Accounting Policies of Suraj Estate Developers Ltd. Company

Mar 31, 2025

3. | SUMMARY OF MATERIAL ACCOUNTING POLICIES

3.1. Current and non-current classification

The Company presents assets and liabilities in
the Balance Sheet based on current/ non-current
classification. An asset is treated as current when it is:

• Expected to be realised or intended to be sold or
consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months after
the reporting period; or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.

A liability is current when:

• I t is expected to be settled in normal operating
cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after
the reporting period; or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period.

The Company classifies all other liabilities as non¬
current. Deferred tax assets and liabilities are classified
as non-current assets and liabilities, respectively.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents.

The operating cycle of the Company’s real estate
operations varies from project to project depending
on the size of the project, type of development, project
complexities and related approvals. Assets and
Liabilities are classified into current and non-current
based on the operating cycle.

3.2. Functional and presentation of currency

The Standalone Ind AS Financial Statements are
prepared in Indian Rupees which is also the Company’s
functional currency. All amounts are rounded to the
nearest rupees in Mn.

.3. Fair value measurement

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. A fair value measurement assumes
that the transaction to sell the asset or transfer the
liability takes place either in the principal market for the
asset or liability or in the absence of a principal market,
in the most advantageous market for the asset or
liability. The principal market or the most advantageous
market must be accessible to the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes
into account a market participant’s ability to generate

economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs

All assets and liabilities for which fair value is
measured or disclosed in the Standalone Ind AS
Financial Statements are categorised within the fair
value hierarchy based on the lowest level input that is
significant to the fair value measurement as a whole.
The fair value hierarchy is described as below:

Level 1 - Unadjusted quoted price in active markets for
identical assets and liabilities.

Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the asset or
liability, either directly or indirectly

Level 3 - unobservable inputs for the asset or liability

For assets and liabilities that are recognised in the
Standalone Ind AS Financial Statements at fair value
on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy
by re-assessing categorisation at the end of each
reporting period.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of fair value hierarchy.

Fair values have been determined for measurement and
/ or disclosure purpose using methods as prescribed in
"Ind AS 113 Fair Value Measurement".

3.4. Use of estimates and judgements

The preparation of these Standalone Ind AS Financial
Statements in conformity with the recognition
and measurement principles of Ind AS requires
management to make estimates and assumptions that
affect the reported balances of assets and liabilities,
disclosure of contingent liabilities as on the date of the
Standalone Ind AS Financial Statements and reported
amounts of income and expenses for the periods
presented. The Company based its assumptions
and estimates on parameters available when the
Standalone Ind AS Financial Statements were prepared.
Estimates and underlying assumptions are reviewed on

an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are
revised and future periods are affected.

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. Significant
estimates and critical judgement in applying these
accounting policies are described below:

3.4.1. Significant estimates

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, are described below. The
Company based its assumptions and estimates
on parameters available when the Standalone Ind
AS 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 assumptions when they occur.

i) Revenue recognition and net realisable value
of construction work in progress

• Revenue to be recognised, stage of
completion, projections of cost and
revenues expected from project and
realisation of the construction work in
progress have been determined based
on management estimates which are
based on current market situations/
technical evaluations.

• In respect of real estate project
(Construction work in progress) which
are at initial preparatory stage [i.e.
acquisition of land / development
rights], realisation of the construction
work in progress and advance given to
various parties have been determined
based on management estimates of
commercial feasibility and management
expectation of future economic benefits
from the projects. These estimates are
reviewed periodically by management
and revised whenever required.

The consequential effect of such revision in
estimates is considered in the year of revision
and in the balance future period of the project.
These estimates are dynamic in nature and
are dependent upon various factors like
eligibility of the tenants, changes in the area,
approval and other factors. Changes in these
estimates can have significant impact on
the financial results of the Company and its
comparability with the previous year however
quantification of the impact due to change in
said estimates cannot be quantified.

ii) Valuation of investment in subsidiaries

Investments in subsidiaries are carried
at cost. At each balance sheet date, the
management assesses the indicators of
impairment of such investments. This
requires assessment of several external and
internal factor including capitalisation rate,
key assumption used in discounted cash flow
models (such as revenue growth, unit price
and discount rates) or sales comparison
method which may affect the carrying value
of investments in subsidiaries.

