share of profit / loss from partnership firm is recognised based
on the financial information provided and confirmed by the respective
firms.
C. INVENTORIES
Stock of units in completed projects and work-in-progress are valued at
lower of cost or net realisable value. Cost is aggregate of land cost,
materials, contract works, direct expenses, provisions and apportioned
borrowing costs and is net of material scrap receipts.
D. CASH FLOW STATEMENT
Cash flow statement is prepared under Accounting Standard 3 ''Cash Flow
Statements'' notified under Section 211 (3C) of the Companies Act, 1956
("the 1956 Act") (which continue to be applicable in respect of Section
133 of the Companies Act, 2013 ("the 2013 Act") in terms of General
Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate
Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as
applicable. Cash flows are reported using the indirect method, whereby
profit / (loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cash nature.
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
E. FIXED ASSETS (TANGIBLE & INTANGIBLE ASSETS)
Fixed assets are stated at cost, including expenses incurred to bring
the asset to present condition. Cost includes all costs relating to the
acquisition and installation of fixed assets including interest on
borrowing for the project / fixed asset up to the date the asset is put
to use. Any cost incurred relating to settlement of claims regarding
titles to the properties is accounted for and capitalized as incurred.
F. CAPITAL WORK-IN-PROGRESS
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost comprising direct cost, related
incidental expenses and attributable interest.
G. IMPAIRMENT OF FIXED ASSETS
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset''s net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pretax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the statement of profit and loss.
Reversal of impairment losses recognised in prior years, if any, is
recorded when there is an indication that the impairment losses
recognised for the asset no longer exist or have decreased. However,
the increase in carrying amount of an asset due to reversal of an
impairment loss is recognised to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation)
had no impairment loss been recognised for the asset in prior years.
H. DEPRECIATION AND AMORTISATION
a. Depreciation on Tangible Fixed Assets is provided on the written
down value method in accordance with the rates specified in Schedule
xIV to the Companies Act, 1956 except in respect of the following:
Cost of leasehold land is amortised over the period of lease. In
respect of leasehold building, leasehold improvement plant & machinery
and leasehold improvement furniture & fixtures, depreciation has been
provided over the leasable period. Asset individually costing less
than Rs.5,000 are depreciated 100% in the year of purchase.
b. Amortisation on intangible assets are provided under the written
down value method based on useful lives estimated by management as
follows :
Computer software - 40%
i. investments
Long-term investments are carried at cost and provision is made to
recognise any decline, other than temporary, in the value of such
investment. Cost of investments includes acquisition charges such as
brokerage, fee and duties.
Current investments are stated at lower of cost and fair value.
J. FOREIGN CURRENCY TRANSACTIONS
All transactions in foreign currency are recorded on the basis of the
exchange rate prevailing as on the date of transaction. The difference,
if any, on actual payment / realisation is recorded to the statement of
profit & loss. Monetary assets and liabilities denominated in foreign
currency are restated at rates prevailing at the year-end. The net loss
or gain arising out of such conversion is dealt with in the statement
of profit and loss.
Gain or loss on forward contracts / options which are not entered into
to hedge the foreign currency risk of existing assets or liabilities
but entered into to hedge the foreign currency risks of future
transaction in respect of which firm commitments are made or which are
highly probable forecast transaction, is recognised on settlement of
such forward contracts / options and adjusted against the borrowing
cost to the extent eligible for capitalisation and the balance is
charged to statement of profit and loss.
K. EMPLOYEE BENEFITS
Employee benefits include provident fund and employee state insurance
scheme, gratuity and compensated absences.
(I) DEFINED CONTRIBUTION PLAN
The Company''s contribution to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made and when the services are rendered by the employees.
(ii) Defined Benefit Plan
For defined benefit plans in the form of gratuity fund, the cost of
providing benefits is determined using the Projected unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the statement
of profit and loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognised in the balance sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
(iii) Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
(iv) Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the balance sheet date.
l. Borrowing cost
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the statement of profit and loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
statement of profit and loss during extended periods when active
development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes a 12 months or
more to get ready for its intended use or sale and includes the real
estate properties developed by the Company.
