Accounting Policies of Sunteck Realty Ltd. Company
Mar 31, 2023
1. CORPORATE INFORMATION
Sunteck Realty Limited ("the Companyâ) [CIN: L32100MH1981PLC025346] is primarily engaged in the business of real estate construction/ real estate development and incidental services.
The Company is a limited company, domiciled in India. The Company was incorporated on 1st October, 1981 and has its registered office at 5th Floor, Sunteck Centre Subhash Road, Vile Parle (East) Mumbai. Maharashtra - 400057.
The Company''s shares are listed on two recognised stock exchanges in India - the Bombay Stock Exchange and the National Stock Exchange.
These standalone financial statements of the Company for the year ended 31st March, 2023 were approved by the Board of Directors on 26th May, 2023.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
The Company has prepared its standalone financial statements to comply in all material aspects with the provisions of the Companies Act, 2013 ("the Actâ) and rules framed thereunder. In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Act and the guidelines issued by Securities and Exchange Board of India, to the extent applicable.
The standalone financial statements have been prepared on a historical cost convention and accrual basis, except for the certain financial assets and liabilities that are measured at fair value.
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.
The Company''s normal operating cycle in respect of operations relating to under construction real estate projects may vary from project to project depending upon the size and duration (from launch till occupation certificate period) of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and other business are based on 12 months period. Assets and liabilities have been classified into current and non-current based on the operating cycle of respective businesses.
These standalone financial statements are presented in Indian rupee, which is the functional currency of the Company. All financial information is presented in Indian rupees.
b) Critical estimates and judgements
The preparation of the standalone financial statements, in conformity with the recognition and measurement principal of Ind AS, requires the management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these standalone financial statements and the results of operation during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
i. Useful lives of property, plant and equipment and investment properties
Property, plant and equipment and investment property represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each reporting date.
ii. Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and noncurrent categories based on management''s expectation of the timing of realisation of the assets or timing of contractual settlement of liabilities.
iii. Compensation liability in case of project under development
The management requires to make estimates of payments to be made in connection with the temporary accommodation facilities provided to the tenants and corpus payments for acquiring land developments rights in case of redevelopment projects.
iv. Impairment of financial and non- financial assets
In assessing impairment, management estimates the recoverable amounts of each asset (in case of nonfinancial assets) based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future cash flows and the determination of a suitable discount rate.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
vi. Revenue recognition
The Company recognises revenue including other fee such as club house charges etc. over the time of completion of project where criteria of Ind AS 115 are met. This requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity.
vii. Expected credit loss
The Company applies Expected Credit Losses ("ECLâ) model for measurement and recognition of loss allowance on the following: ⢠Trade receivables and lease receivables. ⢠Financial assets measured at amortised cost (other than trade receivables and lease receivables). ⢠Financial assets measured at fair value through other comprehensive income (FVTOCI). In accordance with Ind AS 109 - Financial Instruments, the Company applies ECL model for measurement and recognition of impairment loss on the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115 - Revenue from Contracts with Customers.
For this purpose, the Company follows ''simplified approach'' for recognition of impairment loss allowance on the trade receivable balances. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
In case of other assets, the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to twelve months ECL is measured and recognised as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.
viii. Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the standalone financial statements. Contingent assets are disclosed where an inflow of economic benefits is probable.
Estimating fair value for share-based payment requires determination of the most appropriate valuation model. The estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them.
x. Valuation of deferred tax assets
In assessing the realisability of deferred income tax assets, management considers whether some portion or all the deferred income tax assets will not be realised. The ultimate realisation of deferred income tax assets is dependent upon the generation of future taxable income during the period in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the Company will realise the benefits of those deductible differences. The amount of the deferred income tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
xi. Defined benefit obligation
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
xii. Accounting for revenue and land cost for projects executed through joint development arrangements
For projects executed through joint development arrangements (JDA), the revenue from the development and transfer of constructed area/revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated consideration payable or construction service rendered to the landowner. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. The management is of the view that the fair value method and estimates are reflective of the current market condition.
c) Foreign currency transactions(i) Functional and presentation currency
The financial statements are presented in Indian rupee (''), which is Company''s functional and presentation currency. Functional Currency is the currency of a primary economic environment in which the Company operates.
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs.
(iii) Measurement of foreign currency items at the balance sheet date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
The result and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
⢠assets and liabilities are translated at the closing rate at the date of that balance sheet
⢠income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
⢠all resulting exchange differences are recognised in other comprehensive income.
d) Revenue recognition(i) Revenue from real estate development/sale, maintenance services and project management services Revenue from contracts with customers
Revenue is recognised on satisfaction of performance obligation upon transfer of control of promised products (residential or commercial completed units) or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenue and trade receivables are recorded at transaction price, which is the consideration, adjusted for discounts and other credits, if any, as specified in the contract with customers.
The Company satisfies the performance obligation and recognises revenue over time, if one of the following criteria is met:
⢠The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs; or
⢠The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
⢠The Company''s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.
For performance obligations where any one of the above conditions are not met, revenue is recognised at the point in time (completed contract basis) at which the performance obligation is satisfied.
In case, revenue is recognised over the time, it is being recognised from the financial year in which the agreement to sell or any other binding documents containing salient terms of agreement to sell is executed. In respect of ''over the period of time'', the revenue is recognised based on the percentage-of-completion method (''POC method'') of accounting with cost of project incurred (input method) for the respective projects determining the degree of completion of the performance obligation.
The period over which revenue is recognised is based on entity''s right to payment for performance completed. In determining whether an entity has right to payment, the entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date, if the contract were to be terminated before completion for reasons other than entity''s failure to perform as per the terms of the contract.
The Company bills to customers for construction contracts as per agreed terms. The Company adjusts the transaction price for the effects of the significant financing component included in the contract price in the case of contracts involving the sale of property under development, where the Company offers deferred payment schemes to its customers.
The revenue recognition of real estate property under development requires forecasts to be made of total budgeted costs with the outcomes of underlying construction contracts, which further require assessments and judgments to be made on changes in work scopes and other payments to the extent they are probable and they are capable of being reliably measured. In case, where the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately in the statement of profit and loss.
Revenue recognized in excess of invoicing is classified as contract asset while invoicing in excess of revenue recognized (billing in excess of contract revenue), deferred revenue i.e. where revenue is being recognized post completion of the project and advance from customers are classified as contract liabilities.
(ii) Revenue from Joint Development Agreement (JDA)
For projects executed through joint development arrangements (JDA) not being jointly controlled operations, wherein the landowner provides rights to develop the land and the Company undertakes to develop properties on such land and in lieu of landowner providing land, whereas the Company agrees to transfer certain percentage of constructed area or certain percentage of the revenue proceeds. Basis the terms and conditions of the JDA, the revenue from the development and transfer of constructed area/revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at either fair value of development rights or the fair value of the estimated construction service rendered to the landowner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. The management is of the view that the fair value method and estimates are reflective of the current market condition.
Rental income is recognised on a time proportion basis as per the contractual obligations agreed with the respective tenant.
Income arising from billing of maintenance charges to tenants/customers is recognised in the period in which the services are being rendered. A receivable is recognised by the Company when the services are
rendered as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required. Further, the Company considers the terms of the contract and its customary business practices to determine the transaction price.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Forfeiture income is recognised on cancellation of unit by unitholder and when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Dividend income from investments is recognised when the Company''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
(viii) Profit /Loss from Partnership Firms / Limited Liability Partnerships (LLP)
Share of profit / loss from firms/ LLPs in which the entity is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of financial statements and as per the terms of the respective partnership deed.
Other income is recognised as and when due or received, whichever is earlier.
) Cost of revenue (cost of real estate projects)
Cost of project, includes cost of land (cost of development rights/ land under agreements to purchase) liaisoning costs, estimated internal development costs, external development charges, overheads, construction costs and development/ construction materials, which is charged to the statement of profit and loss based on the revenue recognised as explained in policy under revenue recognition, in consonance with the concept of matching costs and revenue. Final adjustment is made on completion of the specific project.
"Costs to obtain contractsâ such as brokerage fees paid for obtaining sales contracts, are recognised as assets when incurred and amortised over the period of time or at the point in time depending upon recognition of revenue from the corresponding property sale contract.
) Income tax
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to deductible temporary differences (in case of deferred tax assets) and taxable temporary differences (in case of deferred tax liabilities).
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Company operates and generates taxable income.
Deferred tax
Deferred income tax is provided using the balance sheet approach on deductible and taxable temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are not recognised for:
⢠temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
⢠The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and carry forward unused tax credits only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current 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 (OCI) or directly in equity. In this case, the tax is also recognised in OCI or directly in equity, respectively.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which is likely to give future economic benefit in the form of availability of setoff against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the balance sheet when the assets can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
The Company assesses whether a contract contains a lease, at inception of a contract. 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 of the consideration.
At the date of the commencement of the lease, the Company recognises a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability for all the lease arrangements in which it is a lease, except for leases with a term of twelve months or less (short-term leases) and low value leases.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and demand deposits with an original maturity of three months or less and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purpose of 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.
i) Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Inventories comprise of land and development rights, construction materials, work-in-progress, completed unsold flats/units. These are valued at lower of the cost and net realisable value.
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Land |
Land (including development cost) are valued at lower of cost and net realisable value. Costs include land acquisition cost and initial development |
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cost. |
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Land development rights |
Land development rights received under joint development arrangements (''JDA'') is measured at the fair value of the estimated consideration payable or construction service rendered to the landowner basis the terms and conditions of the JDA. |
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Construction materials |
Construction materials are valued at cost if the completed unsold flats/units in which they will be incorporated are expected to be sold at or above cost, else lower of cost and net realisable value. Cost is determined on a weighted average basis. |
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Work-in-progress (Land/ Real Estate under development) |
Work-in-progress is valued at cost if the completed unsold flats/units are expected to be sold at or above cost otherwise at lower of cost and net realisable value. Cost includes direct expenditure relating to construction activity (including land cost) and indirect expenditure during the construction period to the extent the expenditure is related to construction or is incidental thereto. |
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Completed unsold flats/units |
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 (wherever applicable) and estimated costs necessary to make the sale.
k) Financial instruments(i) Classification
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entity''s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has
made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
At initial recognition, the Company measures a financial asset other than trade receivables at its fair value, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Measurement of loan instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
⢠Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Measurement of equity instruments
The Company subsequently measures all equity investments at fair value except investment in subsidiary and joint venture. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECLâ) model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts recognising impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income /expense in the statement of profit and loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
⢠The Company has transferred the rights to receive cash flows from the financial asset or
⢠The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
(v) Interest income from financial assets
Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
l) Classification and subsequent measurement of financial liabilities
All financial liabilities are recognised initially at its fair value adjusted by directly attributable transaction costs. The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss, financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
m) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
n) Property, plant and equipment (including capital work in progress)
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs relating to acquisition of property, plant and equipment which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Items of property, plant and equipment that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the statement of profit and loss.
Losses arising from the retirement of, and gains or losses arising from disposal of property, plant and equipment which are carried at cost are recognised in the statement of profit and loss.
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises of its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Intangible assets under development (IUD) comprises of direct cost, related incidental expenses and attributable borrowing cost, if any, on intangible assets which are not ready for their intended use. IUD usually pertain to a product development project which has reached a defined milestone according to an established project management model and its technological and economic feasibility is viable. Expenditure on research activities is recognised in statement of profit and loss as incurred. Intangible assets under development are subject to impairment testing at each reporting date and assessed for impairment and impairment loss, if any.
p) Depreciation and amortisation
(i) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. Freehold land is not depreciated.
(ii) Depreciation on property, plant and equipment and investment property has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013, except for furniture and fixtures and air conditioner wherein based on technical assessment of management, useful life has been estimated to be different from that prescribed in Schedule II to the Act. Residual value is considered as 5% of the original acquisition cost of the assets.
|
The estimated useful lives of the assets are as follows: |
|
|
Asset class |
Useful life |
|
Building (including classified under investment properties) |
60 years |
|
Plant and equipment |
15 years |
|
Furniture and fixtures |
10 years |
|
Furniture and fixtures (temporary structure and portable structure) |
2 - 3 years |
|
Office equipment |
5 years |
|
Air conditioner (classified as office equipment) |
10 years |
|
Computers and peripherals |
3 years |
|
Vehicles |
8 years |
(iii) Amortisation is recognised on a straight-line basis over their estimated useful lives. The Company amortises computer software using the straight-line method over the period of 5 years.