iii) Defined benefit obligations

The cost of defined benefit gratuity plan and
the present value of the gratuity obligation
along with leave salary are determined using
actuarial valuations. An actuarial valuation
involves making various assumptions such
as standard rates of inflation, mortality,
discount rate, attrition rates and anticipation
of future salary increases. Due to the
complexities involved in the valuation and its
long-term nature, a defined benefit obligation
is highly sensitive to changes in these
assumptions. All assumptions are reviewed
at each reporting date.

iv) Fair value measurement of financial
instruments

When the fair values of financial assets
and financial liabilities recorded in the
balance sheet cannot be measured based
on quoted price in active markets since they
are unquoted, their value is measured using
valuation technique including the discounted
cash flow (DCF) model. The inputs to these
models are taken from observable markets

where possible, but where this is not
feasible, a degree of judgement is required in
establishing fair values. Judgements include
considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in
assumptions about these factors could
affect the reported fair value of financial
instruments.

3.4.2. Significant management judgement in applying
accounting policies and estimation uncertainty

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.
Where the carrying amount of an asset
exceeds its recoverable amount, the asset is
considered impaired and is written down to
its recoverable amount.

ii) Impairment of financial assets

The impairment provisions for financial
assets are based on assumptions about risk
of default and expected credit loss rates.
The Company uses judgement in making
these assumptions and selecting the inputs
to the impairment calculation based on
industry practice, Company’s past history,
and existing market conditions as well as
forward looking estimates at the end of each
reporting period.

iii) Provisions

At each balance sheet date basis the
management judgment, changes in facts
and legal aspects, the Company assesses
the requirement of provisions against the
outstanding contingent liabilities. However,
the actual future outcome may be different
from this judgement.

iv) Recognition of deferred tax assets

The extent to which deferred tax assets can
be recognised is based on an assessment of
the probability of the future taxable income
against which the deferred tax assets can be
utilised.

v) Revenue from contracts with customers

The Company has applied judgements that
significantly affect the determination of the
amount and timing of revenue from contracts
with customers.

3.5. Property, Plant and Equipment and Depreciation
Recognition and measurement

Properties plant and equipment are stated at their cost
of acquisition. On transition to Ind AS, the Company
had elected to measure all of its property, plant and
equipment at the previous GAAP carrying value
(deemed cost). Cost of an item of property, plant and
equipment includes purchase price including non -
refundable taxes and duties, borrowing cost directly
attributable to the qualifying asset, any costs directly
attributable to bringing the asset to the location and
condition necessary for its intended use and the
present value of the expected cost for the dismantling/
decommissioning of the asset.

Parts (major components) of an item of property,
plant and equipments having different useful lives are
accounted as separate items of property, plant and
equipments.

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. All other repair and maintenance
costs are recognised in statement of profit and loss as
incurred.

Capital work-in-progress comprises of cost incurred
on property, plant and equipment under construction /
acquisition that are not yet ready for their intended use
at the Balance Sheet Date.

Depreciation and useful lives

Depreciation on the property, plant and equipment
(other than capital work in progress) is provided on a
written down value (WDV) over their useful lives which
is in consonance of useful life mentioned in Schedule
II to the Companies Act, 2013. Depreciation methods,
useful lives and residual values are reviewed at each
financial year end and adjusted prospectively.

De-recognition

An item of property, plant and equipment and any
significant part initially recognised is de-recognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or

loss arising on de-recognition of the asset (calculated
as the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the statement of profit and loss when the asset is de¬
recognised.

3.6. Leases

The determination of whether a contract is (or contains)
a lease is based on the substance of the contract at the
inception of the lease. The contract is, or contains, a
lease if the contract provide lessee, the right to control
the use of an identified asset for a period of time in
exchange for consideration. A lessee does not have
the right to use an identified asset if, at inception of the
contract, a lessor has a substantive right to substitute
the asset throughout the period of use.

The Company accounts for the lease arrangement as
follows:

(i) Where the Company is the lessee

The Company applies single recognition and
measurement approach for all leases, except for
short term leases and leases of low value assets.
On the commencement of the lease, the Company,
in its Balance Sheet, recognise the right of use
asset at cost and lease liability at present value
of the lease payments to be made over the lease
term.