M. Operating leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased assets, are classified as
operating leases. Operating lease receipts / payments are recognised as
an income / expense in the statement of profit and loss on a
straight-line basis over the lease term.
n. Earning Per share
The basic and diluted earning per share is computed by dividing the net
profit / loss attributable to equity share holders for the year by the
weighted average number of equity shares outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of
earnings per share are adjusted for all the periods presented.
o. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
P. Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Q. Operating cycle and basis of classification of assets and
liabilities
a) The real estate development projects undertaken by the Company
generally run over a period ranging upto 5 years. Operating assets and
liabilities relating to such projects are classified as current based
on an operating cycle of 5 years. Borrowings in connection with such
projects are classified as short-term (i.e current) since they are
payable over the term of the respective projects.
b) Assets and liabilities, other than those discussed in paragraph (a)
above, are classified as current to the extent they are expected to be
realized / are contractually repayable within 12 months from the
Balance sheet date and as non-current, in other cases.
2 Share Capital
b The Company has only one class of equity shares with voting rights
having par value of Rs. 10 each. The rights, preferences and
restrictions attached to such equity shares is in accordance with the
terms of issue of equity shares under the Companies Act, 1956, the
Articles of Association of the Company and relevant provisions of the
listing agreement.
c On September 23, 2009 the company issued 20 bonus shares for every
share outstanding then. Accordingly, 2,500 Lakhs equity shares of Rs.
10 each fully paid for each share held by the shareholders were issued
by capitalisation of balance in General Reserve and Surplus in
statement of profit & loss during the year ended March 31, 2010.
d During the year ended March 31, 2013, the Company successfully
completed an Institutional Private Placement under Chapter VIII-A of
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended, which opened on January
23, 2013 and closed on the same date. Pursuant to this 21,926,230
equity shares of Rs. 10 each at a premium of Rs. 156 per share were
allotted on January 29, 2013. Issue expenses amounting to Rs. 953 Lakhs
has been charged to the securities premium account.
4b Security Details :
Mortgage of certain immovable properties of the company.
Charge over the book debts, operating cash flows, revenues and
receivables of the projects.
Hypothecation of equipment & vehicles.
Assignment of rent receivables from various properties.
4c Repayment and other terms :
Repayable within 32 - 108 installments commencing from January 2008.
Personal guarantee of certain directors of the company and their
relatives. These loans are subject to interest rates ranging from
12.85% to 13.75% per annum. 4d Refer Note No. 10 for current
maturities of long-term debt.
5b Security Details :
Mortgage of certain immovable properties of the company including
inventories and undivided share of land belonging to the company.
Charge over receivables of various projects.
Lien against fixed deposits.
6a Repayment and other terms :
Repayable within 1 - 36 installments commencing from September 2010.
Mortgage of certain immovable properties belonging to and Corporate
Guarantee from two subsidiary companies, a Company under the same
management, 3 wholly owned subsidiary companies and a firm in which the
Company is a partner. Personal guarantee of certain directors of the
company.
Pledge of Mutual Funds held by the Company and certain Directors of the
Company. These secured loans are subject to interest rates ranging
from 9.95 % to 15.10 % per annum. 8d unsecured loans are subject to
interest rates ranging from 13% to 15% per annum.
7a Aggregate amount of quoted investments Rs. Nil (Previous Year Rs.
Nil).
7b Aggregate amount of unquoted Investments net of provision for other
than temporary diminution in the value of investments Rs. 101,426 Lakhs
(Previous Year Rs. 98,914 Lakhs). 13i Aggregate value of provision for
diminution in value of Investments Rs. 53 Lakhs (Previous Year Rs. 53
Lakhs).
7c Aggregate amount of quoted investments Rs 4 Lakhs (Previous Year
Rs. 4 Lakhs) and market value there of is Rs. 31 Lakhs (Previous Year
Rs. 23 Lakhs).
7d Aggregate amount of unquoted Investments Rs 18,797 Lakhs (Previous
Year Rs. 8,536 Lakhs).
8a Auditors'' Remuneration
(i) The company avails input credit for service tax and hence no
service tax expense is accrued.