The estimated useful life, residual values and depreciation/amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalized to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Though the company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes.
Reclassification from/to investment property- Transfers to (or from) investment property are made only when there is a change in use. Transfers between investment property, owner-occupied property and inventories do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes.
r) Borrowing costs
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Pursuant to a clarification issued by the International Accounting Standards Board (''IASB'') in relation to borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the Company has with effect from 1st April, 2019 excluded such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
s) Provisions, contingencies and commitments
A provision is recognised when the Company has a present obligation as a result of past event, 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 are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for contingent liabilities is made where there is:
(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(ii) a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.
Contingent assets are not recognised in the financial statements. However, it is disclosed only when an inflow of economic benefits is probable. Commitments are future liabilities for contractual expenditure, classified and disclosed as estimated amount of contracts remaining to be executed on capital account and not provided for.
0 Employee benefits:(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The Company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
(iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plan such as gratuity; and
(b) defined contribution plan such as provident fund.
The liability or asset 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 plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR 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 by 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 employee benefit expense 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.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Company operates equity-settled share based remuneration plans for its employees. All services received in exchange for the grant of any share-based payment are measured at their fair values on the grant date and is recognised as an employee expense, in the profit or loss with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The increase in equity recognised in connection with share-based payment transaction is presented as a separate component in equity under "Employee stock options reserveâ. The amount recognised as an expense is adjusted to reflect the actual number of stock options that vest. Grant date is the date when the Company and employees have shared an understanding of terms and conditions on the arrangement.
Where employees are rewarded using share based payments, the fair value of employees'' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth). All share-based remuneration is ultimately recognised as an expense in profit or loss. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holder does not impact the expense recorded in any period.
Market conditions are taken into account when estimating the fair value of the equity instruments granted. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
) Contributed equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
The final dividend on shares is recorded as a liability on the date of approval by the shareholders. Interim dividend is recognised as a liability on the date of declaration by the Company''s Board of Directors.
) Earnings per share
Basic earnings per share is computed by dividing the profit/ (loss) for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, and bonus element in a rights issue to existing shareholders,
Mar 31, 2022
Summary of significant accounting policies and other explanatory information to the standalone financial statements as at and for the year ended 31st March, 2022
Sunteck Realty Limited ("the Companyâ) [CIN: L32100MH1981PLC025346] is primarily engaged in the business of real estate construction/ real estate development and incidental services.
The Company is a limited company, domiciled in India. The Company was incorporated on 1st October, 1981 and has its registered office at 5th Floor, Sunteck Centre Subhash Road, Vile Parle (East) Mumbai. Maharashtra - 400057.
The Company''s shares are listed on two recognised stock exchanges in India - the Bombay Stock Exchange and the National Stock Exchange.
These standalone financial statements of the Company for the year ended 31st March 2022 were approved by the Board of Directors on 30th May, 2022.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
The Company has prepared its financial statements to comply in all material aspects with the provisions of the Companies Act, 2013 ("the Actâ) and rules framed thereunder. In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Act and the guidelines issued by Securities and Exchange Board of India, to the extent applicable.
The financial statements have been prepared on a historical cost convention and accrual basis, except for the certain financial assets and liabilities that are measured at fair value.
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.
The Company''s normal operating cycle in respect of operations relating to under construction real estate projects may vary from project to project depending upon the size and duration (from launch till occupation certificate period) of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and other business are based on 12 months period. Assets and liabilities have been classified into current and non-current based on the operating cycle of respective businesses.
These standalone financial statements are presented in Indian rupee, which is the functional currency of the Company. All financial information is presented in Indian rupees.
b) Critical estimates and judgements
The preparation of the financial statements, in conformity with the recognition and measurement principal of Ind AS, requires the management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the results of operation during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in
the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
i. Useful lives of property, plant and equipment and investment properties
Property, plant and equipment and investment property represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each reporting date.
ii. Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and noncurrent categories based on management''s expectation of the timing of realisation of the assets or timing of contractual settlement of liabilities.
iii. Compensation liability in case of project under development
The management requires to make estimates of payments to be made in connection with the temporary accommodation facilities provided to the tenants and corpus payments for acquiring land developments rights in case of redevelopment projects.
iv. Impairment of financial and non- financial assets
I n assessing impairment, management estimates the recoverable amounts of each asset (in case of non-financial assets) based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future cash flows and the determination of a suitable discount rate.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
vi. Revenue recognition
The Company recognises revenue including other fee such as club house charges etc. over the time of completion of project where criteria of Ind AS 115 are met. This requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity.
vii. Expected credit loss
The Company applies Expected Credit Losses ("ECLâ) model for measurement and recognition of loss allowance on the following: ⢠Trade receivables and lease receivables. ⢠Financial assets measured at amortised cost (other than trade receivables and lease receivables). ⢠Financial assets measured at fair value through other comprehensive income (FVTOCI). In accordance with Ind AS 109 - Financial Instruments, the Company applies ECL model for measurement and recognition of impairment loss on the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115 - Revenue from Contracts with Customers.
For this purpose, the Company follows ''simplified approach'' for recognition of impairment loss allowance on the trade receivable balances. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forwardlooking estimates are analysed.
In case of other assets, the Company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to twelve months ECL is measured and recognised as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognised as loss allowance.
viii. Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the financial statements. Contingent assets are disclosed where an inflow of economic benefits is probable.
Estimating fair value for share-based payment requires determination of the most appropriate valuation model. The estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them.
x. Valuation of deferred tax assets
I n assessing the realisability of deferred income tax assets, management considers whether some portion or all the deferred income tax assets will not be realised. The ultimate realisation of deferred income tax assets is dependent upon the generation of future taxable income during the period in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the Company will realise the benefits of those deductible differences. The amount of the deferred income tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
xi. Defined benefit obligation
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
c) Foreign currency transactions
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (''), which is Company''s functional and presentation currency. Functional Currency is the currency of a primary economic environment in which the Company operates.
(ii) Initial recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs.
(iii) Measurement of foreign currency items at the balance sheet date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Nonmonetary items are recorded at the exchange rate prevailing on the date of the transaction. Nonmonetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of nonmonetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
The result and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
⢠assets and liabilities are translated at the closing rate at the date of that balance sheet
⢠income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
⢠all resulting exchange differences are recognised in other comprehensive income.
d) Revenue recognition
(i) Revenue from real estate development/sale, maintenance services and project management services
Revenue from contracts with customers
Revenue is recognised on satisfaction of performance obligation upon transfer of control of promised products (residential or commercial completed units) or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
The Company satisfies the performance obligation and recognises revenue over time, if one of the following criteria is met:
⢠The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs; or
⢠The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
⢠The Company''s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.
For performance obligations where any one of the above conditions are not met, revenue is recognised at the point in time (completed contract basis) at which the performance obligation is satisfied.
I n case, revenue is recognised over the time, it is being recognised from the financial year in which the agreement to sell or any other binding documents containing salient terms of agreement to sell is executed. In respect of ''over the period of time'', the revenue is recognised based on the percentage-of-completion method (''POC method'') of accounting with cost of project incurred (input method) for the respective projects determining the degree of completion of the performance obligation.
The period over which revenue is recognised is based on entity''s right to payment for performance completed. In determining whether an entity has right to payment, the entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date, if
the contract were to be terminated before completion for reasons other than entity''s failure to perform as per the terms of the contract.
The Company bills to customers for construction contracts as per agreed terms. The Company adjusts the transaction price for the effects of the significant financing component included in the contract price in the case of contracts involving the sale of property under development, where the Company offers deferred payment schemes to its customers.
The revenue recognition of real estate property under development requires forecasts to be made of total budgeted costs with the outcomes of underlying construction contracts, which further require assessments and judgments to be made on changes in work scopes and other payments to the extent they are probable and they are capable of being reliably measured. In case, where the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately in the Statement of Profit and Loss.
Revenue in excess of billing (unbilled revenue) are classified as contract asset while invoicing in excess of revenues (bill in advance) are classified as contract liabilities.
(ii) Revenue from Joint Development Agreement (JDA)
For projects executed through JDA, the land owner provides land and the Company undertakes to develop the project on such land. The revenue from the development and transfer of constructed area/ revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. Such assessment is carried out at the launch of the real estate project and is not reassessed at each reporting period. The management is of the view that the fair value method and estimates are reflective of the current market condition.
Rental income is recognised on a time proportion basis as per the contractual obligations agreed with the respective tenant.
Income arising from billing of maintenance charges to tenants/customers is recognised in the period in which the services are being rendered. A receivable is recognised by the Company when the services are rendered as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required. Further, the Company considers the terms of the contract and its customary business practices to determine the transaction price.
(v) Interest
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Forfeiture income is recognised on cancellation of unit by unitholder and when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Dividend income from investments is recognised when the Company''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
(viii) Profit /Loss from Partnership Firms / Limited Liability Partnerships (LLP)
Share of profit / loss from firms/ LLPs in which the entity is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of financial statements and as per the terms of the respective partnership deed.
Other income is recognised as and when due or received, whichever is earlier.
e) Cost of revenue (cost of real estate projects)
Cost of project, includes cost of land (cost of development rights/ land under agreements to purchase) liaisoning costs, estimated internal development costs, external development charges, overheads, construction costs and development/ construction materials, which is charged to the statement of profit and loss based on the revenue recognised as explained in policy under revenue recognition, in consonance with the concept of matching costs and revenue. Final adjustment is made on completion of the specific project.
"Costs to obtain contractsâ such as brokerage fees paid for obtaining sales contracts, are recognised as assets when incurred and amortised over the period of time or at the point in time depending upon recognition of revenue from the corresponding property sale contract.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to deductible temporary differences (in case of deferred tax assets) and taxable temporary differences (in case of deferred tax liabilities).
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Company operates and generates taxable income.
Deferred tax
Deferred income tax is provided using the balance sheet approach on deductible and taxable temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are not recognised for:
⢠temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
⢠The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and carry forward unused tax credits only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current 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 (OCI) or directly in equity. In this case, the tax is also recognised in OCI or directly in equity, respectively.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which is likely to give future economic benefit in the form of availability of setoff against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the balance sheet when the assets can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
The Company assesses whether a contract contains a lease, at inception of a contract. 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 of the consideration.
At the date of the commencement of the lease, the Company recognises a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability for all the lease arrangements in which it is a lease, except for leases with a term of twelve months or less (short-term leases) and low value leases.
At present, all contracts in the Company are of low lease value and for these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
Leases for which the Company is a lessor classified as finance or operating lease. Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and demand deposits with an original maturity of three months or less and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
i) Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Inventories comprise of land and development rights, construction materials, work-in-progress, completed unsold flats/units. These are valued at lower of the cost and net realisable value.
|
Land and development rights |
Land and development rights (including development cost) are valued at lower of cost and net realisable value. Costs include land acquisition cost and initial development cost. |
|
Construction materials |
Construction materials are valued at cost if the completed unsold flats/ units in which they will be incorporated are expected to be sold at or above cost, else lower of cost and net realisable value. Cost is determined on a weighted average basis. |
|
Work-in-progress (Land/ Real Estate under development) |
Work-in-progress is valued at cost if the completed unsold flats/units are expected to be sold at or above cost otherwise at lower of cost and net realisable value. Cost includes direct expenditure relating to construction activity (including land cost) and indirect expenditure during the construction period to the extent the expenditure is related to construction or is incidental thereto. |
|
Completed unsold flats/units |
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 (wherever applicable) and estimated costs necessary to make the sale.
k) Financial instruments(i) Classification
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entity''s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Measurement of loan instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
⢠Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Measurement of equity instruments
The Company subsequently measures all equity investments at fair value except investment in subsidiary and joint venture. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
I n accordance with Ind AS 109, the Company applies the expected credit loss ("ECLâ) model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income / expense in the statement of profit and loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
⢠The Company has transferred the rights to receive cash flows from the financial asset or
⢠The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
(v) Interest income from financial assets
I nterest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
l) Classification and subsequent measurement of financial liabilities
All financial liabilities are recognised initially at its fair value adjusted by directly attributable transaction costs. The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss, financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
m) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
n) Property, plant and equipment (including capital work in progress)
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs relating to acquisition of property, plant and equipment which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Items of property, plant and equipment that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the statement of profit and loss.
