3. Material Accounting Policies
a) Operating Cycle
ALL assets and LiabiLities have been classified as current or non-current as per the Company’s normal
operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. Operating cycle for
project related assets and liabilities is the time start of the project to their realization in cash or cash
equivalents. Operating cycle for all other assets and LiabiLities has been considered as twelve months.
b) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs,
less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including non-refundable
purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the
item to its working condition for its intended use. If significant parts of an item of property, plant and
equipment have different useful Lives, then they are accounted for as separate items (major components)
of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in Statement of
Profit and Loss.
Subsequent measurement
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company.
Depreciation
Depreciation is being provided on a pro-rata basis on the ‘Straight Line Method’ over the estimated useful
lives of the assets as prescribed under Part C of Schedule II to the Companies Act, 2013. The residual values,
useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate. Advances given towards acquisition of property, plant
and equipment outstanding at each Balance Sheet date are disclosed as other non-current assets.
Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no
future economic benefits are expected from its use of disposal. The consequential gain or loss is measured
as the difference between the net disposal proceeds and the carrying amount of the item and is recognized
in the Statement of Profit and Loss.
c) Intangible assets and amortisation
Intangible assets are carried at cost less accumulated amortization 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
Subsequent expenditure is capitalized only when it increases the future economic benefits associated with
the expenditure will flow to the Company. All other expenditure is recognized in the Statement of Profit and
Loss as incurred
Amortisation
Intangible assets are amortized on a straight - line basis (pro-rata from the date of additions) over estimated
useful life of four years.
Derecognition
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits
are expected from its use or disposal. The gain or loss arising from the derecognition of an intangible assets
are measured as the difference between the net disposal proceeds and the carrying amount of intangible
assets and is recognized in the Statement of Profit and Loss.
d) Capital work-in-progress and intangible assets under development
Capital work-in-progress and intangible assets under development represents expenditure incurred in
respect of capital projects/intangible assets under development which are not yet ready for their intended
use and are carried at cost less accumulated impairment loss, if any.
Depreciation/amortisation is not provided on capital work-in-progress and intangible assets under¬
development until construction/installation are complete and the asset is ready for its intended use.
e) Investment Property
Investment property is property held either to earn rental income or for capital appreciation or for both,
but not for sale in the ordinary course of business, use in the production or supply of goods or services or
for administrative purposes.
Recognition and measurement
Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition,
investment property is measured at cost less accumulated depreciation and accumulated impairment
losses, if any.
Depreciation
Depreciation is being provided on a pro-rata basis on the ‘Straight Line Method’ over the estimated useful
lives of the assets as prescribed under Part C of Schedule II to the Companies Act, 2013. The residual values,
useful lives and methods of depreciation of investment properties equipment are reviewed at each financial
year end and adjusted prospectively, if appropriate.
Fair value disclosure
The fair values of investment property is disclosed in the notes. Fair value is determined by an independent
valuer who holds a recognized and relevant professional qualification and has recent experience in the
location and category of the investment property being valued.
Any gain or loss on disposal of an investment property is recognized in Statement of Profit and Loss.
f) Impairment of Financial and non-financial assets
Non-financial assets of the Company, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset’s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into
cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows
that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value
less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in the Statement of Profit and Loss. Impairment loss
recognized in respect of a CGU is allocated to reduce the carrying amounts of the other assets of the CGU
(or group of CGUs) on a pro rata basis.
g) Employee benefits
Short term employee benefits
Short term employee benefit obligations are measured on an undiscounted expenses and are expensed as
the related services are provided. A Liability is recognized for the amount expected to be paid, if the Company
has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the amount of obligation can be estimated reliably.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company
makes specified monthly contributions towards government administered schemes. Obligations for
contributions to defined contribution plans are recognized as an employee benefit expense in the Statement
of Profit and Loss in the periods during which the services are rendered by the employees.
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than defined contribution plan. The
Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by
estimating the amount of future benefit that employees have earned in the current and prior periods,
discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed periodically by an independent qualified actuary
using the projected unit credit method. When the calculation results in a potential asset for the Company, the
recognized asset is limited to the present value of economic benefits available in the form of any future
refunds from the plan or reductions in future contributions to the plan. To calculate the present value of
economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return
on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are
recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net
defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability
(asset). Net interest expense and other expenses related to defined benefit plans are recognized in
Statement of Profit and Loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognized immediately in Statement of Profit and
Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the
settlement occurs.