(ii) The above fees does not include Rs. Nil (Previous Year Rs. 60
Lakhs) towards services rendered for the Institutional Placement
Programme (IPP) which has been considered as share issue expense and
set off against the balance available in securities premium account.
8b The donation for the year in Note 28 includes donation made to
Bharatiya Janata Party Rs. Nil (Previous Year Rs. 1.50 Lakhs).
Mar 31, 2013
A. Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
B. Revenue recognition
(i) Recognition of revenue from contractual projects:
Revenue from contractual projects undertaken is recognized on the basis
of independent certification obtained in terms of the contract.
(ii) Revenue from real estate developmental projects under development
is recognized based on Percentage Completion Method . The Percentage
Completion Method is applied when the stage of completion of the
project reaches a reasonable level of development. For projects that
commenced on or after April 1, 2012 or where revenue on a project is
being recognized for the first time on or after that date, the
threshold for reasonable level of development is considered to have
been met when the criteria specified in the Guidance Note on Accounting
for Real Estate Transactions (Revised 2012) issued by the Institute of
Chartered Accountants of India are satisfied, i.e., when:
(a) All critical approvals necessary for commencement of the project
have been obtained.
(b) The expenditure incurred on construction and development costs is
not less than 25 % of the construction and development costs.
(c) Atleast 25% of the saleable project area is secured by contracts or
agreements with buyers.
(d) Atleast 10 % of the total revenue as per the agreements of sale or
any other legally enforceable documents are realised at the reporting
date in respect of each of the contracts and it is reasonable to expect
that the parties to such contracts will comply with the payment terms
as defined in the contracts.
For projects that commenced prior to March 31, 2012 and where sales
have occurred prior to that date reasonable level of development is
considered to have occurred when the project costs (excluding land
cost) incurred is in the range of 20% to 30% of the total estimated
costs of the project (excluding land cost).
For computation of revenue, the stage of completion is arrived at with
reference to the entire project costs incurred including land costs,
borrowing costs and construction and development costs as compared to
the estimated total costs of the project. The percentage completion
method is applied on a cumulative basis in each reporting period and
the estimates of saleable area and costs are revised periodically by
the management. The effect of such changes to estimates is recognized
in the period such changes are determined. The changes to estimates
also include changes arising out of cancellation of contracts and cases
where the property or part thereof is subsequently earmarked for own
use or for rental purposes. In such cases any revenues attributable to
such contracts previously recognised are reversed and the costs in
relation thereto are carried forward and accounted in accordance with
the accounting policy for Inventory or Fixed Assets, as applicable.
When it is probable that total project costs will exceed total eligible
project revenues, the expected loss is recognised as an expense
immediately when such probability is determined.
(iii) Sale of plots and completed units is recognized at the sale
consideration when all significant risks and rewards of ownership in
the property is transferred to the buyer and are net of adjustments on
account of cancellation.
(iv) Facility charges, management charges, rental, hire charges, sub
lease and maintenance income are recognized on accrual basis as per the
terms and conditions of relevant agreements.
(v) Interest income is accounted on accrual basis except for interest
on delayed payments by the customers, which are accounted on receipt
basis.
(vi) Dividend income is recognized when right to receive is
established.
(vii) Share of profit / loss from partnership firm is recognized based
on the financial information provided and confirmed by the respective
firms.
C. Inventories
Stock of units in completed projects and work-in-progress are valued at
lower of cost or net realizable value. Cost is aggregate of land cost,
materials, contract works, direct expenses, provisions and apportioned
borrowing costs and is net of material scrap receipts.
D. Cash flow statement
Cash flow statement is prepared under the Indirect Method Prescribed
under Accounting Standard 3 Cash Flow Statements prescribed under the
Companies (Accounting Standard) Rules, 2006.
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
E. Fixed Assets
Fixed assets are stated at cost, including expenses incurred to bring
the asset to present condition. Cost includes all costs relating to the
acquisition and installation of fixed assets including interest on
borrowing for the project / fixed asset up to the date the asset is put
to use. Any cost incurred relating to settlement of claims regarding
titles to the properties is accounted for and capitalized as incurred.