Subsequently, the right of use asset are measured
at cost less accumulated depreciation and any
accumulated impairment loss. Lease liability are
measured at amortised cost using the effective
interest method. The lease payment made, are
apportioned between the finance charge and the
reduction of lease liability, and are recognised as
expense in the Statement of Profit and Loss.

Lease deposits given are a financial asset and are
measured at amortised cost under Ind AS 109
since it satisfies Solely Payment of Principal and
Interest (SPPI) condition. The difference between
the present value and the nominal value of deposit
is considered as prepaid rent and recognised over
the lease term. Unwinding of discount is treated as
finance income and recognised in the Statement
of Profit and Loss.

(ii) Where the Company is the lessor

The lessor needs to classify its leases as either
an operating lease or a finance lease. Lease
arrangements where the risks and rewards

incidental to ownership of an asset substantially
vest with the lessor are recognised as operating
lease. The Company has only operating lease and
accounts the same as follows:

Assets given under operating leases are included
in investment properties. Lease income is
recognised in the Statement of Profit and Loss
on straight line basis over the lease term, unless
there is another systematic basis which is more
representative of the time pattern of the lease.

Initial direct costs incurred in negotiating and
arranging an operating lease are added to
the carrying amount of the leased asset and
recognised over the lease term on the same basis
as rental income.

Lease deposits received are financial instruments
(financial liability) and are measured at fair value
on initial recognition. The difference between the
fair value and the nominal value of deposits is
considered as rent in advance and recognised over
the lease term on a straight line basis. Unwinding
of discount is treated as interest expense (finance
cost) for deposits received and is accrued as per
the EIR method.

3.7. Intangible assets and amortisation
Recognition and measurement

I ntangible assets are recognised only if it is probable
that the future economic benefits attributable to
asset will flow to the Company and the cost of asset
can be measured reliably. On transition to Ind AS, the
Company had elected to measure all of its property,
plant and equipment at the previous GAAP carrying
value (deemed cost). Intangible assets are stated at
cost of acquisition/development less accumulated
amortisation and accumulated impairment loss if any.

Cost of an intangible asset includes purchase price
including non - refundable taxes and duties, borrowing
cost directly attributable to the qualifying asset and any
directly attributable expenditure on making the asset
ready for its intended use.

Intangible assets under development comprises of
cost incurred on intangible assets under development
that are not yet ready for their intended use as at the
Balance Sheet date.

Goodwill arising on business combination is initially
measured at cost, being the excess of the aggregate of
the consideration transferred over the net identifiable
assets acquired and liabilities assumed.

Amortisation and useful lives

Computer softwares are amortised in 3 years on
Written Down Value (WDV). Amortisation methods and
useful lives are reviewed at each financial year end and
adjusted prospectively.

I n case of Goodwill related to Business Combination,
after initial recognition, goodwill is measured at cost
less any accumulated impairment losses. In case such
goodwill paid for acquisition is in relation to underlying
real estate project, impairment co-inside with the
revenue recognition from the underlying project and
accordingly impairment provision is made in line
with revenue recognition. Goodwill, other than related
to underlying real estate project is only tested for
impairment.

In case of assets purchased during the year,
amortisation on such assets is calculated on pro-rata
basis from the date of such addition.

3.8. Impairment of non-financial assets

The carrying amounts of assets are reviewed at each
balance sheet date for any indication of impairment
based on internal / external factors. An impairment
loss is recognised wherever the carrying amount of an
asset exceeds its recoverable amount. The recoverable
amount is the higher of a) fair value of assets less cost
of disposal and b) its value in use. Value in use is the
present value of future cash flows expected to derive
from an assets or Cash-Generating Unit (CGU).

Based on the assessment done at each balance sheet
date, recognised impairment loss is further provided
or reversed depending on changes in circumstances.
After recognition of impairment loss or reversal of
impairment loss as applicable, the depreciation charge
for the asset is adjusted in future periods to allocate
the asset’s revised carrying amount, less its residual
value (if any), on a systematic basis over its remaining
useful life. If the conditions leading to recognition of
impairment losses no longer exist or have decreased,
impairment losses recognised are reversed to the extent
it does not exceed the carrying amount that would
have been determined after considering depreciation /
amortisation had no impairment loss been recognised
in earlier years.

3.9. Inventories

Inventory of finished units are valued at lower of cost or
net realisable value.