Losses arising from the retirement of, and gains or losses arising from disposal of property, plant and equipment which are carried at cost are recognised in the statement of profit and loss.
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises of its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Intangible under development (IUD) comprises of direct cost, related incidental expenses and attributable borrowing cost, if any, on intangible assets which are not ready for their intended use. IUD usually pertain to a product development project which has reached a defined milestone according to an established project management model and its technological and economic feasibility is viable. Expenditure on research activities is recognised in statement of profit and loss as incurred. Intangible assets under development are subject to impairment testing at each reporting date and assessed for impairment and impairment loss, if any.
p) Depreciation and amortisation
(i) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. Freehold land is not depreciated.
(ii) Depreciation on property, plant and equipment and investment property has been provided on prorata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013, except for furniture and fixtures and air conditioner wherein based on technical assessment of management, useful life has been estimated to be different from that prescribed in Schedule II to the Act. Residual value is considered as 5% of the original acquisition cost of the assets.
The estimated useful lives of the assets are as follows:
|
Asset class |
Useful life |
|
Building (including classified under investment properties) |
60 years |
|
Plant and equipment |
15 years |
|
Furniture and fixtures |
10 years |
|
Furniture and fixtures (temporary structure and portable structure) |
2 - 3 years |
|
Office equipment |
5 years |
|
Air conditioner (classified as office equipment) |
10 years |
|
Computers and peripherals |
3 years |
|
Vehicles |
8 years |
(iii) Amortisation is recognised on a straight-line basis over their estimated useful lives. The Company amortises computer software using the straight-line method over the period of 5 years.
The estimated useful life, residual values and depreciation/amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Capital work-in-progress represents expenditure incurred in respect of assets under development and are carried at cost. Cost includes related acquisition expenses, construction cost, borrowing cost capitalised and other direct expenditure.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Pursuant to a clarification issued by the International Accounting Standards Board (''IASB'') in relation to borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the Company has with effect from 1 April, 2019 excluded such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
s) Provisions, contingencies and commitments
A provision is recognised when the Company has a present obligation as a result of past event, 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 are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for contingent liabilities is made where there is:
(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(ii) a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.
Contingent assets are not recognised in the financial statements. However, it is disclosed only when an inflow of economic benefits is probable Commitments are future liabilities for contractual expenditure, classified and disclosed as estimated amount of contracts remaining to be executed on capital account and not provided for.
t) Employee benefits:(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The Company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
(iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plan such as gratuity; and
(b) defined contribution plan such as provident fund.
Gratuity obligations
The liability or asset 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 plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in 0 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 by 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 employee benefit expense 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.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Company operates equity-settled share based remuneration plans for its employees. All services received in exchange for the grant of any share-based payment are measured at their fair values on the grant date and is recognised as an employee expense, in the profit or loss with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The increase in equity recognised in connection with share-based payment transaction is presented as a separate component in equity under "Employee stock options reserveâ. The amount recognised as an expense is adjusted to reflect the actual number of stock options that vest. Grant date is the date when the Company and employees have shared an understanding of terms and conditions on the arrangement.
Where employees are rewarded using share based payments, the fair value of employees'' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth). All share-based remuneration is ultimately recognised as an expense in profit or loss. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holder does not impact the expense recorded in any period.
Market conditions are taken into account when estimating the fair value of the equity instruments granted. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
The final dividend on shares is recorded as a liability on the date of approval by the shareholders. Interim dividend is recognised as a liability on the date of declaration by the Company''s Board of Directors.
Basic earnings per share is computed by dividing the profit/ (loss) for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, and bonus element in a rights issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/ (loss) for the year as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date
x) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III to the Companies Act, 2013 unless otherwise stated.
y) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting, nature of the products / process, organisation structure as well as differential risks and returns, provided to the Board of Directors, which constitute as chief operating decision maker (''CODM'').
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Group for the year, the nature and amount of such items is disclosed as exceptional items.
Business combinations, other than common control business combinations, are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the dat
Mar 31, 2021
1. CORPORATE INFORMATION
Sunteck Realty Limited ("the Companyâ) [CIN: L32100MH1981PLC025346] is primarily engaged in the business of real estate construction/ real estate development and incidental services.
The Company is a Limited Company, domiciled in India. The Company was incorporated on 1st October, 1981 and has its registered office at 5th Floor, Sunteck Centre Subhash Road, Vile Parle (East) Mumbai. Maharashtra -400057.
The Company''s shares are listed on two recognised stock exchanges in India - the Bombay Stock Exchange and the National Stock Exchange.
These standalone financial statements of the Company for the year ended 31st March, 2021 were approved by the Board of Directors on 29th June, 2021.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Basis of preparation - Statement of compliance
The Company has prepared its financial statements to comply in all material aspects with the provisions of the Companies Act, 2013 ("the Actâ) and rules framed thereunder. In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Act.
The financial statements have been prepared on a historical cost convention and accrual basis, except for the certain financial assets and liabilities that are measured at fair value.
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.
The Company''s normal operating cycle in respect of operations relating to under construction real estate projects may vary from project to project depending upon the size and duration (from launch till occupation certificate period) of the project, type of development, project complexities and related approvals. Operating cycle for all completed projects and other business are based on 12 months period. Assets and liabilities have been classified into current and non-current based on the operating cycle of respective businesses.
These standalone financial statements are presented in Indian rupee, which is the functional currency of the Company. All financial information is presented in Indian rupees.
b) Critical estimates and judgements
The preparation of the financial statements, in conformity with the recognition and measurement principal of Ind AS, requires the management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the results of operation during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the
financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
i. Useful lives of property, plant and equipment and investment properties
Property, plant and equipment and investment property represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each reporting date.
ii. Classification of assets and liabilities into current and non-current
The management classifies the assets and liabilities into current and noncurrent categories based on management''s expectation of the timing of realisation of the assets or timing of contractual settlement of liabilities.
iii. compensation liability in case of project under development
The management requires to make estimates of payments to be made in connection with the temporary accommodation facilities provided to the tenants and corpus payments for acquiring land developments rights in case of redevelopment projects.
In assessing impairment, management estimates the recoverable amounts of each asset (in case of nonfinancial assets) based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future cash flows and the determination of a suitable discount rate.
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
The Company recognises revenue including other fee such as club house charges etc. over the time of completion of project where criteria of Ind AS 115 are met. This requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity.
vii. provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the financial statements. Contingent assets are disclosed where an inflow of economic benefits is probable.
viii. Valuation of deferred tax assets
In assessing the realisability of deferred income tax assets, management considers whether some portion or all the deferred income tax assets will not be realised. The ultimate realisation of deferred income tax assets is dependent upon the generation of future taxable income during the period in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the
deferred income tax assets are deductible, management believes that the Company will realise the benefits of those deductible differences. The amount of the deferred income tax assets considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.
ix. Defined benefit obligation
The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
c) Foreign currency transactions
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency. Functional Currency is the currency of a primary economic environment in which the Company operates.
(ii) Initial recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss for the year.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, within finance costs.
(iii) Measurement of foreign currency items at the balance sheet date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
(iv) Foreign operations
The result and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
⢠assets and liabilities are translated at the closing rate at the date of that balance sheet
⢠income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
⢠all resulting exchange differences are recognised in other comprehensive income.
d) Revenue recognition
(i) Revenue from real estate development/sale, maintenance services and project management services Revenue from contracts with customers
Revenue is recognised on satisfaction of performance obligation upon transfer of control of promised products (residential or commercial completed units) or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services.
The Company satisfies the performance obligation and recognises revenue over time, if one of the following criteria is met:
⢠The customer simultaneously receives and consumes the benefits provided by the Company''s performance as the Company performs; or
⢠The Company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
⢠The Company''s performance does not create an asset with an alternative use to the Company and an entity has an enforceable right to payment for performance completed to date.
For performance obligations where any one of the above conditions are not met, revenue is recognised at the point in time (completed contract basis) at which the performance obligation is satisfied.
In case, revenue is recognised over the time, it is being recognised from the financial year in which the agreement to sell or any other binding documents containing salient terms of agreement to sell is executed. In respect of ''over the period of time'', the revenue is recognised based on the percentage-of-completion method (''POC method'') of accounting with cost of project incurred (input method) for the respective projects determining the degree of completion of the performance obligation.
The period over which revenue is recognised is based on entity''s right to payment for performance completed. In determining whether an entity has right to payment, the entity shall consider whether it would have an enforceable right to demand or retain payment for performance completed to date, if the contract were to be terminated before completion for reasons other than entity''s failure to perform as per the terms of the contract.
The Company bills to customers for construction contracts as per agreed terms. The Company adjusts the transaction price for the effects of the significant financing component included in the contract price in the case of contracts involving the sale of property under development, where the Company offers deferred payment schemes to its customers.
The revenue recognition of real estate property under development requires forecasts to be made of total budgeted costs with the outcomes of underlying construction contracts, which further require assessments and judgments to be made on changes in work scopes and other payments to the extent they are probable and they are capable of being reliably measured. In case, where the total project cost is estimated to exceed total revenues from the project, the loss is recognised immediately in the Statement of Profit and Loss.
Revenue in excess of billing (unbilled revenue) are classified as contract asset while invoicing in excess of revenues (bill in advance) are classified as contract liabilities.
(ii) Revenue from Joint Development Agreement (JDA)
For projects executed through JDA, the land owner provides land and the Company undertakes to develop the project on such land. The revenue from the development and transfer of constructed area/revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. Such assessment is carried out at the launch of the real estate project and is not reassessed at each reporting period. The management is of the view that the fair value method and estimates are reflective of the current market condition.
Rental income is recognised on a time proportion basis as per the contractual obligations agreed with the respective tenant.
Income arising from billing of maintenance charges to tenants/customers is recognised in the period in which the services are being rendered. A receivable is recognised by the Company when the services are rendered as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required. Further, the Company considers the terms of the contract and its customary business practices to determine the transaction price.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Forfeiture income is recognised on cancellation of unit by unitholder and when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Dividend income from investments is recognised when the Company''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
(viii) Profit /Loss from Partnership Firms / Limited Liability Partnerships (LLP)
Share of profit / loss from firms/ LLPs in which the entity is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of financial statements and as per the terms of the respective partnership deed.
Other income is recognised as and when due or received, whichever is earlier.
e) cost of revenue (cost of real estate projects)
Cost of project, includes cost of land (cost of development rights/ land under agreements to purchase) liaisoning costs, estimated internal development costs, external development charges, overheads, construction costs and development/ construction materials, which is charged to the statement of profit and loss based on the revenue recognised as explained in policy under revenue recognition, in consonance with the concept of matching costs and revenue. Final adjustment is made on completion of the specific project.
"Costs to obtain contractsâ such as brokerage fees paid for obtaining sales contracts, are recognised as assets when incurred and amortised over the period of time or at the point in time depending upon recognition of revenue from the corresponding property sale contract.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to deductible and taxable temporary differences.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date where the Company operates and generates taxable income.
Deferred income tax is provided using the balance sheet approach on deductible and taxable temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are not recognised for:
⢠temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of the transaction;
⢠The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 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.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current 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 (OCI) or directly in equity. In this case, the tax is also recognised in OCI or directly in equity, respectively.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India which is likely to give future economic benefit in the form of availability of setoff against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the balance sheet when the assets can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
Effective 1st April, 2019, the Company has adopted Ind AS 116, "Leases" using the modified retrospective approach, as a result of which the comparative information is not required to be restated.
The Company assesses whether a contract contains a lease, at inception of a contract. 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 of the consideration.
At the date of the commencement of the lease, the Company recognises a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability for all the lease arrangements in which it is a lease, except for leases with a term of twelve months or less (short-term leases) and low value leases.
