(xii) Provisions, contingent assets and contingent liabilities
A provision is recognized when:
• the Company has a present obligation as a result of a past event;
• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
• a reliable estimate can be made of the amount of the obligation.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
(xiii) Earnings per share
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
(xiv) Leases
The company follows IND AS 116. In accordance with IND AS 116, the company recognises right of use assets representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of right of use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before commencement date less any lease incentive received plus any initial direct cost incurred and an estimate of cost to be incurred by lessee in dismantling and removing underlying asset or restoring the underlying asset or site on which it is located. The right of use asset is subsequently measured at cost less accumulated depreciation, accumulated impairment losses, if any, and adjusted for any re-measurement of lease liability. The right of use assets is depreciated using the Straight Line Method from the commencement date over the charter of lease term or useful life of right of use asset. The estimated useful life of right of use assets are determined on the same basis as those of Property, Plant and Equipment. Right of use asset are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in Statement of Profit and Loss.
The company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of lease.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the company uses incremental borrowing rate.
The lease liability is subsequently re-measured by increasing the carrying amount to reflect interest on lease liability, reducing the carrying amount to reflect the lease payments made and re-measuring the carrying amount to reflect any reassessment or lease modification or to reflect revised-in-substance fixed lease payments. The company recognises amount of re-measurement of lease liability due to modification as an adjustment to write off use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of right of use assets is reduced to zero and there is further reduction in measurement of lease liability, the company recognises any remaining amount of the re-measurement in Statement of Profit and Loss.
The company has elected not to apply the requirements of IND AS 116 to short term leases of all assets that have a lease term of 12 months or less unless renewable on long term basis and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognised as an expense over lease term.
Company as a lessor leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Fit- out rental income is recognised in the statement of profit and loss on accrual basis.
Leases are classified as finance leases when
substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
(xv) Income Tax
i. Provision for current tax is made based on the tax payable under the Income Tax Act, 1961. Current income tax relating to items recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity).
ii. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
(xvi) Cash and Cash Equivalent
Cash and Cash equivalent in the balance sheet comprises cash at bank and cash on hand, demand deposits and short term deposits which are subject to an insignificant change in value. The amendment to IND AS-7 requires entities to provide disclosure of change in the liabilities arising from financing activities, including both changes arising from cash flows and non cash changes (such as foreign exchange gain or loss). The Company has provided information for both current and comparative period in cash flow statement.
(xvii) Significant management judgement in applying accounting policies and estimation of uncertainty
(a) Significant management judgements
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
(b) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company's future taxable income against which the deferred tax assets can be utilized.
(c) Recoverability of advances/receivables
At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.
(d) Defined benefit obligation (DBO)
Management's estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
(e) Provisions
At each balance sheet date based on management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However the actual future outcome may be different from this judgement.
(f) Inventories
Inventory is stated at the lower of cost or net realisable value (NRV).
NRV for completed inventory is assessed including but not limited to market conditions and prices existing at the reporting date and is determined by the Company based on net amount that it expects to realise from the sale of inventory in the ordinary course of business.
NRV in respect of inventories under construction is assessed with reference to market prices (by referring to expected or recent selling price) at the reporting date less estimated costs to complete the construction, and estimated cost necessary to make the sale. The costs to
complete the construction are estimated by management.
(g) 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.
(h) Lease
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of IND AS 116. Identification of a lease requires significant judgement. The company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
The company determines the lease term as the non-cancellable period of lease, together with both periods covered by an
option to extend the lease if the company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the company is reasonably certain not to exercise that option. In exercise whether the company is reasonably certain to exercise an option to extend a lease or to exercise an option to terminate the lease, it considers all relevant facts and circumstances that create an economic incentive for the company to exercise the option to extend the lease or to exercise the option to terminate the lease. The company revises lease term, if there is change in non-cancellable period of lease. The discount rate used is generally based on incremental borrowing rate.