Construction work in progress (CWIP) is valued at
lower of cost or net realisable value. CWIP includes
cost of land, premium or fees paid in connection
with acquisition of transferable development rights,
sub-development rights, initial costs for securing
projects, initial premium paid on assignment/transfer
of project, construction costs, cost of redevelopment,
settlement of claims relating to land, and attributable
borrowing cost and expenses incidental to the projects
undertaken by the Company. In case of projects at
initial stage, net realisable value is computed based on
the management estimate of future realisable value.

Construction costs include all cost related to
development of real estate project and exclude all costs
pertaining to selling and marketing activities which are
considered as indirect cost and are directly charged to
the Statement of Profit and Loss.

3.10. Revenue recognition

(i) Revenue from contract with customer

Revenue from contracts with customer is
recognised, when control of the goods or services
are transferred to the customer, at an amount that
reflects the consideration to which the Company
is expected to be entitled in exchange for those
goods or services. The Company assesses its
revenue arrangements against specific criteria
in order to determine if it is acting as principal or
agent. The Company concluded that it is acting as
a principal in all of its revenue arrangements. The
specific recognition criteria described below must
also be met before revenue is recognised.

Revenue is recognised as follows:

(a) Revenue from contract with customers

Revenue is measured at the fair value of the
consideration received/ receivable, taking
into account contractually defined terms
of payment and excluding taxes or duties
collected on behalf of the government and is
net of rebates and discounts. The Company
assesses its revenue arrangements against
specific criteria to determine if it is acting
as principal or agent. The Company has
concluded that it is acting as a principal in all
of its revenue arrangements.

Revenue is recognised in the income
statement to the extent that it is probable
that the economic benefits will flow to the
Company and the revenue and costs, if
applicable, can be measured reliably.

The Company has applied five step model
as per Ind AS 115 ''Revenue from contracts
with customers’ to recognise revenue in the
Standalone Ind AS Financial Statements. The
Company satisfies a performance obligation
and recognises revenue over time, if one of
the following criteria is met:

a) The customer simultaneously receives
and consumes the benefits provided
by the Company’s performance as the
Company performs; or

b) The Company’s performance creates or
enhances an asset that the customer
controls as the asset is created or
enhanced; or

c) The Company’s performance does
not create an asset with an alternative
use to the Company and the entity has
an enforceable right to payment for
performance completed to date.

For performance obligations where any of
the above conditions are not met, revenue is
recognised at the point in time at which the
performance obligation is satisfied.

Revenue is recognised either at point of time
or over a period of time based on various
conditions as included in the contracts with
customers.

(ii) Finance income

Finance income is recognised as it accrues
using the Effective Interest Rate (EIR) method.
Finance income is included in other income in the
Statement of Profit and Loss.

When calculating the EIR, the Company estimates
the expected cash 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.

(iii) Revenue from lease rentals and related income

Lease income is recognised in the Statement of
Profit and Loss on straight line basis over the
lease term, unless there is another systematic
basis which is more representative of the time
pattern of the lease. Revenue from lease rentals is
disclosed net of indirect taxes, if any.

Revenue from property management service is
recognised at value of service and is disclosed net
of indirect taxes, if any.

(iv) Dividend income

Revenue is recognised when the Company’s right
to receive the payment is established, which is
generally when shareholders approve the dividend.

(v) Other income

Other incomes are accounted on accrual basis,
except interest on delayed payment by debtors
and liquidated damages which are accounted on
acceptance of the Company’s claim.

3.H. Foreign currency transaction

Transactions denominated in foreign currencies are
recorded at the exchange rates prevailing on the
date of the transaction. As at the Balance Sheet date,
foreign currency monetary items are translated at
closing exchange rate. Exchange difference arising on
settlement or translation of foreign currency monetary
items are recognised as income or expense in the year
in which they arise.

Foreign currency non-monetary items which are carried
at historical cost are reported using the exchange rate
at the date of transactions.

3.12. Employee benefits

• Short term employee benefits

All employee benefits falling due wholly within
twelve months of rendering the service are
classified as short term employee benefits
and they are recognised as an expense at the
undiscounted amount in the Statement of Profit
and Loss in the period in which the employee
renders the related service.