F. Capital work-in-progress
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost comprising direct cost, related
incidental expenses and attributable interest.
G. Impairment of Fixed Assets
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an assets net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the statement of profit and loss.
Reversal of impairment losses recognised in prior years, if any, is
recorded when there is an indication that the impairment losses
recognised for the asset no longer exist or have decreased. However,
the increase in carrying amount of an asset due to reversal of an
impairment loss is recognised to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation)
had no impairment loss been recognized for the asset in prior years.
H. Depreciation and amortization
a. Depreciation on Tangible Fixed Assets is provided on the written
down value method in accordance with the rates specified in Schedule
XIV to the Companies Act, 1956 except in respect of the following:
Cost of leasehold land is amortized over the period of lease.
In respect of leasehold building, leasehold improvement plant &
machinery and leasehold improvement furniture & fixtures, depreciation
has been provided over the leasable period.
Asset individually costing less than Rs.5,000 are depreciated 100% in
the year of purchase.
b. Amortisation on intangible assets are provided under the written
down value method based on useful lifes estimated by management as
follows :
Computer software - 40%
I. Investments
Long-term investments are carried at cost and provision is made to
recognize any decline, other than temporary, in the value of such
investment. Cost of investments includes acquisition charges such as
brokerage, fee and duties.
Current investments are stated at lower of cost and net realizable
value.
J. Foreign Currency transactions
All transactions in foreign currency are recorded on the basis of the
exchange rate prevailing as on the date of transaction. The difference,
if any, on actual payment / realization is recorded to the statement of
profit & loss. Monetary assets and liabilities denominated in foreign
currency are restated at rates prevailing at the year-end. The net loss
or gain arising out of such conversion is dealt with in the statement
of profit and loss.
K. Employee Benefits
Employee benefits include provident fund and employee state insurance
scheme, gratuity and compensated absences.
(i) Defined Contribution Plan
The Company s contribution to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made.
(ii) Defined Benefit Plan
For defined benefit plans in the form of gratuity fund, the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the statement
of profit and loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognised in the balance sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
(iii) Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
The cost of short-term compensated absences is accounted as under :
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
(iv) Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the balance sheet date.
L. Borrowing cost
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the statement of profit and loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
statement of profit and loss during extended periods when active
development activity on the qualifying assets is interrupted.
A qualifying asset is an asset that necessarily takes a 12 months or
more to get ready for its intended use or sale and includes the real
estate properties developed by the Company.
M. Operating leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased term, are classified as
operating leases. Operating lease receipts / payments are recognized as
an income / expense in the statement of profit and loss on a
straight-line basis over the lease term.
N. Earning Per Share
The basic and diluted earning per share is computed by dividing the net
profit / loss attributable to equity share holders for the year by the
weighted average number of equity shares outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of
earnings per share are adjusted for all the periods presented.
O. Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabosrbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses, deferred
tax assets are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the statement of profit
and loss.
P. Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Q. Operating cycle and basis of classification of assets and
liabilities
a) The real estate development projects undertaken by the Company
generally run over a period ranging upto 5 years. Operating assets and
liabilities relating to such projects are classified as current based
on an operating cycle of 5 years. Borrowings in connection with such
projects are classified as short-term (i.e current) since they are
payable over the term of the respective projects.
b) Assets and liabilities, other than those discussed in paragraph (a)
above, are classified as current to the extent they are expected to be
realized / are contractually repayable within 12 months from the
Balance sheet date and as non-current, in other cases.
Mar 31, 2012
1. Basis for preparation of financial statements
"The financial statements have been prepared under the historical
cost convention in accordance with Indian Generally Accepted Accounting
Principles (GAAP) on the accrual basis and comply with applicable
mandatory Accounting Standard prescribed under the Companies
(Accounting Standard) Rules, 2006. The accounting policies have been
consistently applied.
2. Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
3. Revenue recognition
(i) Recognition of revenue from contractual projects:
Revenue from contractual projects undertaken is recognized on the basis
of independent certification obtained in terms of the contract.