At present, all contracts in the Company are of low lease value and for these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
Leases for which the Company is a lessor classified as finance or operating lease. Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and demand deposits with an original maturity of three months or less and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
i) Impairment of non- financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Inventories comprise of land and development rights, construction materials, work-in-progress, completed unsold flats/units. These are valued at lower of the cost and net realisable value.
|
Land and development rights |
Land and development rights (including development cost) are valued at lower of cost and net realisable value. Costs include land acquisition cost and initial development cost. |
|
Construction materials |
Construction materials are valued at cost if the completed unsold flats/units in which they will be incorporated are expected to be sold at or above cost, else lower of cost and net realisable value. Cost is determined on a weighted average basis. |
|
Work-in-progress (Land/ Real Estate under development) |
Work-in-progress is valued at cost if the completed unsold flats/units are expected to be sold at or above cost otherwise at lower of cost and net realisable value. Cost includes direct expenditure relating to construction activity (including land cost) and indirect expenditure during the construction period to the extent the expenditure is related to construction or is incidental thereto. |
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Completed unsold flats/units |
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 (wherever applicable) and estimated costs necessary to make the sale.
k) Financial instruments(i) classification
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entity''s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Measurement of loan instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
⢠Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
⢠Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Measurement of equity instruments
The Company subsequently measures all equity investments at fair value except investment in subsidiary and joint venture. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the Statement of Profit and Loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
In accordance with Ind AS 109, the Company applies the expected credit loss ("ECL") model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Simplified approach
does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income /expense in the statement of profit and loss.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
⢠The Company has transferred the rights to receive cash flows from the financial asset or
⢠The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
(v) Interest income from financial assets
Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
l) Classification and subsequent measurement of financial liabilities
All financial liabilities are recognised initially at its fair value adjusted by directly attributable transaction costs. The measurement of financial liabilities depends on their classification as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss, financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
m) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
n) Property, plant and equipment (including capital work in progress)
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs relating to acquisition of property, plant and equipment which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
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. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Items of property, plant and equipment that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the statement of profit and loss.
Losses arising from the retirement of, and gains or losses arising from disposal of property, plant and equipment which are carried at cost are recognised in the statement of profit and loss.
Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises of its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
p) Depreciation and amortisation
(i) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method.
(ii) Depreciation on property, plant and equipment and investment property has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013, except for furniture and fixtures and air conditioner wherein based on management decision, useful life has been estimated to be different from that prescribed in Schedule II of the Act. Residual value is considered as 5% of the original acquisition cost of the assets.
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The estimated useful lives of the assets are as follows: |
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Asset class |
useful life |
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Building (including classified under investment properties) |
60 years |
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Plant and equipment |
15 years |
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Furniture and fixtures |
10 years |
|
Furniture and fixtures (temporary structure and portable structure) |
2 - 3 years |
|
Office equipment |
5 years |
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Air conditioner (classified as office equipment) |
10 years |
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Computers and peripherals |
3 years |
|
Vehicles |
8 years |
(iii) Amortisation is recognised on a straight-line basis over their estimated useful lives. The Company amortises computer software using the straight-line method over the period of 5 years.
The estimated useful life, residual values and depreciation/amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Capital work-in-progress represents expenditure incurred in respect of assets under development and are carried at cost. Cost includes related acquisition expenses, construction cost, borrowing cost capitalised and other direct expenditure.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Borrowing costs that are directly attributable to the acquisition/construction of qualifying assets are capitalised as part of their costs.
Borrowing costs are considered as part of the asset cost when the activities that are necessary to prepare the assets for their intended use or sale are in progress.
Borrowing costs consist of interest and other costs that Company incurs in connection with the borrowing of funds. Other borrowing costs are recognised as an expense, in the period in which they are incurred.
Pursuant to a clarification issued by the International Accounting Standards Board (''IASB'') in relation to borrowing costs on real-estate projects where revenue is recognised on percentage of completion basis, the Company has with effect from 1st April, 2019 excluded such borrowing costs relating to the post-launch period from its estimates of the balance cost to completion, and the same is recognised as finance cost in the Statement of Profit and Loss.
s) Provisions, contingencies and commitments
A provision is recognised when the Company has a present obligation as a result of past event, 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 are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for contingent liabilities is made where there is:
(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(ii) a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.
Contingent assets are not recognised in the financial statements. However, it is disclosed only when an inflow of economic benefits is probable Commitments are future liabilities for contractual expenditure, classified and disclosed as estimated amount of contracts remaining to be executed on capital account and not provided for.
t) Employee benefits:(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The Company presents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for twelve months after the reporting date. Where the Company has the unconditional legal and contractual right to defer the settlement for a period beyond twelve months, the same is presented as non-current liability.
(iii) post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plan such as gratuity; and
(b) defined contribution plan such as provident fund.
The liability or asset 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 plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in '' 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 by 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 employee benefit expense 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.
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Company operates equity-settled share based remuneration plans for its employees. All services received in exchange for the grant of any share-based payment are measured at their fair values on the grant date and is recognised as an employee expense, in the profit or loss with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The increase in equity recognised in connection with share-based payment transaction is presented as a separate component in equity under "Employee stock options reserveâ. The amount recognised as an expense is adjusted to reflect the actual number of stock options that vest. Grant date is the date when the Company and employees have shared an understanding of terms and conditions on the arrangement.
Where employees are rewarded using share based payments, the fair value of employees'' services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth). All share-based remuneration is ultimately recognised as an expense in profit or loss. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any adjustment to cumulative share-based compensation resulting from a revision is recognised in the current period. The number of vested options ultimately exercised by holder does not impact the expense recorded in any period.
Market conditions are taken into account when estimating the fair value of the equity instruments granted. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
The final dividend on shares is recorded as a liability on the date of approval by the shareholders. Interim dividend is recognised as a liability on the date of declaration by the Company''s Board of Directors.
Basic earnings per share is computed by dividing the profit/ (loss) for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, and bonus element in a rights issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/ (loss) for the year as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs as per the requirement of Schedule III of the Companies Act, 2013 unless otherwise stated.
Operating segments are reported in a manner consistent with the internal reporting, nature of the products / process, organisation structure as well as differential risks and returns, provided to the Board of Directors, which constitute as chief operating decision maker (''CODM'').
Business combinations, other than common control business combinations, are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the date of exchange by the Company. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition. Transaction costs incurred in connection with a business acquisition are expensed as incurred.
The cost of an acquisition also includes the fair value of any contingent consideration measured as at the date of acquisition. Any subsequent changes to the fair value of contingent consideration classified as liabilities, other than measurement period adjustments, are recognised in the statement of profit and loss.
Common Control business combinations, i.e. business combinations involving entities or businesses under common control, are accounted for using the pooling of interests method. The assets and liabilities of the combining entities are reflected at their carrying amounts. The identity of the reserves shall be preserved and shall appear in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor shall be transferred to capital reserve and should be presented separately as Common Control Transactions Capital reserve.
aa) Investment in subsidiaries and joint ventures
Investments in subsidiaries and joint ventures are recognised at cost as per Ind AS 27. bb) Exceptional items
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
cc) The Company has applied an accounting policy retrospectively, restated items retrospectively, or reclassified items in its financial statements as explained in Note 54, and the retrospective application, restatement or reclassification has a material effect on the information presented in the balance sheet at the beginning of the preceding period and hence presented a third balance sheet (statement of financial position) as at the beginning of the preceding period (i.e.1st April, 2019).
On 24th March, 2021, the Ministry of Corporate Affairs (MCA) 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 1st April, 2021. The Company is evaluating the effect of the amendments on its financial statements.
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of Preparation
(i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (hereinafter referred to as âInd ASâ) as notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 prescribed under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities - measured atfair value;
- Share-based payments - measured atfairvalue;
- Defined benefit plans - plan assets measured atfairvalue.
(b) Foreign Currency Transactions
(i) Functional and presentation currency
Items included in the financial statements of each of the companyâs entities are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The Standalone financial statements are presented in Indian rupee (INR), which is Sunteck Realty Limitedâs functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to transactions entered into in order to hedge certain foreign currency risks. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entityâs net investment in that foreign operation.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on nonmonetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on nonmonetary assets such as equity investments classified as fair value routed through other comprehensive income are recognised in other comprehensive income.
(c) Revenue Recognition
(i) Revenue for real estate development/sale
The Company follows percentage of completion method of accounting. Direct/Allocable expenses incurred during the year are debited to work- in-progress account. The revenue is accounted for when the following conditions are met:
1. All critical approvals necessary for commencement of the project have been obtained;
2. the actual construction and development cost incurred is at least 40% of the total construction and development cost (without considering land cost);
3. when at least 20% of the sales consideration is realised; and
4. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.
(ii) Rent
Rental Income is recognised on a time proportion basis as per the contractual obligations agreed with the respective tenant.
(iii) Interest
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
(iv) Dividend
Dividend income from investments is recognized when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
(v) Profit /Loss from Partnership Firms / LLPs
Share of profit / loss from firms/ LLPs in which the Group is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of audited financial statements and as per the terms of the respective partnership deed.
(vi) Maintenance Services /Project Management Services
Revenue in respect of maintenance services / Project Management services is recognised on an accrual basis, in accordance with the terms of the respective contract.
(d) Income tax Current Income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
1) Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
2) Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
3) The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
4) Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
5) Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets relate to the same taxable entity and same taxation authority.
Minimum Alternate Tax
Minimum Alternate Tax (âMATâ) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income-tax during the specified period. In the year in which the MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the statement of profit and loss. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income-tax during the specified period.
(e) Leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
As a lessor
Rental income from operating leases is generally recognised on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Initial direct cost incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on straight-line basis over the lease term.
(f) Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the statement of profit or loss for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash inflows which are largely dependent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(g) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and demand deposits with an original maturity of three months or less and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
(h) Inventories
Inventories comprise of Land and development rights, Construction materials, Work-in-progress, completed unsold flats/units. These are valued at lower of the cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion (wherever applicable) and estimated costs necessary to make the sale.
(i) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal asset classified as held for sale continue to be recognised.
(j) Investments and other financial assets (i) Classification
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entityâs business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The company reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the company classifies its debt instruments:
- Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
- Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The company subsequently measures all equity investments at fair value. Where the companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
The company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 37 details how the company determines whether there has been a significant increase in credit risk.
For trade receivables only, the company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognised only when
- The company has transferred the rights to receive cash flows from the financial asset or
- The company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the company has not retained control of the financial asset. Where the company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
(k) Financial Liabilities
All Financial liabilities are measured at amortized cost using effective interest method or fair value through profit and loss. However,financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a Company of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companyâs documented risk management or investment strategy, and information about the Company is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognized in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liabilityâs credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in Statement of Profit and Loss. The remaining amount of change in the fair value of liability is always recognised in Statement of Profit and Loss. Changes in fair value attributable to a financial liabilityâs credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to Statement of Profit and Loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognised in Statement of Profit and Loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costsâ line item. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
(l) Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
Subsequent costs are included in the assetâs 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. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
(m) Depreciation
i) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method.
ii) Amortisation is recognised on a straightline basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
iii) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
iv) Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
v) Lease improvement costs are amortized over the period of the lease. Leasehold land acquired by the Company, with an option in the lease deed, entitling the Company to purchase on outright basis after a certain period at no additional cost is not amortized.
vi) The Estimated useful lives of the assets are as follows:
The estimated useful life, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
(n) Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Investment properties are depreciated using the straight-line method over their estimated useful lives. Investment properties generally have a useful life of 60 years.
(o) Intangible assets
Computer software
Costs associated with maintaining software programmes are recognised as an expense as incurred. Certain computer software costs are capitalized and recognized as Intangible assets based on materiality, accounting prudence and significant benefits expected to flow therefrom for a period longer than one year.
Amortisation method
The Company amortizes computer software using the straight-line method over the period of 3 years.
(p) Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 45 -90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(q) Expected Credit Losses
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.
(r) Borrowing costs
Borrowing costs relating to acquisition and/or construction of qualifying assets are capitalized to the extent that the funds are borrowed and used for purpose of constructing a qualifying asset until the time all substantial activities necessary to prepare the qualifying assets for their intended use or sale are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs which are not related to acquisition and/or construction activities nor are incidental thereto are charged to the Statement of Profit and Loss.
(s) Provisions, contingencies and commitments:
A provision is recognised when the company has a present obligation as a result of past event, 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 are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for contingent liabilities is made where there is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(b) a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.
(t) Employee benefit
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Compensated absences
I. Short term
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of the benefit expected to be availed by the employees.
II. Long Term
Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to statement of profit and loss in the year in which such gains or losses are determined.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plan such as gratuity; and
(b) defined contribution plan such as provident fund.