Other long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits other than post-employment
benefits is the amount of future benefits that employees have earned in return for their service in the current
and prior periods; that benefits is discounted to determine its present value, and the fair value of any related
assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation
using the projected unit credit method.
Remeasurement gains or losses are recognized in the Statement of Profit and Loss in the period in which
they arise.
h) Revenue recognition
(i) Recognition of Revenue from Real Estate Development:
Revenue is recognized on satisfactory performance obligations in a contract with customers, allocation
of transaction price to the performance obligations and recognition of revenue as the performance
obligations are satisfied either at a point in time or over a period of time. While recognizing revenue,
the cost of land has been allocated in proportion to the percentage of work completed. If the outcome of
a construction contract can be estimated reliably, contract revenue is recognized in the Statement of \
Profit and Loss in proportion to the stage of completion of the contract. The stage of completion is
assessed by reference to surveys of work performed. Otherwise, contract revenue is recognized only to
the extent of contract costs incurred that are likely to be recoverable. Contract costs are recognized as
expenses as incurred unless they create an asset is related to future contract activity. An expected loss
on a contract is recognized immediately in the Statement of Profit and Loss.
Revenue is recognized 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
(ii) Land and transferrable development rights
Revenue from contracts for sale of land and transferrable development rights is recognized at
a point in time when control is transferred to the customer and it is probable that consideration
will be collected. This is usually deemed to be legal completion as this is the point at which
the Company has an enforceable right to payment. Revenue from sale of land and transferrable
development rights is measured at the transaction price specified in the contract with the customer.
(iii) Contract balances
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer e.g. unbilled revenue. If the Company performs by transferring goods or services to a customer
before the customer pays consideration or before payment is due, a contract asset i.e. unbilled revenue
is recognized for the earned consideration that is conditional.
A receivable represents the Company’s right to an amount of consideration that is unconditional i.e. only
the passage of time is required before payment of consideration is due.
Contract liability is the obligation to transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Company transfers goods or services to the customer, a contract liability is
recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities
are recognized as revenue when the Company performs under the contract.
(iv) Lease rental income
Lease income from operating leases shall be recognized in income on a straight -line basis over the lease
term, unless another systematic basis is more representative of the time pattern in which use benefit
derived from the leased asset is diminished. Income from leasing of commercial complex is recognized
on an accrual basis in accordance with lease agreements. Refer note 3(O) for accounting policy on leases.
(v) Share in profit/ loss of Limited liability partnerships (“LLPs”) and partnership firm
The Company’s share in profits from LLPs and partnership firm, where the Company is a partner, is
recognized as income in the statement of profit and loss as and when the right to receive its profit/ loss
share is established by the Company in accordance with the terms of contract between the Company
and the partnership entity.
(vi) Interest Income
Interest income, including income arising from other financial instruments measured at amortized cost,
is recognized using the effective interest rate method.
(vii) Dividend Income
Revenue is recognized when the shareholders’ or unit holders’ right to receive payment is established,which
is generally when shareholder approve the dividend.
i) Financial instrument
Financial assets
Classification
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other
comprehensive income or fair value through profit and loss on the basis of its business model for managing
the financial assets and the contractual cash flow characteristics of the financial assets.
Initial recognition and measurement
On initial recognition, a financial asset is recognized at fair value, in case of financial assets which are
recognized at fair value through the Statement of Profit and Loss (FVTPL), its transaction cost
are recognized in the Statement of Profit and Loss. In other case, the transaction costs are attributed to
the acquisition value of the financial asset
Subsequent measurement and gains and losses
Financial assets are subsequently classified as measured at
• Financial assets at amortized cost: These assets are subsequently measured at amortized cost using
the effective interest method. The amortized cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment is recognized in the Statement of Profit and Loss. Any
gain or loss on derecognition is recognized in the Statement of Profit and Loss.
• Fair value through profit and loss (FVTPL): These assets are subsequently measured at fair value. Net
gains and losses, including any interest or dividend income, are recognized in the Statement of Profit and
Loss
• Fair value through other comprehensive income (FVOCI): These assets are subsequently measured at
fair value. Dividends are recognized as income in the Statement of Profit and Loss unless the dividend
clearly represents a recovery of part of the cost of the investment. Other net gains or losses are
recognized in OCI and are not reclassified to the Statement of Profit and Loss.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the
Company changes its business model for managing financial assets.
