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 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.
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 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 from contracts with customers is recognised when control of the promised goods or services
is transferred to the customer, at an amount reflecting the consideration to which the Company
expects to be entitled. Contracts for the sale of residential and commercial units comprise a single
performance obligation, being the construction and handover of the unit. Revenue is recognised
over time under paragraph 35(c) of Ind AS 115, the unit under construction having no alternative use
to the Company once the agreement for sale is executed and registered, and the Company having
an enforceable right to payment for performance completed to date including a reasonable margin.
Progress is measured using an input method, based on the proportion that project cost incurred
to date bears to total estimated project cost of the unit. Total estimated project cost comprises the
cost of land and development rights, construction and related direct cost, and directly attributable
overheads and borrowing costs; land cost is allocated to units proportionately. Costs that do not
depict performance, such as materials delivered but not installed and advances to contractors, are
excluded from the measurement of progress. Estimates are reviewed at each reporting date and
revisions are recognised on a cumulative catch-up basis. The transaction price is adjusted for variable
consideration, which is included only to the extent that a significant reversal of cumulative revenue
is highly probable not to occur, and for consideration payable to a customer. Where the unavoidable
costs of a contract exceed the benefits expected from it, the resulting loss is recognised in full in the
period in which it becomes known. Revenue recognised in excess of progress billings is presented
as a contract asset; progress billings in excess of revenue recognised are presented as a contract
liability under advance from customers. Amounts unconditionally due from customers are presented
as trade receivables.
(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 instrumentFinancial assetsClassification
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.
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 lossesFinancial 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.
Equity 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 initially measured at fair value, net of directly attributable transaction costs,
except for financial liabilities classified at fair value through profit or loss, in respect of which
transaction costs are recognised in the Statement of Profit and Loss as incurred. Subsequent to initial
recognition, financial liabilities are measured at amortised cost using the effective interest method,
except for those classified at fair value through profit or loss.
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.
Offsetting of financial instruments
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 the recognized 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.
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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