(ii) Recognition of revenue from real estate developmental projects
related to real estate vested with the company is recognized based on
'Percentage Completion Method'.
The percentage completion method is applied on a cumulative basis in
each accounting period to the current estimates of contract revenue and
contract costs, when the stage of completion of each project reaches a
significant level, which is estimated in the range of 20% to 30% of the
total estimated costs of the project depending on the size of the
project. The estimates of saleable area and costs are revised
periodically by the management. The effect of such changes to estimates
is recognized in the period such changes are determined.
In case of joint development projects revenue recognition is restricted
to the company's percentage share of the underlying real estate
development projects.
(iii) Sale of plots / apartments is recognized at the sale
consideration after adjustments on account of cancellation.
(iv) Facility charges, management charges, rental and maintenance
income are recognized on accrual basis.
(v) Interest income is accounted on accrual basis except the interest
on delayed payments by the customers, which are accounted on receipt
basis.
(vi) Dividend income is recognized on basis of right to receive is
established.
(vii) Share of profit / loss from partnership firm is recognized based
on the financial information provided and confirmed by the respective
firms.
4. Inventories
Stock of units in completed projects and work-in-progress are valued at
lower of cost or net realizable value. Cost is aggregate of land cost,
materials, contract works, direct expenses, provisions and apportioned
borrowing costs and net of material scrap receipts.
5. Cash flow statement
Cash flow statement is prepared under the 'Indirect Method'
Prescribed under Accounting Standard 3 'Cash Flow Statements'
prescribed under the Companies (Accounting Standard) Rules, 2006.
6. Fixed Assets
Fixed assets are stated at cost, including expenses incurred to bring
the asset to present condition. Cost includes all costs relating to the
acquisition and installation of fixed assets including interest on
borrowing for the project / fixed asset up to the date the asset is put
to use. Any cost incurred relating to settlement of claims regarding
titles to the properties is accounted for and capitalized as incurred,
wherever the asset is held. Assets identified as impaired are carried
at net realizable value.
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset's net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the profit and loss account.
Reversal of impairment losses recognised in prior years, if any, is
recorded when there is an indication that the impairment losses
recognised for the asset no longer exist or have decreased. However,
the increase in carrying amount of an asset due to reversal of an
impairment loss is recognised to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation)
had no impairment loss been recognized for the asset in prior years.
7. Depreciation and amortization
a. Depreciation on Tangible Fixed Assets is provided on the written
down value method in accordance with the rates specified in Schedule
XIV to the Companies Act, 1956 except in respect of the following:
Cost of leasehold land is amortized over the period of lease.
In respect of leasehold building, Leasehold improvement plant &
machinery and Leasehold improvement furniture & fixtures, depreciation
has been provided over the unexpired portion of the primary lease
period.
In case of assets purchased during the year, individually costing less
than Rs.5,000 have been depreciated 100% in the year of purchase.
b. Depreciation on Intangible Fixed assets is provided on the written
down value method at the rates estimated by the management to be the
estimated lifes of the assets.
8. Investments
Long term investments are carried at cost, and provision is made to
recognize any decline, other than temporary, in the value of such
investment.
Current investments are stated at lower of cost or net realizable
value.
9. Foreign Currency transactions
All transactions in foreign currency are recorded on the basis of the
exchange rate prevailing as on the date of transaction. The
difference, if any, on actual payment / realization is recorded to the
profit & loss account. Monetary assets and liabilities denominated in
foreign currency are restated at rates prevailing at the year-end. The
net loss or gain arising out of such conversion is dealt with in the
profit & loss account.
Gain or loss on forward contracts / options which are not entered into
to hedge the foreign currency risk of existing assets or liabilities
but entered into to hedge the foreign currency risks of future
transaction in respect of which firm commitments are made or which are
highly probable forecast transaction, is recognized on settlement of
such forward contracts / options and adjusted against the borrowing
cost to the extent eligible for capitalization and the balance is
charged to Profit and loss account.