• Post-employment benefits & other long term
benefits

a. Defined contribution plan

The defined contribution plan is a post¬
employment benefit plan under which the
Company contributes fixed contribution to
a Government Administered Fund and will
have no obligation to pay further contribution.
The Company’s defined contribution plan
comprises of Provident Fund, Labour
Welfare Fund, Employee State Insurance
Scheme, National Pension Scheme and
Employee Pension Scheme. The Company’s

contribution to defined contribution plans
are recognised in the Statement of Profit and
Loss in the period in which the employee
renders the related service.

b. Post-employment benefit and other long
term benefits

The Company has defined benefit plans
comprising of gratuity and other long
term benefits in the form of leave benefits.
Company’s obligation towards gratuity
liability is unfunded. The present value of the
defined benefit obligations and other long
term employee benefits is determined based
on actuarial valuation using the projected
unit credit method. The rate used to discount
defined benefit obligation is determined by
reference to market yields at the Balance
Sheet date on Indian Government Bonds for
the estimated term of obligations.

For gratuity plan, re-measurements
comprising of (a) actuarial gains and losses,
(b) the effect of the asset ceiling (excluding
amounts included in net interest on the net
defined benefit liability) and (c) the return on
plan assets (excluding amounts included
in net interest on the post-employment
benefits liability) are recognised immediately
in the balance sheet with a corresponding
debit or credit to retained earnings through
other comprehensive income in the period in
which they occur. Re-measurements are not
reclassified to statement of profit and loss in
subsequent periods.

Gains or losses on the curtailment or
settlement of defined benefit plan are
recognised when the curtailment or
settlement occurs.

Actuarial gains or losses arising on account
of experience adjustment and the effect
of changes in actuarial assumptions for
employee benefit plan [other than gratuity]
are recognised immediately in the Statement
of Profit and Loss as income or expense.

3.13. Borrowing cost

Borrowing costs (net of interest income on temporary
investments) that are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of the

respective asset till such time the asset is ready for
its intended use or sale. A qualifying asset is an asset
which necessarily takes a substantial period of time to
get ready for its intended use or sale. Ancillary cost of
borrowings in respect of loans not disbursed are carried
forward and accounted as borrowing cost in the year
of disbursement of loan. All other borrowing costs are
expensed in the period in which they occur. Borrowing
costs consist of interest expenses calculated as per
effective interest method, exchange difference arising
from foreign currency borrowings to the extent they
are treated as an adjustment to the borrowing cost and
other costs that an entity incurs in connection with the
borrowing of funds.

3.14. Taxes on income

Tax expenses for the year comprises of current tax,
deferred tax charge or credit and adjustments of taxes
for earlier years. In respect of amounts adjusted outside
profit or loss (i.e. in other comprehensive income or
equity), the corresponding tax effect, if any, is also
adjusted outside profit or loss.

Provision for current tax is made as per the provisions
of Income Tax Act, 1961.

Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred
tax liabilities are recognised for all taxable temporary
differences, and deferred tax assets are recognised for
all deductible temporary differences, carry forward tax
losses and allowances to the extent that it is probable
that future taxable profits will be available against
which those deductible temporary differences, carry
forward tax losses and allowances can be utilised.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred
tax assets and deferred tax liabilities are offset, if a
legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred
taxes relate to the same taxation authority.

Deferred tax assets are recognised only to the extent
that it is probable that future taxable profit will be
available against which such deferred tax assets
can be utilised. In situations where the Company has
unused tax losses and unused tax credits, deferred tax

assets are recognised only if it is probable that they can
be utilised against future taxable profits. Deferred tax
assets are reviewed for the appropriateness of their
respective carrying amounts at each Balance Sheet
date.

At each reporting date, the Company re-assesses
unrecognised deferred tax assets. It recognises
previously unrecognised deferred tax assets to the
extent that it has become probable that future taxable
profit allow deferred tax assets to be recovered.

3.15. Cash & cash equivalent

Cash and cash equivalents include cash in hand, bank
balances, deposits with banks (other than on lien) and
all short term and highly liquid investments that are
readily convertible into known amounts of cash and are
subject to an insignificant risk of changes in value.

3.16. Cash flow statement

Cash flows are reported using the indirect method,
where by net profit before tax is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and item of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, investing and financing activities are
segregated.