Trade receivables and loans
Trade receivables and loans are initially recognized at fair value when they are originated. Subsequently,
these assets are held at amortized cost, using the effective interest rate (EIR) method net of any expected
credit losses. The EIR is the rate that discounts estimated future cash income through the expected life
of financial instrument.
ALL investments in equity instruments classified under financial assets are initially measured at fair value,
the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity
instrument is recognized as other income in the Statement of Profit and Loss unless the Company has
elected to measure such instrument at FVOCI.
Fair value Changes excluding dividends, on an equity instrument measured at FVOCI are recognized in
OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss.
Dividend income on the investments in equity instruments are recognized as ‘other income’ in the
Statement of Profit and Loss.
Derecognition
A financial asset (or, where applicable, a part of the financial asset) is primarily derecognized when:
a) The right to receive cash flows from the asset have expired; or
b) The Company has transferred substantially all the risks and rewards of the asset; or
c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
Impairment of financial assets
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than
financials assets in FVTPL category. For financial assets other than trade receivables, as per Ind AS 109,
the Company recognizes 12 month expected credit losses for all originated or acquired financial assets
if at the reporting date the credit risk of the financial asset has not increased significantly since its initial
recognition. The expected credit losses are measured as lifetime expected credit losses if the credit
risk on financial asset increases significantly since its initial recognition. The Company’s trade receivables
do not contain significant financing component and loss allowance on trade receivables is measured at
an amount equal to life time expected losses i.e. expected cash shortfall. The impairment losses and
reversals are recognized in Statement of Profit and Loss.
Financial liabilities
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the
instrument. Financial liabilities are initially measured at the amortized cost unless at initial recognition,
they are classified as fair value through profit and loss. In case of trade payables, they are initially
recognized at fair value and subsequently, these liabilities are held at amortized cost, using the effective
interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities
carried at fair value through Statement of Profit and Loss are measured at fair value with all changes in fair
value recognized in the Statement of Profit and Loss.
Derecognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or
expires.
Financial assets and financial Liabilities are offset and the net amount is reported in the balance sheet
date if there is a currently enforceable legal right to offset the recognized amounts and there is an
intention to settle them on net basis or to realize the assets and settle the Liabilities simultaneously.
j) Income taxes
Income tax comprises of current and deferred tax. It is recognized in the Statement of Profit and Loss except
to the extent that it is relates to an item recognized directly in equity or in OCI.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty,
if any, related to income taxes.
It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date. Current
tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off therecognized
amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax is also recognized in respect of carried forward tax losses and tax credits. Deferred tax assets
are recognized to the extent that it is probable that future taxable profits will be available against which they
can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available.
Minimum Alternate Tax (MAT)
Minimum Alternate Tax (MAT) credit is recognized as a deferred tax asset only when and to the extent there
is convincing evidence that the company will pay normal tax during the specified period. MAT credit is reviewed
at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
k) Inventories
Inventory comprises of land, Finished Goods of Residential project and land development rights.
Land and land development rights are valued at lower of cost or net realizable value. Cost includes cost of
land, land development rights, acquisition of tenancy rights, materials, services, borrowing cost and other
related overhead as the case may be. In the case of acquisition of land for development and construction,
the rights are acquired from the owners of the land and the conveyance and registration thereof will be
executed between the original owners and the ultimate purchasers as per trade practice. As a result, in the
immediate period, generally, the land is not registered in the name of the company.
Direct expenditures relating to real estate activity are inventoried. Other expenditure (including borrowing
costs) during construction period is inventoried to the extent the expenditure is directly attributable cost of
bringing the asset to its working condition for its intended use. Other expenditure (including borrowing costs)
incurred during the construction period which is not directly attributable for bringing the asset to its working
condition for its intended use is charged to the statement of profit and loss. Direct and other expenditure is
determined based on specific identification to the real estate activity. Cost incurred/ items purchased
specifically for projects are taken as consumed as and when incurred/ received.
i. Work- in - progress (including land inventory): Represents cost incurred in respect of unsold area of the
real estate development projects or cost incurred on projects where the revenue is yet to be recognized.
Work-in-progress is valued at lower of cost and net realizable value.
ii. Finished goods - unsold residential unit, commercial unit, plots: Valued at lower of cost and net
realizable value.
iii. Construction material: Valued at lower of cost and net realizable value. Cost is determined based on FIFO
basis.Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.
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