10. Employee Benefits
(i) Short term employee benefits including salaries, social security
contributions, short term compensated absences (such as paid annual
leave) where the absences are expected to occur within twelve months
after the end of the period in which the employees render the related
employee service, profit sharing and bonuses payable within twelve
months after the end of the period in which the employees render the
related services and non monetary benefits (such as medical care) for
current employees are estimated and measured on an undiscounted basis.
(ii) Defined Contribution Plan:
Company's contributions paid /payable during the year to Provident
Fund are recognized in the Profit and Loss Account
(iii) Defined Benefit Plan:
Liabilities for gratuity funded in terms of a scheme administered by
Life Insurance Corporation of India are determined by actuarial
valuation made by an independent actuary using projected unit credit
method, as at each balance sheet date. The benefit obligation
recognised in the balance sheet represents the present value of the
defined benefit obligation as adjusted for unrecognized past service
cost. Provision for liabilities pending remittance to the fund is
carried in the balance sheet. In case the fund balance is in excess of
benefit obligation, the asset recognised is limited to past service
cost, plus the present value of available refunds and reductions in
future contributions to the scheme.
(iv) Actuarial gains and losses are recognized immediately in the
statement of Profit and loss account as income or expense. Obligation
is measured at the present value of estimated future cash flows using a
discount rate that is determined by reference to market yields at the
Balance sheet date on Government bonds where the currency and terms of
the Government bonds are consistent with the currency and estimated
terms of the defined benefit obligation.
Past service cost is recognised immediately in the profit and loss
account.
(v) The liability for leave salary is accrued based on estimated cost
of compensated absences determined by actuarial valuation as on the
date of balance sheet.
11. Borrowing cost
Borrowing cost attributable to the acquisition or construction of a
qualifying asset is capitalized / inventoried as part of the cost of
that asset. Other borrowing costs are recognized as an expense in the
period in which they are incurred. Incomes earned on temporary
deployment of funds have been credited to the borrowing costs.
12. Operating leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased term, are classified as
operating leases. Operating lease receipts / payments are recognized as
an income / expense in the profit and loss account on a straight-line
basis over the lease term.
13. Earning Per Share
The basic and diluted earning per share is computed by dividing the net
profit / loss attributable to equity share holders for the year by the
weighted average number of equity shares outstanding during the year.
The Company does not have any potentially dilutive equity shares
outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of
earnings per share are adjusted for all the periods presented. If these
changes occur after the balance sheet date but before the date on which
the financial statements are approved by the board of directors, the
per share calculations for those financial statements and any prior
period financial statements presented are based on the new number of
shares.
14. Taxes on income
Income tax comprises the current tax provision under the tax payable
method, the net change in the deferred tax asset or liability in the
year and Fringe Benefit Tax.
Deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the carrying values of
the assets and liabilities and their respective tax basis. Deferred tax
assets are recognized subject to managements' judgment that
realization is virtually certain. Deferred Tax assets and liabilities
are measured using enacted tax rates to apply to taxable income in the
years in which the temporary differences are expected to be received or
settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the income statement in the period of
enactment of the change.
Advance tax and provision for tax are presented in the financial
statements at gross amounts and are set off on completion of the
assessment.
15. Provisions and contingent liabilities
A provision is recognized when the Company has present obligations as a
result of past events; it is probable that an outflow of resources will
be required to settle the obligations, in respect of which reliable
estimates can be made. Provisions are not discounted to its present
value and are determined based on the best estimate required to settle
the obligations at the balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect a current best estimate.
All known liabilities wherever material are provided for. Liabilities
which are material and whose future amount cannot be ascertained with
reasonable certainty are treated as contingent liabilities and
disclosed by way of notes to the accounts.
Mar 31, 2011
A) Basis for preparation of financial statements
The financial statements have been prepared under the historical cost
convention in accordance with Indian Generally Accepted Accounting
Principles (GAAP) on the accrual basis and comply with applicable
mandatory Accounting Standard prescribed under the Companies
(Accounting Standard) Rules, 2006. The accounting policies have been
consistently applied.
All the amounts are stated in Indian Rupees, except as otherwise
specified.
b) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires that the management makes estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of financial statements and
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
c) Revenue recognition
(i) Recognition of revenue from contractual projects:
Revenue from contractual projects undertaken is recognized on the basis
of independent certification obtained in terms of the contract.