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Mar 31, 2024

3. SUMMARY OF MATERIAL ACCOUNTING POLICIES

3.1. Current and non-current classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised within twelve months after the reporting period; or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is current when:

• I t is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

The Company classifies all other liabilities as noncurrent. Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.

The operating cycle of the Company’s real estate operations varies from project to project depending on the size of the project, type of development, project complexities and related approvals. Assets and Liabilities are classified into current and non-current based on the operating cycle.

3.2. Functional and presentation of currency

The Standalone Ind AS Financial Statements are prepared in Indian Rupees which is also the Company’s functional currency. All amounts are rounded to the nearest rupees in Mn.

3.3. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal market or the most advantageous market must be accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs

All assets and liabilities for which fair value is measured or disclosed in the Standalone Ind AS Financial Statements are categorised within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described as below:

Level 1 - Unadjusted quoted price in active markets for identical assets and liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - unobservable inputs for the asset or liability

For assets and liabilities that are recognised in the Standalone Ind AS Financial Statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy.

Fair values have been determined for measurement and / or disclosure purpose using methods as prescribed in "Ind AS 113 Fair Value Measurement".

3.4. Use of estimates and judgements

The preparation of these Standalone Ind AS Financial Statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of the Standalone Ind AS Financial Statements and reported amounts of income and expenses for the periods presented. The Company based its assumptions and estimates on parameters available when the Standalone Ind AS Financial Statements were prepared.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.

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. Significant estimates and critical judgement in applying these accounting policies are described below:

3.4.1. Significant estimates

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, are described below. The Company based its assumptions and estimates on parameters available when the Standalone Ind AS 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 assumptions when they occur.

i) Revenue recognition and net realisable value of construction work in progress

• Revenue to be recognised, stage of completion, projections of cost and revenues expected from project and realisation of the construction work in progress have been determined based on management estimates which are based on current market situations/ technical evaluations.

• In respect of real estate project (Construction work in progress) which are at initial preparatory stage [i.e. acquisition of land / development rights], realisation of the construction work in progress and advance given to various parties have been determined based on management estimates of commercial feasibility and management expectation of future economic benefits from the projects. These estimates are reviewed periodically by management and revised whenever required.

The consequential effect of such revision in estimates is considered in the year of revision and in the balance future period of the project. These estimates are dynamic in nature and are dependent upon various factors like eligibility of the tenants, changes in the area, approval and other factors. Changes in these estimates can have significant impact on the financial results of the Company and its comparability with the previous year however quantification of the impact due to change in said estimates cannot be quantified.

ii) Valuation of investment in subsidiaries

Investments in subsidiaries are carried at cost. At each balance sheet date, the management assesses the indicators of impairment of such investments. This requires assessment of several external and internal factor including capitalisation rate, key assumption used in discounted cash flow models (such as revenue growth, unit price and discount rates) or sales comparison method which may affect the carrying value of investments in subsidiaries.

iii) Defined benefit obligations

The cost of defined benefit gratuity plan and the present value of the gratuity obligation along with leave salary are determined using actuarial valuations. An actuarial valuation involves making various assumptions such as standard rates of inflation, mortality, discount rate, attrition rates and anticipation of future salary increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

iv) Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted price in active markets since they are unquoted, their value is measured using valuation technique including the discounted cash flow (DCF) model. The inputs to these models are taken from observable markets

where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

3.4.2. Significant management judgement in applying accounting policies and estimation uncertainty

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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

ii) Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected credit loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on industry practice, Company’s past history, and existing market conditions as well as forward looking estimates at the end of each reporting period.

iii) Provisions

At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

iv) Recognition of deferred tax assets

The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised.

v) Revenue from contracts with customers

The Company has applied judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers.

3.5. Property, Plant and Equipment and Depreciation Recognition and measurement

Properties plant and equipment are stated at their cost of acquisition. On transition to Ind AS, the Company had elected to measure all of its property, plant and equipment at the previous GAAP carrying value (deemed cost). Cost of an item of property, plant and equipment includes purchase price including non -refundable taxes and duties, borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and the present value of the expected cost for the dismantling/ decommissioning of the asset.

Parts (major components) of an item of property, plant and equipments having different useful lives are accounted as separate items of property, plant and equipments.

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. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.

Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date.