Gratuity obligations
The liability or asset 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 plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR 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 by 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 employee benefit expense 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.
Defined contribution plan
The company pays provident fund contributions to publicly administered provident funds as per local regulations. The company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iv) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits; and
(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits.
In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
(u) Share-based payments
The fair value of options granted under the Employee Stock Option Plan is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
(v) Contributed equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.
(w) Dividend
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
(x) Earnings per share
Basic earnings per share is computed by dividing the profit/(loss) for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/(loss) for the year as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date
(y) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Mar 31, 2017
Background
Sunteck Realty Limited (''The Company'') is primarily engaged in the business of real estate/ real estate development and incidental services
1. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of Preparation
(i) Compliance with Ind AS
The standalone financial statements comply in all material aspects with Indian Accounting Standards (hereinafter referred to as "Ind ASâ) as notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 prescribed under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014.
The financial statements up to year ended 31st March 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
These financial statements are the first financial statements of the company under Ind AS. Refer note 41 for an explanation of how the transition from previous GAAP to Ind AS has affected the company''s financial position, financial performance and cash flows.
The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2015 being the date of transition to Ind AS.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities - measured at fair value
- Share-based payments - measured at fair value
- Defined benefit plans - plan assets measured at fair value
(b) Foreign Currency Transactions
(i) Functional and presentation currency
Items included in the financial statements of each of the company''s entities are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The Standalone financial statements are presented in Indian rupee (INR), which is Sunteck Realty Limited''s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. They are deferred in equity if they relate to transactions entered into in order to hedge certain foreign currency risks. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity''s net investment in that foreign operation.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on nonmonetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognized in other comprehensive income.
(c) Revenue Recognition
(i) Revenue for real estate development/sale
The Company follows percentage of completion method of accounting. Direct/Allocable expenses incurred during the year are debited to work- in-progress account. The revenue is accounted for when the following conditions are met:
1. All critical approvals necessary for commencement of the project have been obtained;
2. the actual construction and development cost incurred is at least 40% of the total construction and development cost (without considering land cost);
3. when at least 20% of the sales consideration is realized; and
4. where 25% of the total saleable area of the project is secured by contracts of agreement with buyers.
(ii) Rent
Rental Income is recognized on a time proportion basis as per the contractual obligations agreed with the respective tenant.
(iii) Interest
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
(iv) Dividend
Dividend income from investments is recognized when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably).
(v) Profit /Loss from Partnership Firms / LLPs
Share of profit / loss from firms/LLPs in which the Company is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of audited financial statements and as per the terms of the respective partnership deed.
(vi) Maintenance Services /Project Management Services
Revenue in respect of maintenance services / Project Management services is recognized on an accrual basis, in accordance with the terms of the respective contract.
(d) Income tax Current Income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the company operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
1) Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
2) Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
3) The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
4) Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
5) Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets relate to the same taxable entity and same taxation authority.
Minimum Alternate Tax:
Minimum Alternate Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income-tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit to the statement of profit and loss. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income-tax during the specified period.
(e) Leases As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases.
As a less or
Rental income from operating leases is generally recognized on a straight-line basis over the term of the relevant lease except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Initial direct cost incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on straight-line basis over the lease term.
(f) Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized in the statement of profit or loss for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash inflows which are largely dependent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
(g) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and demand deposits with an original maturity of three months or less and highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
(h) Inventories
Inventories comprise of Land and development rights, Construction materials, Work-in-progress, completed unsold flats/units. These are valued at lower of the cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion (wherever applicable) and estimated costs necessary to make the sale.
(i) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
Non-current assets are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal asset classified as held for sale continue to be recognized.
(j) Investments and other financial assets (i) Classification
Financial assets, other than equity instruments, are subsequently measured at amortized cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) on the basis of both:
(a) the entity''s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
The company reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Measurement
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the company classifies its debt instruments:
- Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
- Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Equity instruments
The company subsequently measures all equity investments at fair value. Where the company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognized in profit or loss as other income when the company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) Impairment of financial assets
The company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 37 details how the company determines whether there has been a significant increase in credit risk.
For trade receivables only, the company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
- The company has transferred the rights to receive cash flows from the financial asset or
- The company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the company has not retained control of the financial asset. Where the company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
(k) Financial Liabilities
All Financial liabilities are measured at amortized cost using effective interest method or fair value through profit and loss. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument
A financial liability other than a financial liability held for trading or contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a Company of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the Company is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in Statement of Profit and Loss. The net gain or loss recognized in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognized in Statement of Profit and Loss. The remaining amount of change in the fair value of liability is always recognized in Statement of Profit and Loss. Changes in fair value attributable to a financial liability''s credit risk that are recognized in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to Statement of Profit and Loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognized in Statement of Profit and Loss.
Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
(l) Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
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 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
(m) Depreciation
i) Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method.
ii) Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
iii) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
iv) Depreciation on tangible fixed assets has been provided on pro-rata basis, on the straight-line method as per the useful life prescribed in Schedule II of the Companies Act, 2013.
v) Lease improvement costs are amortized over the period of the lease. Leasehold land acquired by the Company, with an option in the lease deed, entitling the Company to purchase on outright basis after a certain period at no additional cost is not amortized.
The estimated useful life, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
(n) Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Investment properties are depreciated using the straight-line method over their estimated useful lives. Investment properties generally have a useful life of 60 years.
Transition to Ind AS
On transition to Ind AS, the company has elected to continue with the carrying value of all of its investment properties recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of investment properties.
(o) Intangible assets Computer software
Costs associated with maintaining software programmes are recognized as an expense as incurred. Certain computer software costs are capitalized and recognized as Intangible assets based on materiality, accounting prudence and significant benefits expected to flow there from for a period longer than one year.
Amortization method
The Company amortizes computer software using the straight-line method over the period of 3 years.
Transition to Ind AS
On transition to Ind AS, the company has elected to continue with the carrying value of all of intangible assets recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.
(p) Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 45 -90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
(q) Expected Credit Losses
The Company measures the expected credit loss of trade receivables and loan from individual customers based on historical trend, industry practices and the business environment in which the entity operates. Loss rates are based on actual credit loss experience and past trends. Based on the historical data, loss on collection of receivable is not material hence no additional provision considered.
(r) Borrowing costs
Borrowing costs relating to acquisition and/or construction of qualifying assets are capitalized to the extent that the funds are borrowed and used for purpose of constructing a qualifying asset until the time all substantial activities necessary to prepare the qualifying assets for their intended use or sale are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs which are not related to acquisition and/or construction activities nor are incidental thereto are charged to the Statement of Profit and Loss.
(s) Provisions, contingencies and commitments:
A provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.
A disclosure for contingent liabilities is made where there is:
(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
(b) a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.
(t) Employee benefit :-(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Compensated absences
I. Short term
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value of estimated amount required to be paid or estimated value of the benefit expected to be availed by the employees.
II. Long Term
Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to statement of profit and loss in the year in which such gains or losses are determined.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plan such as gratuity; and
(b) defined contribution plan such as provident fund.
Gratuity obligations
The liability or asset 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 plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation denominated in INR 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 by 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 employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses 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.
Defined contribution plan
The company pays provident fund contributions to publicly administered provident funds as per local regulations. The company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iv) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits; and
(b) when the Company recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits.
In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
(u) Share-based payments
The fair value of options granted under the Employee Stock Option Plan is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in Statement of Profit and Loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
(v) Contributed equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognized at the proceeds received, net of direct issue costs.
(w) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
(x) Earnings per share
Basic earnings per share is computed by dividing the profit/(loss) for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split.
Diluted earnings per share is computed by dividing the profit/(loss) for the year as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date
(y) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Mar 31, 2016
Significant Accounting Policies forming part of Financial Statements for the year ended 31st March, 2016
1 SIGNIFICANT ACCOUNTING POLICIES
a) Nature of Operations
The Company is engaged in the business of real estate/ real estate development and incidental services.
b) General
The financial statements are prepared under the historical cost convention, on the accounting principles of a going concern.
Accounting Policies not specifically referred to otherwise are consistent and in consonance with the applicable accounting standards prescribed by under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI) to the extent applicable.
All expenses and income to the extent ascertainable with reasonable certainty are accounted for on accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual result could differ from these estimates. Any revision to accounting estimates is recognized prospectively.
All assets and liabilities have been classified as current and non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
c) Revenue recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting. Direct/Allocable expenses incurred during the year are debited to work- in-progress account. The revenue is accounted for as and when the significant risks and rewards of ownership of the units in real estate have passed or deemed to have passed to the buyer and the Projects get completed or substantially completed, to the extent that the economic benefits will flow to the Company and the revenue can be reliably measured.
ii) Rent
Rental Income is recognized on a time proportion basis as per the contractual obligations agreed with the respective tenant.
iii) Interest
Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
iv) Dividend
Dividend Income is recognized when the shareholders'' right to receive payment is established by the balance sheet date.
v) Profit /Loss from Partnership Firms
Share of profit / loss from firms in which the Company is a partner is accounted for in the financial period ending on (or before) the date of the balance sheet on the basis of audited accounts and as per the terms of the respective partnership deed.
vi) Maintenance Services
Revenue in respect of maintenance services is recognized on an accrual basis, in accordance with the terms of the respective contract.
vii) Project Management Services
Revenue in respect of Project Management services is recognized on an accrual basis, in accordance with the terms of the respective agreement.
d) Inventories
Inventories comprise of Land and development rights, Construction materials, Work-in-progress, completed unsold flats/units. These are valued at lower of the cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business; less estimated costs of completion (wherever applicable) and estimated costs necessary to make the sale.
e) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Capital work in progress includes expenditure incurred till the assets are put into intended use.
f) Depreciation and Amortization
Depreciation of tangible fixed assets is provided as per the Straight Line Method using the useful life as prescribed under Schedule II of the Companies Act, 2013. In case of intangible fixed assets - Software, the same is amortized over a period of its useful life or five years whichever is less.
g) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates and if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is restated to extent of the carrying value of the asset that would have been determined (net of amortization / depreciation), had no impairment loss been recognized. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
h) Investments
Investments that are readily realizable and intended to be held for not more than one year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost or fair value determined on individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary decline in the value of the investments.
i) Employee benefits Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the Statement of profit and loss of the period when the contributions to the fund are due. There are no other obligations other than the contribution payable to the government funds.
Defined Benefit Plan
Company''s liabilities towards gratuity liability are provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each balance sheet date. Actuarial gains/losses are immediately taken to Statement of profit and loss and are not deferred.
Compensated absences i. Short term
Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value of estimated amount required to be paid or estimated value of the benefit expected to be availed by the employees.
ii. Long Term
Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are credited or charged to statement of profit and loss in the year in which such gains or losses are determined.
Employee Share-Based Payments
The stock options granted under Employee Stock Option Scheme - 2013 to employees of the Company are accounted for in accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 ("ESOP Guidelinesâ) issued by Securities and Exchange Board of India ("SEBIâ) and the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India, whereby the intrinsic value of options is recognized as deferred employee compensation. The deferred employee compensation is charged to the Statement of Profit and Loss on the straight-line basis over the vesting period of the option.
j) Borrowing Costs
Borrowing costs relating to acquisition and/or construction of qualifying assets are capitalized to the extent that the funds are borrowed and used for purpose of constructing a qualifying asset until the time all substantial activities necessary to prepare the qualifying assets for their intended use or sale are complete. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use or sale. All other borrowing costs which are not related to acquisition and/or construction activities nor are incidental thereto are charged to the Statement of profit and loss.
k) Taxation
Tax expense comprises of current income tax and deferred income tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each balance sheet date, the Company reassesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset and carried forward only if there is a reasonable certainty of it being set off against regular tax payable within the stipulated statutory period.
l) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange in force on the date of the transactions. Foreign Currency assets and liabilities (monetary items) are translated at the exchange rate prevalent at the date of the Balance Sheet. Non - Monetary item such as investments are carried at historical cost using the exchange rate on the date of transaction.
Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
m) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
n) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation as a result of past event 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 are not discounted to its present value and are determined based on 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.