(ii) Recognition of revenue from real estate developmental projects
related to real estate vested with the Company is recognized based on
Percentage Completion Method.
The percentage completion method is applied on a cumulative basis in
each accounting period to the current estimates of contract revenue and
contract costs, when the stage of completion of each project reaches a
significant level, which is estimated in the range of 20% to 30% of the
total estimated costs of the project depending on the size of the
projects. The estimates of saleable area and costs are revised
periodically by the management. The effect of such changes to estimates
is recognized in the period such changes are determined.
In case of joint development projects revenue recognition is restricted
to the Companys percentage share of the underlying real estate
development projects.
(iii) Sale of plots/apartments is recognized at the sale consideration
after adjustments on account of cancellation.
(iv) Facility charges, management charges, rental and maintenance
income are recognized on accrual basis.
(v) Interest income is accounted on accrual basis except the interest
on delayed payments by the customers, which are accounted on receipt
basis.
(vi) Dividend income is recognized on basis of right to receive is
established.
(vii) Share of profit/loss from partnership firms is recognized based
on the financial information provided and confirmed by the respective
firms.
d) Inventories
Stock of units in completed projects and work-in-progress are valued at
lower of cost or net realizable value. Cost is aggregate of land cost,
materials, contract works, direct expenses, provisions and apportioned
borrowing costs and net of material scrap receipts.
e) Cash flow statement
Cash flow statement is prepared under the Indirect Method Prescribed
under Accounting Standard 3 Cash Flow Statements prescribed under the
Companies (Accounting Standard) Rules, 2006.
f) Fixed assets
(i) Fixed assets are stated at cost, including expenses incurred to
bring the asset to present condition. Cost includes all costs relating
to the acquisition and installation of fixed assets including interest
on borrowing for the project/ fixed asset up to the date the asset is
put to use. Any cost incurred relating to settlement of claims
regarding tides to the properties is accounted for and capitali2ed as
incurred, wherever the asset is held. Assets identified as impaired are
carried at net reactable value.
(ii) At each balance sheet date, the Company assesses whether there is
any indication that an asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an assets net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the asset and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. If such recoverable amount of the asset or the
recoverable amount of the cash generating unit to which the asset
belongs is less than its carrying amount, the carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the Profit and Loss Account.
Reversal of impairment losses recognised in prior years, if any, is
recorded when there is an indication that the impairment losses
recognized for the asset no longer exist or have decreased. However,
the increase in carrying amount of an asset due to reversal of an
impairment loss is recognized to the extent it does not exceed the
carrying amount that would have been determined (net of depreciation)
had no impairment loss been recognized for the asset in prior years.
g) Depreciation and amortization
Depreciation on fixed assets is provided on the written down value
method in accordance with the rates specified in Schedule XIV to the
Companies Act, 1956 except in respect of the following
(i) Cost of leasehold land is amortized over the period of lease.
(ii) In respect of Leasehold building, Leasehold improvement plant &
machinery and Leasehold improvement furniture & fixtures, depreciation
has been provided over the unexpired portion of the primary lease
period.
In case of assets purchased during the year, individually costing less
than Rs 5,000 have been depreciated 100% in the year of purchase.
h) Investments
Long term investments are carried at cost, and provision is made to
recognize any decline, other than temporary, in the value of such
investments.
Current investments are stated at lower of cost and net realizable
value.
i) Foreign currency transactions
All transactions in foreign currency are recorded on the basis of the
exchange rate prevailing as on the date of transaction. The difference,
if any, on actual payment/realization is recorded to the Profit & Loss
Account. Monetary assets and liabilities denominated in foreign
currency are restated at rates prevailing at the year-end. The net loss
or gain arising out of such conversion is dealt with in the Profit &
Loss Account.