Depreciation and useful lives

Depreciation on the property, plant and equipment (other than capital work in progress) is provided on a written down value (WDV) over their useful lives which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013. Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or

loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.

3.6. Leases

The determination of whether a contract is (or contains) a lease is based on the substance of the contract at the inception of the lease. The contract is, or contains, a lease if the contract provide lessee, the right to control the use of an identified asset for a period of time in exchange for consideration. A lessee does not have the right to use an identified asset if, at inception of the contract, a lessor has a substantive right to substitute the asset throughout the period of use.

The Company accounts for the lease arrangement as follows:

(i) Where the Company entity is the lessee

The Company applies single recognition and measurement approach for all leases, except for short term leases and leases of low value assets. On the commencement of the lease, the Company, in its Balance Sheet, recognise the right of use asset at cost and lease liability at present value of the lease payments to be made over the lease term.

Subsequently, the right of use asset are measured at cost less accumulated depreciation and any accumulated impairment loss. Lease liability are measured at amortised cost using the effective interest method. The lease payment made, are apportioned between the finance charge and the reduction of lease liability, and are recognised as expense in the Statement of Profit and Loss.

Lease deposits given are a financial asset and are measured at amortised cost under Ind AS 109 since it satisfies Solely Payment of Principal and Interest (SPPI) condition. The difference between the present value and the nominal value of deposit is considered as prepaid rent and recognised over the lease term. Unwinding of discount is treated as finance income and recognised in the Statement of Profit and Loss.

(ii) Where the Company entity is the lessor

The lessor needs to classify its leases as either an operating lease or a finance lease. Lease arrangements where the risks and rewards

incidental to ownership of an asset substantially vest with the lessor are recognised as operating lease. The Company has only operating lease and accounts the same as follows:

Assets given under operating leases are included in investment properties. Lease income is recognised in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease.

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Lease deposits received are financial instruments (financial liability) and are measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.

3.7. Intangible assets and amortisation Recognition and measurement

I ntangible assets are recognised only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. On transition to Ind AS, the Company had elected to measure all of its property, plant and equipment at the previous GAAP carrying value (deemed cost). Intangible assets are stated at cost of acquisition/development less accumulated amortisation and accumulated impairment loss if any.

Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for its intended use.

Intangible assets under development comprises of cost incurred on intangible assets under development that are not yet ready for their intended use as at the Balance Sheet date.

Goodwill arising on business combination is initially measured at cost, being the excess of the aggregate of the consideration transferred over the net identifiable assets acquired and liabilities assumed.

Amortisation and useful lives

Computer softwares are amortised in 3 years on Written Down Value (WDV). Amortisation methods and useful lives are reviewed at each financial year end and adjusted prospectively.

I n case of Goodwill related to Business Combination, after initial recognition, goodwill is measured at cost less any accumulated impairment losses. In case such goodwill paid for acquisition is in relation to underlying real estate project, impairment co-inside with the revenue recognition from the underlying project and accordingly impairment provision is made in line with revenue recognition. Goodwill, other than related to underlying real estate project is only tested for impairment.

In case of assets purchased during the year, amortisation on such assets is calculated on pro-rata basis from the date of such addition.

3.8. Impairment of non-financial assets

The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of a) fair value of assets less cost of disposal and b) its value in use. Value in use is the present value of future cash flows expected to derive from an assets or Cash-Generating Unit (CGU).

Based on the assessment done at each balance sheet date, recognised impairment loss is further provided or reversed depending on changes in circumstances. After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for the asset is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognised are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation / amortisation had no impairment loss been recognised in earlier years.

3.9. Inventories

Inventory of finished units are valued at lower of cost or net realisable value.

Construction work in progress (CWIP) is valued at lower of cost or net realisable value. CWIP includes

cost of land, premium or fees paid in connection with acquisition of transferable development rights, subdevelopment rights, initial costs for securing projects, initial premium paid on assignment/transfer of project, construction costs, cost of redevelopment, settlement of claims relating to land, and attributable borrowing cost and expenses incidental to the projects undertaken by the Company to project. In case of projects at initial stage, net realisable value is computed based on the management estimate of future realisable value.

Construction costs include all cost related to development of real estate project and exclude all costs pertaining to selling and marketing activities which are considered as indirect cost and are directly charged to the Statement of Profit and Loss.