Possible future obligations or present obligations that may but will probably not require outflow of resources or where the same cannot be reliably estimated, is disclosed as contingent liabilities in the notes to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial statements.
o) Share Issue Expenses
Share issue expenses are adjusted against Securities Premium Account. p) Leases
i) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating lease. Operating lease payments are recognized as an expense in the Statement of profit and loss on Straight Line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are included in Investments. Lease income is recognized in the Statement of profit and loss on Straight Line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the Lease.
Mar 31, 2015
A) Nature of Operations
The Company is engaged in the business of real estate/ real estate
development and incidental services.
b) General
The financial statements are prepared under the historical cost
convention, on the accounting principles of a going concern.
Accounting Policies not specifically referred to otherwise are
consistent and in consonance with the applicable accounting standards
prescribed by under section 133 of the Companies Act, 2013 ('the Act')
read with Rule 7 of the Companies (Accounts) Rules, 2014 the provisions
of the Act (to the extent notified) and guidelines issued by the
Securities and Exchange Board of India (SEBI) to the extent applicable.
All expenses and income to the extent ascertainable with reasonable
certainty are accounted for on accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent liabilities on the
date of financial statements and reported amounts of revenue and
expenses for that year. Actual result could differ from these
estimates. Any revision to accounting estimates is recognised
prospectively.
All assets and liabilities have been classified as current and
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013.
c) Revenue recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting.
Direct/Allocable expenses incurred during the year are debited to work-
in-progress account. The revenue is accounted for as and when the
significant risks and rewards of ownership of the units in real estate
have passed or deemed to have passed to the buyer and the Projects get
completed or substantially completed, to the extent that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
ii) Rent
Rental Income is recognized on a time proportion basis as per the
contractual obligations agreed with the respective tenant.
iii) Interest
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iv) Dividend
Dividend Income is recognised when the shareholders' right to receive
payment is established by the balance sheet date.
v) Profit /Loss from Partnership Firms/LLP
Share of profit / loss from firms in which the Company is a partner is
accounted for in the financial period ending on (or before) the date of
the balance sheet on the basis of audited accounts and as per the terms
of the respective partnership deed.
vi) Maintenance Services
Revenue in respect of maintenance services is recognised on an accrual
basis, in accordance with the terms of the respective contract.
vii) Project Management Services
Revenue in respect of Project Management services is recognised on an
accrual basis, in accordance with the terms of the respective
agreement.
d) Inventories
Inventories comprise of Land and development rights, Construction
materials, Work-in- progress, completed unsold flats/units. These are
valued at lower of the cost or net realizable value.
Construction Work in Progress are valued as follows:
Land and development rights
Land and development rights (including development cost) are valued at
lower of cost and net realizable value. Costs include land acquisition
cost and initial development cost.
Construction materials
Construction materials are valued at cost if the completed unsold
flats/units in which they will be incorporated are expected to be sold
at or above cost otherwise lower of cost and net realizable value. Cost
is determined on a weighted average basis.
Work-in-progress (Land/ Real Estate under development)
Work-in-progress is valued at cost if the completed unsold flats/units
are expected to be sold at or above cost otherwise at lower of cost and
net realizable value. Cost includes direct expenditure relating to
construction activity (including land cost) and indirect expenditure
(including borrowing costs) during the construction period to the
extent the expenditure is related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)
incurred during the construction period which is neither related to the
construction activity nor is incidental thereto is charged to the
Statement of profit and loss.
Completed unsold flats/units
Lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business; less estimated costs of completion (wherever
applicable) and estimated costs necessary to make the sale.
e) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use. Capital work in progress
includes expenditure incurred till the assets are put into intended
use.
f) Depreciation and Amortization
Depreciation of tangible fixed assets is provided as per the Straight
Line Method using the useful life as prescribed under Schedule II of
the Companies Act, 2013. In case of intangible fixed assets - Software,
the same is amortized over a period of five years.
g) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates
and if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If at
the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, then such loss is reversed
and the asset is restated to extent of the carrying value of the asset
that would have been determined (net of amortization / depreciation),
had no impairment loss been recognized.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
h) Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost or fair value determined on
individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary decline in the value of the investments.
i) Employee benefits Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the Statement
of profit and loss of the period when the contributions to the fund are
due. There are no other obligations other than the contribution payable
to the government funds.
Defined Benefit Plan
Company's liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to Statement of profit and loss and are not deferred.
Compensated absences
i. Short term
Liability in respect of compensated absences becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of undiscounted value of estimated amount required to be
paid or estimated value of the benefit expected to be availed by the
employees.
ii. Long Term
Liability in respect of compensated absences becoming due or expected
to be availed more than one year after the balance sheet date is
estimated on the basis of an actuarial valuation performed by an
independent actuary using the projected unit credit method. Actuarial
gains and losses arising from past experience and changes in actuarial
assumptions are credited or charged to statement of profit and loss in
the year in which such gains or losses are determined.
Employee Share-Based Payments
The stock options granted under Employee Stock Option Scheme - 2013 to
employees of the Company are accounted for in accordance with the
Employee Stock Option Scheme and Employee Stock Purchase Scheme
Guidelines, 1999 ("ESOP Guidelines") issued by Securities and Exchange
Board of India ("SEBI") and the Guidance Note on Accounting for
Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India, whereby the intrinsic value of options is
recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight-line basis over the vesting period of the option.
j) Borrowing Costs
Borrowing costs relating to acquisition and/or construction of
qualifying assets are capitalized to the extent that the funds are
borrowed and used for purpose of constructing a qualifying asset until
the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs which are not related to
acquisition and/or construction activities nor are incidental thereto
are charged to the Statement of profit and loss.
k) Taxation
Tax expense comprises of current income tax and deferred income tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits. At
each balance sheet date, the Company re-assesses unrecognised deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Minimum Alternative Tax (MAT)
credit is recognised as an asset and carried forward only if there is a
reasonable certainty of it being set off against regular tax payable
within the stipulated statutory period.
l) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Foreign Currency assets and
liabilities (monetary items) are translated at the exchange rate
prevalent at the date of the Balance Sheet. Non - Monetary item such as
investments are carried at historical cost using the exchange rate on
the date of transaction.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
m) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted
for events of bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split (consolidation of
shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
n) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
Possible future obligations or present obligations that may but will
probably not require outflow of resources or where the same cannot be
reliably estimated, is disclosed as contingent liabilities in the notes
to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
0) Share Issue Expenses
Share issue expenses are adjusted against Securities Premium Account.
p) Leases
1) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Statement of profit and loss on Straight Line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are
included in Investments. Lease income is recognized in the Statement of
profit and loss on Straight Line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the Lease.
q) Cash Flow Statement
Cash flow statement has been prepared under the 'Indirect Method'. Cash
and cash equivalents, in the cash flow statement comprise of
unencumbered cash and bank balances.
r) The Company operates in single segment i.e. real estate/real estate
development and incidental services and therefore, Segment Reporting as
per AS-17 'Segment Reporting' is not applicable.
Mar 31, 2014
A) Nature of Operations
The Company is engaged in the business of real estate/ real estate
development and incidental services.
b) Basis of preparation of financial statements
The financial statements are prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") in India under the historical
cost convention, on accrual basis. GAAP comprises mandatory Accounting
Standards issued by the Companies (Accounting Standards) Rules, 2006
and the relevant provisions of the Companies Act, 1956. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
c) Use of Estimates
The Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to the accounting estimates is
recognized prospectively.
d) Revenue recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting.
Direct/Allocable expenses incurred during the year are debited to work-
in-progress account. The revenue is accounted for as and when the
significant risks and rewards of ownership of the units in real estate
have passed or deemed to have passed to the buyer and the Projects get
completed or substantially completed, to the extent that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
ii) Rent
Rental Income is recognized on a time proportion basis as per the
contractual obligations agreed with the respective tenant.
iii) Interest
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iv) Dividend
Dividend Income is recognised when the shareholders'' right to receive
payment is established by the balance sheet date.
v) Profit /Loss from Partnership Firms/LLP
Share of profit / loss from firms in which the Company is a partner is
accounted for in the financial period ending on (or before) the date of
the balance sheet on the basis of audited accounts and as per the terms
of the respective partnership deed.
vi) Maintenance Services
Revenue in respect of maintenance services is recognised on an accrual
basis, in accordance with the terms of the respective contract.
vii) Project Management Services
Revenue in respect of Project Management services is recognised on an
accrual basis, in accordance with the terms of the respective
agreement.
e) Inventories
Inventories comprise of Land and development rights, Construction
materials, Work-in- progress, completed unsold flats/units. These are
valued at lower of the cost or net realizable value
Construction Work in Progress are valued as follows:
Land and development rights Land and development rights (including
development cost) are valued
at lower of cost and net realizable value. Costs include land
acquisition cost and initial development cost.
Construction materials Construction materials are valued at cost if the
completed unsold
flats/units in which they will be incorporated are expected to be sold
at or above cost otherwise lower of cost and net realizable value. Cost
is determined on a weighted average basis.
Work-in-progress (Land/ Real Work-in-progress is valued at cost if the
completed unsold flats/units are
Estate under development) expected to be sold at or above cost
otherwise at lower of cost and net
realizable value. Cost includes direct expenditure relating to
construction activity (including land cost) and indirect expenditure
(including borrowing costs) during the construction period to the
extent the expenditure is related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)
incurred during the construction period which is neither related to the
construction activity nor is incidental thereto is charged to the
Statement of profit and loss.
Completed unsold flats/units Lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business; less estimated costs of completion (wherever
applicable) and estimated costs necessary to make the sale
f) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use. Capital work in progress
includes expenditure incurred till the assets are put into intended use
g) Depreciation and Amortization
Depreciation of tangible fixed assets is provided using the Straight
Line Method at the rates and in the manner as prescribed under schedule
XIV of the Companies Act, 1956. In case of intangible fixed assets Â
Software, the same is amortized over a period of five years
h) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates
and if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If at
the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, then such loss is reversed
and the asset is restated to extent of the carrying value of the asset
that would have been determined (net of amortization / depreciation),
had no impairment loss been recognized.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
I) Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost or fair value determined on
individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary decline in the value of the investments.
j) Employee benefits
Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the Statement
of profit and loss of the period when the contributions to the fund are
due. There are no other obligations other than the contribution payable
to the government funds.
Defined Benefit Plan
Company''s liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to Statement of profit and loss and are not deferred.
Compensated absences
I) Short term
Liability in respect of compensated absences becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of undiscounted value of estimated amount required to be
paid or estimated value of the benefit expected to be availed by the
employees.
ii) Long Term
Liability in respect of compensated absences becoming due or expected
to be availed more than one year after the balance sheet date is
estimated on the basis of an actuarial valuation performed by an
independent actuary using the projected unit credit method. Actuarial
gains and losses arising from past experience and changes in actuarial
assumptions are credited or charged to statement of profit and loss in
the year in which such gains or losses are determined.