Gain or loss on forward contracts/options which are not entered into to
hedge the foreign currency risk of existing assets or liabilities but
entered into to hedge the foreign currency risks of future transaction
in respect of which firm commitments are made or which are highly
probable forecast transaction, is recognized on settlement of such
forward contracts/options and adjusted against the borrowing cost to
the extent eligible for capitalization and the balance is charged to
Profit and Loss Account.
j) Employee Benefits
(f) Short term employee benefits including salaries, social security
contributions, short term compensated absences (such as paid annual
leave) where the absences are expected to occur within twelve months
after the end of the period in which the employees render the related
employee service, profit sharing and bonuses payable within twelve
months after the end of the period in which the employees render the
related services and non monetary benefits (such as medical care) for
current employees are estimated and measured on an undiscounted basis.
(ii) Defined Contribution Plan:
Companys contributions paid/payable during the year to Provident Fund
are recognized in the Profit and Loss Account.
(iii) Defined Benefit Plan:
Liabilities for gratuity funded in terms of a scheme administered by
Life Insurance Corporation of India are determined by actuarial
valuation made by an independent actuary using projected unit credit
method, as at each Balance Sheet date. The benefit obligation
recognized in the Balance Sheet represents the present value of the
defined benefit obligation as adjusted for unrecognized past service
cost. Provision for liabilities pending remittance to the fund is
carried in the Balance Sheet. In case the fund balance is in excess of
benefit obligation, the asset recognized is limited to past service
cost, plus the present value of available refunds and reductions in
future contributions to the scheme.
(iv) Actuarial gains and losses are recognized immediately in the
statement of Profit and Loss Account as income or expense. Obligation
is measured at the present value of estimated future cash flows using a
discount rate that is determined by reference to market yields at the
Balance Sheet date on Government bonds where the currency and terms of
the Government bonds are consistent with the currency and estimated
terms of the defined benefit obligation.
Past service cost is recognized immediately in the Profit and Loss
Account.
(v) The liability for leave salary is accrued based on estimated cost
of compensated absences determined by actuarial valuation as on the
date of Balance Sheet.
k) Borrowing cost
Borrowing cost attributable to the acquisition or construction of a
qualifying asset is capitali2ed/inventoried as part of the cost of that
asset. Other borrowing costs are recognized as an expense in the period
in which they are incurred. Incomes earned on temporary deployment of
funds have been credited to the borrowing costs.
i) Operating leases
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased term, are classfied as
operating leases. Operating lease receipts/payments are recognized as
an income/expense in the Profit and Loss Account on a straight-line
basis over the lease term.
m) Earning Per Share
The basic and diluted earning per share is computed by dividing the net
profit/loss attributable to equity share-holders for the year by the
weighted average number of equity shares outstanding during the year.
The Company does not have any potentially dilutive equity shares
outstanding during the year.
In case of any Bonus issue of shares is made, the calculations of
earnings per share are adjusted for all the periods presented. If these
changes occur after the Balance Sheet date but before the date on which
the financial statements are approved by the board of directors, the
per share calculations for those financial statements and any prior
period financial statements presented are based on the new number of
shares.
n) Taxes on income
Income tax comprises the current tax provision under the tax payable
method, the net change in the deferred tax asset or liability in the
year and Fringe Benefit Tax.
Deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the carrying values of
the assets and liabilities and their respective tax basis. Deferred Tax
assets and liabilities are measured using tax rates and tax laws that
have been enacted or substantively enacted by the balance sheet date.
In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognised only to the extent that there is
virtual certainity that sufficient furture taxable income will be
available to realise such assets. In other situations, deferred tax
assets are recognised only to the extent that there is reasonable
certainity that sufficient furture taxable income will be available to
realise these assets. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in the income statement in the
period of enactment of the change..
o) Provisions and contingent liabilities
A provision is recognized when the Company has present obligation as a
result of past events; it is probable that an outflow of resources will
be required to settle the obligations, in respect of which reliable
estimates can be made. Provisions are not discounted to its present
value and are determined based on the best estimate required to settle
the obligations at the Balance Sheet date. These are reviewed at each
Balance Sheet date and adjusted to reflect a current best estimate.
All known liabilities wherever material are provided for. Liabilities
which are material and whose future amount cannot be ascertained with
reasonable certainty are treated as contingent liabilities and
disclosed by way of notes to the accounts.