3.10. Revenue recognition

(i) Revenue from contract with customer

Revenue from contracts with customer is recognised, when control of the goods or services are transferred to the customer, at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before revenue is recognised.

Revenue is recognised as follows:

(a) Revenue from contract with customers

Revenue is measured at the fair value of the consideration received/ receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government and is net of rebates and discounts. The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all of its revenue arrangements.

Revenue is recognised in the income statement to the extent that it is probable that the economic benefits will flow to the Company and the revenue and costs, if applicable, can be measured reliably.

The Company has applied five step model as per Ind AS 115 ''Revenue from contracts with customers’ to recognise revenue in the Standalone Ind AS Financial Statements. The Company satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

a) The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs; or

b) The Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

c) The Company’s performance does not create an asset with an alternative use to the Company and the entity has an enforceable right to payment for performance completed to date.

For performance obligations where any of the above conditions are not met, revenue is recognised at the point in time at which the performance obligation is satisfied.

Revenue is recognised either at point of time or over a period of time based on various conditions as included in the contracts with customers.

(ii) Finance income

Finance income is recognised as it accrues using the Effective Interest Rate (EIR) method. Finance income is included in other income in the Statement of Profit and Loss.

When calculating the EIR, the Company estimates the expected cash 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.

(iii) Revenue from lease rentals and related income

Lease income is recognised in the Statement of Profit and Loss on straight line basis over the lease term, unless there is another systematic basis which is more representative of the time pattern of the lease. Revenue from lease rentals is disclosed net of indirect taxes, if any.

Revenue from property management service is recognised at value of service and is disclosed net of indirect taxes, if any.

(iv) Dividend income

Revenue is recognised when the Company’s right to receive the payment is established, which is generally when shareholders approve the dividend.

(v) Other income

Other incomes are accounted on accrual basis, except interest on delayed payment by debtors and liquidated damages which are accounted on acceptance of the Company’s claim.

3.11. Foreign currency transaction

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. As at the Balance Sheet date, foreign currency monetary items are translated at closing exchange rate. Exchange difference arising on settlement or translation of foreign currency monetary items are recognised as income or expense in the year in which they arise.

Foreign currency non-monetary items which are carried at historical cost are reported using the exchange rate at the date of transactions.

3.12. Employee benefits

• Short term employee benefits

All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.

• Post-employment benefits & other long term benefits

a. Defined contribution plan

The defined contribution plan is a postemployment benefit plan under which the Company contributes fixed contribution to a Government Administered Fund and will have no obligation to pay further contribution. The Company’s defined contribution plan comprises of Provident Fund, Labour Welfare Fund Employee State Insurance Scheme, National Pension Scheme, and Employee Pension Scheme. The Company’s

contribution to defined contribution plans are recognised in the Statement of Profit and Loss in the period in which the employee renders the related service.

b. Post-employment benefit and other long term benefits

The Company has defined benefit plans comprising of gratuity and other long term benefits in the form of leave benefits. Company’s obligation towards gratuity liability is unfunded. The present value of the defined benefit obligations and other long term employee benefits is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations.

For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b) the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and (c) the return on plan assets (excluding amounts included in net interest on the post-employment benefits liability) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.

Gains or losses on the curtailment or settlement of defined benefit plan are recognised when the curtailment or settlement occurs.

Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions for employee benefit plan [other than gratuity] are recognised immediately in the Statement of Profit and Loss as income or expense.

3.13. Borrowing cost

Borrowing costs (net of interest income on temporary investments) that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the

respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest expenses calculated as per effective interest method, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.

3.14. Taxes on income

Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of taxes for earlier years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive income or equity), the corresponding tax effect, if any, is also adjusted outside profit or loss.

Provision for current tax is made as per the provisions of Income Tax Act, 1961.

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which such deferred tax assets can be utilised. In situations where the Company has unused tax losses and unused tax credits, deferred tax

assets are recognised only if it is probable that they can be utilised against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each Balance Sheet date.

At each reporting date, the Company re-assesses unrecognised deferred tax assets. It recognises previously unrecognised deferred tax assets to the extent that it has become probable that future taxable profit allow deferred tax assets to be recovered.

3.15. Cash & cash equivalent

Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term and highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

3.16. Cash flow statement

Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.