Employee Share-Based Payments
The stock options granted under Employee Stock Option Scheme  2013 to
employees of the Company are accounted for in accordance with the
Employee Stock Option Scheme and Employee Stock Purchase Scheme
Guidelines, 1999 ("ESOP Guidelines") issued by Securities and Exchange
Board of India ("SEBI") and the Guidance Note on Accounting for
Employee Share-based Payments, issued by the Insitute of Chartered
Accountants of India, whereby the intrinsic value of options is
recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight-line basis over the vesting period of the option.
k) Borrowing Costs
Borrowing costs relating to acquisition and/or construction of
qualifying assets are capitalized to the extent that the funds are
borrowed and used for purpose of constructing a qualifying asset until
the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs which are not related to
acquisition and/or construction activities nor are incidental thereto
are charged to the Statement of profit and loss.
l) Taxation
Tax expense comprises of current income tax and deferred income tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits. At each balance sheet
date, the
Company re-assesses unrecognised deferred tax assets. It recognizes
unrecognized deferred tax assets to the extent that it has become
reasonably certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be
realized. Minimum Alternative Tax (MAT) credit is recognised as an
asset and carried forward only if there is a reasonable certainty of it
being set off against regular tax payable within the stipulated
statutory period.
m) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Foreign Currency assets and
liabilities (monetary items) are translated at the exchange rate
prevalent at the date of the Balance Sheet. Non  Monetary item such as
investments are carried at historical cost using the exchange rate on
the date of transaction.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
n) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted
for events of bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split (consolidation of
shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
o) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
Possible future obligations or present obligations that may but will
probably not require outflow of resources or where the same cannot be
reliably estimated, is disclosed as contingent liabilities in the notes
to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
p) Share Issue Expenses
Share issue expenses are adjusted against Securities Premium Account.
q) Leases
i) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Statement of profit and loss on Straight Line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are
included in Investments. Lease income is recognized in the Statement of
profit and loss on Straight Line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the Lease.
r) Cash Flow Statement
Cash flow statement has been prepared under the ''Indirect Method''. Cash
and cash equivalents, in the cash flow statement comprise of
unencumbered cash and bank balances.
s) The Company operates in single segment i.e. real estate/real estate
development and incidental services and
therefore, Segment Reporting as per AS-17 ''Segment Reporting'' is not
applicable.
b. Terms/rights attached to Equity shares
The Company has only one class of Equity Share having value of Rs. 2
each with an entitlement of one vote per share. The Company declares
and pays dividends in Indian rupees. The dividend proposed by the Board
of Directors are subject to the approval of the shareholders in the
ensuing Annual General Meeting. In the event of liquidation of the
Company, the holder of Equity shares will be entitled to receive any of
the remaining assets of the Company, after distribution of all
Preferential amounts. However, no such Preferential amounts exist
currently. The distribution will be in proportion to the number of
Equity shares held by the Shareholders.
c. Shares held by Subsidiaries
3,000,000 ( P. Y. 3,000,000) shares out of issued, subscribed and paid
up share capital are held by Subsidiary Companies.
e. 353,851 (Previous Year Nil ) Equity Shares of Face Value of Rs. 2
each are reserved for issue under Employee Stock Option Scheme-2013
(ESOP-2013)
The Company uses the intrinsic value-based method of accounting for the
compensation cost of stock options. Intrinsic value is the amount by
which the quoted market price of the underlying shares as on date of
the grant exceeds the excercise price of the option. Had the
compensation cost of stock options been determined in the manner
consistent with the fair value approach based on Black and Scholes
model, the Company''s net profit would be lower by Rs. 9,764,198
(Previous Year: lower by Nil ) and Basic/Diluted earning per share
(before and after exceptional items) would be Rs. 21.66.
Terms & Conditions for Secured Loan taken from Bank
a) The term loan is secured by way of mortgage of land situated at
borivali (realty project - signia high) and andheri (realty project -
sunteck grandeur) and receivables thereon.
b) The term loan is further secured by way of lien on fixed deposits
with bank of Rs.23,584,464; (Previous Year Rs.23,484,464).
c) The interest rate on above term loan is ICICI bank limited I-base
rate plus 4.5% spread.
d) Repayment schedule of secured term loan.
e) The Company has taken a overdraft facility from ICICI bank limited
of Rs. 20 crores which is secured by way of mortgage of the land
situated at andheri (realty project  sunteck grandeur) & at borivali
(realty project- signia high) and receivables thereon. The rate of
interest applied on the above overdraft facility is ICICI bank limited
I-base rate plus 3.75%
f) The Company has taken a overdraft facility from Kotak mahindra bank
limited of Rs. 17 crores which is secured by way of mortgage of the
portion of 4th floor in wing A and wing B of the building known as
sunteck centre . The rate of interest applied on the above overdraft
facility is base rate plus 3.75%
g) The Company has taken loans from body corporates @ 10% which are
repayable on demand.
Mar 31, 2013
A) Nature of Operations
The Company is engaged in the business of real estate/ real estate
development and incidental services.
b) Basis of preparation of financial statements
The financial statements are prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") in India under the historical
cost convention, on accrual basis. GAAP comprises mandatory Accounting
Standards issued by the Companies (Accounting Standards) Rules, 2006
and the relevant provisions of the Companies Act, 1956. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
c) Use of Estimates
The Preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to the accounting estimates is
recognized prospectively.
d) Revenue recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting.
Direct/Allocable expenses incurred during the year are debited to work-
in-progress account. The revenue is accounted for as and when the
significant risks and rewards of ownership of the units in real estate
have passed or deemed to have passed to the buyer and the Projects get
completed or substantially completed, to the extent that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
ii) Rent
Rental Income is recognized on a time proportion basis as per the
contractual obligations agreed with the respective tenant.
iii) Interest
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iv) Dividend
Dividend Income is recognised when the shareholders'' right to receive
payment is established by the balance sheet date.
v) Profit /Loss from Partnership Firms/LLP
Share of profit / loss from firms in which the Company is a partner is
accounted for in the financial period ending on (or before) the date of
the balance sheet on the basis of audited accounts and as per the terms
of the respective partnership deed.
vi) Maintenance Services
Revenue in respect of maintenance services is recognized on an accrual
basis, in accordance with the terms of the respective contract.
vii) Project Management Services
Revenue in respect of Project Management services is recognized on an
accrual basis, in accordance with the terms of the respective
agreement.
e) Inventories
Inventories comprise of Land and development rights, Construction
materials, Work-in- progress, completed unsold flats/units. These are
valued at lower of the cost or net realizable value.
Construction Work in Progress are valued as follows:
Land and development rights Land and development rights (including
development cost) are valued at lower of cost and net realizable value.
Costs include land acquisition cost and initial development cost.
Construction materials Construction materials are valued at cost if the
completed unsold flats/units in which they will be incorporated are
expected to be sold at or above cost otherwise lower of cost and net
realizable value. Cost is determined on a weighted average basis.
Work-in-progress (Land/ Real Work-in-progress is valued at cost if the
completed unsold flats/units are
Estate under development) expected to be sold at or above cost
otherwise at lower of cost and net realizable value. Cost includes
direct expenditure relating to
construction activity (including land cost) and indirect expenditure
(including borrowing costs) during the construction period to the
extent the expenditure is related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)
incurred during the construction period which is neither related to the
construction activity nor is incidental thereto is charged to the
Statement of profit and loss.
Completed unsold flats/units Lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business; less estimated costs of completion (wherever
applicable) and estimated costs necessary to make the sale.
f) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use. Capital work in progress
includes expenditure incurred till the assets are put into intended
use.
g) Depreciation and Amortization
Depreciation of tangible fixed assets is provided using the Straight
Line Method at the rates and in the manner as prescribed under schedule
XIV of the Companies Act, 1956. In case of intangible fixed assets Â
Software, the same is amortized over a period of five years.
h) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates
and if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If at
the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, then such loss is reversed
and the asset is restated to extent of the carrying value of the asset
that would have been determined (net of amortization / depreciation),
had no impairment loss been recognized.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
i) Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost or fair value determined on
individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary decline in the value of the investments.
j) Employee benefits
Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the Statement
of profit and loss of the period when the contributions to the fund are
due. There are no other obligations other than the contribution payable
to the government funds.
Defined Benefit Plan
Company''s liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to Statement of profit and loss and are not deferred.
Compensated absences
Short term
Liability in respect of compensated absences becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of undiscounted value of estimated amount required to be
paid or estimated value of the benefit expected to be availed by the
employees.
Long Term
Liability in respect of compensated absences becoming due or expected
to be availed more than one year after the balance sheet date is
estimated on the basis of an actuarial valuation performed by an
independent actuary using the projected unit credit method. Actuarial
gains and losses arising from past experience and changes in actuarial
assumptions are credited or charged to statement of profit and loss in
the year in which such gains or losses are determined.
k) Borrowing Costs
Borrowing costs relating to acquisition and/or construction of
qualifying assets are capitalized to the extent that the funds are
borrowed and used for purpose of constructing a qualifying asset until
the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs which are not related to
acquisition and/or construction activities nor are incidental thereto
are charged to the Statement of profit and loss.
l) Taxation
Tax expense comprises of current income tax and deferred income tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits. At
each balance sheet date, the Company re-assesses unrecognised deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Minimum Alternative Tax (MAT)
credit is recognised as an asset and carried forward only if there is a
reasonable certainty of it being set off against regular tax payable
within the stipulated statutory period.
m) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Foreign Currency assets and
liabilities (monetary items) are translated at the exchange rate
prevalent at the date of the Balance Sheet. Non  Monetary item such as
investments are carried at historical cost using the exchange rate on
the date of transaction.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
n) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted
for events of bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split (consolidation of
shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
o) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
Possible future obligations or present obligations that may but will
probably not require outflow of resources or where the same cannot be
reliably estimated, is disclosed as contingent liabilities in the notes
to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
p) Share Issue Expenses
Share issue expenses are adjusted against Securities Premium Account.
q) Leases
i) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Statement of profit and loss on Straight Line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are
included in Investments. Lease income is recognized in the Statement of
profit and loss on Straight Line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the Lease.
r) Cash Flow Statement
Cash flow statement has been prepared under the ''Indirect Method''. Cash
and cash equivalents, in the cash flow statement comprises of
unencumbered cash and bank balances.
Mar 31, 2012
A) Nature of Operations
The Company is engaged in the business of real estate/ real estate
development and incidental services.
b) Basis of preparation of financial statements
The financial statements are prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") in India under the historical
cost convention, on accrual basis. GAAP comprises mandatory Accounting
Standards issued by the Companies (Accounting Standards) Rules, 2006
and the relevant provisions of the Companies Act, 1956. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
c) Use of Estimates
The Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to the accounting estimates is
recognized prospectively.
d) Revenue recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting.
Direct/Allocable expenses incurred during the year are debited to work-
in-progress account. The revenue is accounted for as and when the
significant risks and rewards of ownership of the units in real estate
have passed or deemed to have passed to the buyer and the Projects get
completed or substantially completed, to the extent that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
ii) Rent
Rental Income is recognized on a time proportion basis as per the
contractual obligations agreed with the respective tenant.
iii) Interest
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iv) Dividend
Dividend Income is recognised when the shareholders' right to receive
payment is established by the balance sheet date.
v) Profit /Loss from Partnership Firms/LLP
Share of profit / loss from firms in which the Company is a partner is
accounted for in the financial period ending on (or before) the date of
the balance sheet on the basis of audited accounts and as per the terms
of the respective partnership deed.
vi) Maintenance Services
Revenue in respect of maintenance services is recognised on an accrual
basis, in accordance with the terms of the respective contract.
e) Construction Work in Progress
Construction Work In Progress comprises of Land and development rights,
Construction materials, Work-in- progress, completed unsold
flats/units. These are valued at lower of the cost or net realizable
value.
Land
Land and development rights including development cost and borrowing
costs.
Construction materials
Construction materials are valued at cost if the completed unsold
flats/units in which they will be incorporated are expected to be sold
at or above cost otherwise lower of cost or net realizable value. Cost
is determined on a weighted average basis.
Work-in-progress (Land/ Real Estate under development)
Work-in-progress is valued at cost if the completed unsold flats/units
are expected to be sold at or above cost otherwise at lower of cost or
net realizable value. Cost includes direct expenditure relating to
construction activity (including land cost) and indirect expenditure
(including borrowing costs) during the construction period to the
extent the expenditure is related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)
incurred during the construction period which is neither related to the
construction activity nor is incidental thereto is charged to the
Statement of profit and loss.
Completed unsold flats/units Lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business; less estimated costs of completion (where ever
applicable) and estimated costs necessary to make the sale.
f) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use. Capital work in progress
includes expenditure incurred till the assets are put into intended
use.
g) Depreciation and Amortization
Depreciation of tangible fixed assets is provided using the Straight
Line Method at the rates and in the manner as prescribed under schedule
XIV of the Companies Act, 1956. In case of intangible fixed assets Ã
Software, the same is amortized over a period of five years.
h) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates
and if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If at
the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, then such loss is reversed
and the asset is restated to extent of the carrying value of the asset
that would have been determined (net of amortization / depreciation),
had no impairment loss been recognized.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
I) Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost or fair value determined on
individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary decline in the value of the investments.
j) Employee benefits
Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the Statement
of profit and loss of the period when the contributions to the fund are
due. There are no other obligations other than the contribution payable
to the government funds.
Defined Benefit Plan
Company's liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to Statement of profit and loss and are not deferred.
Compensated absences
Short term
Liability in respect of compensated absences becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of undiscounted value of estimated amount required to be
paid or estimated value of the benefit expected to be availed by the
employees.
Long Term
Liability in respect of compensated absences becoming due or expected
to be availed more than one year after the balance sheet date is
estimated on the basis of an actuarial valuation performed by an
independent actuary using the projected unit credit method. Actuarial
gains and losses arising from past experience and changes in actuarial
assumptions are credited or charged to statement of profit and loss in
the year in which such gains or losses are determined.
k) Borrowing Costs
Borrowing costs relating to acquisition and/or construction of
qualifying assets are capitalized to the extent that the funds are
borrowed and used for purpose of constructing a qualifying asset until
the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs which are not related to
acquisition and/or construction activities nor are incidental thereto
are charged to the Statement of profit and loss.
l) Taxation
Tax expense comprises of current income tax and deferred income tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits. At
each balance sheet date, the Company re-assesses unrecognised deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Minimum Alternative Tax (MAT)
credit is recognised as an asset and carried forward only if there is a
reasonable certainty of it being set off against regular tax payable
within the stipulated statutory period.
m) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Foreign Currency assets and
liabilities (monetary items) are translated at the exchange rate
prevalent at the date of the Balance Sheet. Non à Monetary item such as
investments are carried at historical cost using the exchange rate on
the date of transaction.
Any income or expenses on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
n) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted
for events of bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split (consolidation of
shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
o) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
Possible future obligations or present obligations that may but will
probably not require outflow of resources or where the same cannot be
reliably estimated, is disclosed as contingent liabilities in the notes
to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
p) Share Issue Expenses
Share issue expenses are adjusted against Securities Premium Account.
q) Leases
i) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Statement of profit and loss on Straight Line basis over the
lease term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are
included in Investments. Lease income is recognized in the Statement
of profit and loss on Straight Line basis over the lease term, unless
there is another systematic basis which is more representative of the
time pattern of the Lease.
r) Cash Flow Statement
Cash flow statement has been prepared under the 'Indirect Method'. Cash
and cash equivalents, in the cash flow statement comprise unencumbered
cash and bank balances.
Mar 31, 2011
1. Nature of Operations
The Company is engaged in the business of real estate/ real estate
development and incidental services.
2. Basis of preparation of financial statements
The financial statements are prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") in India under the historical
cost convention, on accrual basis. GAAP comprises mandatory Accounting
Standards issued by the Companies (Accounting Standards) Amendment
Rules, 2008 and the relevant provisions of the Companies Act, 1956. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year.
3. Use of Estimates
The Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates. Any revision to the accounting estimates is
recognized prospectively.
4. Revenue Recognition
i) Revenue for real estate development/sale
The Company follows completed project method of accounting. Allocable
expenses incurred during the year are debited to work- in-progress
account. The revenue is accounted for as and when the significant risks
and rewards of ownership of the units in real estate are passed to the
buyer and the Projects get completed or substantially completed, to the
extent that the economic benefits will flow to the Company and the
revenue can be reliably measured.
ii) Dividend
Dividend is recognised when the shareholders' right to receive payment
is established by the balance sheet date.
iii) Profit /Loss from Partnership Firms/LLP/AOP
Share of profit / loss from firms in which the Company is a partner is
accounted for in the financial period ending on (or before) the date of
the balance sheet on the basis of audited accounts and as per the terms
of the respective partnership deeds.
iv) Maintenance Services
Revenue in respect of maintenance services is recognised on an accrual
basis, in accordance with the Terms of the respective contract.
5. Construction Work in Progress
Construction Work In Progress comprises of Land and development rights,
Construction materials, Work-in- progress, completed unsold
flats/units. These are valued at lower of the cost and net realizable
value.
Construction Work in Progress are valued as follows:
Land Land and development rights including development cost and
Financial Costs.
Construction materials Construction materials are valued at cost if the
completed unsold flats/units in which they will be incorporated are
expected to be sold at or above cost otherwise lower of cost and net
realizable value. Cost is determined on a weighted average basis.
Work-in-progress (Land/ Real Estate under development)
Work-in-progress is valued at cost if the completed unsold flats/units
are expected to be sold at or above cost otherwise at lower of cost and
net realizable value. Cost includes direct expenditure relating to
construction activity (including land cost) and indirect expenditure
(including borrowing costs) during the construction period to the
extent the expenditure is related to construction or is incidental
thereto. Other indirect expenditure (including borrowing costs)
incurred during the construction period which is neither related to the
construction activity nor is incidental thereto is charged to the
Profit and Loss Account.
Completed unsold flats/units Lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business; less estimated costs of completion (wherever
applicable) and estimated costs necessary to make the sale.
6. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use. Capital work in progress
includes expenditure incurred till the assets are put into intended
use.
7. Depreciation
Depreciation is provided using the Straight Line Method at the rates
and in the manner as prescribed under schedule XIV of the Companies
Act, 1956. In case of Software, the same is amortized over a period of
five years.
8. Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet dates
and if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. If at
the balance sheet date, there is an indication that a previously
assessed impairment loss no longer exists, then such loss is reversed
and the asset is restated to extent of the carrying value of the asset
that would have been determined (net of amortization / depreciation),
had no impairment loss been recognized.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
9. Investments
Investments that are readily realizable and intended to be held for not
more than one year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost or fair value determined on
individual investment basis. Long-term investments are carried at cost.
However, provision for diminution in value is made to recognize a
decline other than temporary decline in the value of the investments.
10. Employee benefits
Defined Contribution Plan
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the period when the contributions to the fund are due.
There are no other obligations other than the contribution payable to
the government funds.
Defined Benefit Plan
Company's liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to Profit and Loss Account and are not deferred.
Compensated absences
Short term
Liability in respect of compensated absences becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of undiscounted value of estimated amount required to be
paid orestimated value of the benefit expected to be availed by the
employees.
Long Term
Liability in respect of compensated absences becoming due or expected
to be availed more than one year after the balance sheet date is
estimated on the basis of an actuarial valuation performed by an
independent actuary using the projected unit credit method. Actuarial
gains and losses arising from past experience and changes in actuarial
assumptions are credited or charged to profit and loss account in the
year in which such gains or losses are determined.
11. Borrowing Costs
Borrowing costs relating to acquisition and/or construction of
qualifying assets are capitalized to the extent that the funds are
borrowed and used for purpose of constructing a qualifying asset until
the time all substantial activities necessary to prepare the qualifying
assets for their intended use are complete. A qualifying asset is one
that necessarily takes substantial period of time to get ready for its
intended use. All other borrowing costs which are not related to
acquisition and/or construction activities nor are incidental thereto
are charged to the Profit and Loss account.
12. Taxation
Tax expense comprises of current income tax and deferred income tax.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act. Deferred
income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognised only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits. At
each balance sheet date, the Company re-assesses unrecognised deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. Minimum Alternative Tax (MAT)
credit is recognised as an asset and carried forward only if there is a
reasonable certainty of it being set off against regular tax payable
within the stipulated statutory period.
13. Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
in force on the date of the transactions. Current assets and Current
liabilities in foreign currency are translated at the exchange rate
prevalent at the Date of the Balance Sheet.
Any income or expenses on account of exchange difference either on
settlement or on translation is reconginsed in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
14. Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the year. The weighted
average number of equity shares outstanding during the year is adjusted
for events of bonus issue, bonus element in a rights issue to existing
shareholders, share split and reverse share split (consolidation of
shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
15. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
Possible future obligations or present obligations that may but will
probably not require outflow of resources or where the same cannot be
reliably estimated, is disclosed as contingent liabilities in the notes
to accounts of financial statements.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
16. Share Issue Expenses
Share issue expenses including expenses incurred on increase in
authorized share capital and premium payable on securities are adjusted
against Securities Premium Account.
17. Leases
I) Where Company is the lessee
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognized as
operating lease. Operating lease payments are recognised as an expense
in the Profit and Loss Account on Straight Line basis over the lease
term, unless there is another systematic basis which is more
representative of the time pattern of the Lease.
ii) Where Company is the lessor
Assets representing Lease arrangements given under operating leases are
included in Investments. Lease income is recognized in the Profit and
Loss Account on Straight Line basis over the lease term, unless there
is another systematic basis which is more representative of the time
pattern of the Lease.
18. Cash Flow Statement
Cash flow statement has been prepared under the 'Indirect Method'. Cash
and cash equivalents, in the cash Flow statement comprise un encumbered
cash and bank balances.
Mar 31, 2010
1. Basis of preparation of financial statements
The financial statements are prepared underthe historical cost
convention, on accrual basis, in compliance with all material aspects
of the notified Accounting standards by Companies (Accounting
Standards) Amendment Rules, 2008 and the relevant provisions of the
Companies Act, 1956. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year.
2. Use of Estimates
The Preparation of financial statements in conformity with generally
accepted accounting principles requires estimates and assumptions to be
made that affect the reported amounts of assets and liabilities on the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Differences between actual
results and estimates are recognised in the period in which the results
are known/materealised.
3. Revenue recognition
i) The Company follows completed project method of accounting ("Project
Completion Method of Accounting"). Allocable expenses incurred during
the year are debited to work in progress account The revenue is
accounted when the Projects get completed to the extent that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
ii) Rent Income is considered on acceptance of the contract and is
accrued over the period of contract.
iii) Interest Income is recognized on time proportion basis.
iv) Dividend is recognised when the shareholders right to receive
payment is established by the balance sheet date.
4. Inventories
Projects in progress are valued at cost. Cost includes cost of land,
land development right, materials, services, borrowing costs and other
related overheads.
5. Fixed Assets
Fixed assets are shown at cost of acquisition, after reducing
accumulated depreciation. Capital work in progress includes expenditure
incurred till the assets are put into intended use.
6. Depreciation
Depreciation is provided using the Straight Line Method as per the
useful lives of the assets estimated by the management, or at the rates
prescribed under Schedule XIV of the Companies Act, 1956 whichever is
higher.
7. Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
if there are impairment indicators. An impairment loss is recognized
wherever the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of the assets net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value at
the WACC.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life. A previously
recognised impairment loss is increased or decreased based on
reassessment of recoverable amount, which is carried out if the change
is significant. However the carrying value after reversal is not
increased beyond the carrying value that would have prevailed by
charging usual depreciation if there was no impairment.
8. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. Current
investments are carried at lower of cost and market value whichever is
less.
All other investments are classified as long-term investments.
Long-term investments are carried at cost, less provision for
diminution in value other than temporary.
9. Employee benefits Defined Contribution Plan
Contribution to defined contribution plans are recognized as expense in
the Profit and Loss Account as they are, incurred.
Defined Benefit Plan
Companys liabilities towards gratuity liability are provided for on
the basis of an actuarial valuation on projected unit credit method
made at the end of each balance sheet date. Actuarial gains/losses are
immediately taken to P&L Account and are not deferred.
Leave Encashment and bonus is accounted on cash basis.
10. Borrowing Cost
Borrowing costs which are directly attributable to acquisition,
construction or production of a qualifying asset are capitalized as a
part of the cost of that asset. Other borrowing costs are recognized as
expenses in the period in which they are incurred.
11. Taxation
Tax expense comprises of current and deferred. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the profit and loss account and shown as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
12. Share Issue Expenses
Share Issue Expenses are charged to the Securities Premium account.
13. 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. The gain or loss arising out of settlement / translation
of the assets and liabilities at the closing rates due to exchange
fluctuations is recognized as income/expenditure in the profit and loss
account.
14. Earnings Per Share
The Company reports basic and diluted earnings per share in accordance
with AS-20 "Earnings per Share". Basic earnings per share are computed
by dividing the net profit or loss for the period by the weighted
average number of Equity Shares outstanding during the period. Diluted
earnings per share is computed by dividing the net profit or loss for
the period by the weighted average number of Equity Shares outstanding
during the period as adjusted for the effects of all dilutive potential
equity shares.
15. Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event 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 are not discounted to its
present value and are determined based on 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.
16. Contingent Liabilities
Contingent Liabilities, if any, are disclosed in the Notes on Accounts.
Provision is made in the accounts in respect of those contingencies
which are likely to materialize into liabilities after the year end
till the approval of the accounts by the Board of Directors and which
have material effect on the position stated in the Balance Sheet.
17. Cash Flow Statement
The Cash Flow Statement has been prepared in accordance with the
indirect method prescribe in Accounting Standard- 3 issued by The
Institute of Chartered Accountants of India.
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