(i) Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument / assets. Management bases its assumptions on observable date as far as possible but this may not always be available. In that case Management uses the best relevant information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
(j) Classification of assets and liabilities into current and non-current
The Management classifies assets and liabilities into current and non-current categories based on its operating cycle.
Nature and Purposes of Reserve forming part of Other Equity
a) Equity component of compound financial instruments- represents equity component of 0.10% Non-Cumulative, Nonconvertible, Redeemable Preference Share
b) Securities Premium- Securities premium represents amount received in excess of face value of shares and can be utilized for the purpose and in the matter as mentioned as mentioned in Section 52 of Companies Act, 2013.
c) Retained Earnings/(Deficit)- This reserve represents accumulated earnings/(Deficit) of the Company as on the balance sheet date.
d) General Reserve- The General Reserve is a free reserve which is used from time to time to transfer profit from / to retained earnings for appropriation purpose. As the general reserve is created by transfer from one component of equity to another and is not an item of other comprehensive income, item included in general reserve will not be reclassified subsequently to statement of Profit & Loss.
e) Other comprehensive income- The Company has elected to recognize changes in the fair value of investment in equity securities and remeasurement of defined benefit obligation in other comprehensive income that will not be reclassified to statement of Profit & Loss.
Note 41: Some of the balances of trade receivables, trade payables, advances given to others are subject to reconciliation and confirmation from respective parties. The balances of said trade receivables, trade payables and advances given to others are taken as shown by the books of accounts. The ultimate outcome of such reconciliation and confirmation cannot presently be determined, therefore, no provision for any liability that may result out of such reconciliation and confirmation has been made in the financial statement, the financial impact of which is unascertainable due to the reasons as stated above.
Note 42: The Income Tax Department has filed writ petition before Hon'ble Supreme Court against the order of Income tax settlement commission in earlier years for assessment year 2000-01 to 2006-07, which is pending for hearing. Pending final outcome of such petition filed, no provision of any potential liability has been made in the books of accounts, the amount of which cannot presently be ascertained.
A demand of Rs. 23.82 Crores has been raised against the company for A.Y. 2007-08 and 2015-16 on various accounts and the company has filed petitions before the Hon'ble High Court against these demand. An amount of Rs. 23.06 Crores has been deposited by the company against this demand under dispute. Further the Income Tax Department has also filed necessary
appeals/writ petitions/ SLP with appropriate authority against the relief given by various appellate authorities of Rs. 116.47 crores to the Company. A further demand of Rs. 33.73 Crores has been raised against the company for A.Y.s 2012-13 to 2017-18 on various accounts and the company has filed appeals before the CIT(A) against these demands and an amount of Rs. 22.03 Crores has been deposited by the company against these demands under dispute.
Based on the decision of various appellate authorities and the interpretations of relevant provisions of Income Tax Act, 1961, the Company has been advised by the experts that the demand so raised is likely to be deleted.
Note 43: In the financial year ended 31 March 2022, search was initiated against the Company under section 132 of the Income Tax Act, 1961. During the financial year 2023-24 assessments were made and several notices of demand under section 156 of the Income Tax Act, 1961 were received. The company has already filed appeals before CIT(Appeals) disputing the demands so raised. Based on the decision of various appellate authorities, interpretation of relevant provision of the Income Tax Act, 1961 and on the basis of opinion from independent tax expert that the demands so raised will not be sustained on completion of the appellate proceedings. Accordingly, pending the decision by the appellate authorities, no provision of any potential liability has been made in the Financial Statements.
(b) Company as a lessor
Lease arrangements where the Company is lessor, lease rentals are recognized on straight line basis over the noncancellable period.
NOTE 45: CORPORATE SOCIAL RESPONSIBILITY (CSR)
The gross amount required to be spent by the Company during the year ended 31-March-2024 and 31-March-2023 on CSR is Nil, as average net profit of the Company for the purpose of determining spending on CSR activities computed in accordance with provision of Section 135 excluding item given under rule 2 (1) (h) of Companies (CSR) Policy Rules 2014 read with Section 198 of Companies Act, 2013 is Rs. Nil.
Note 45.1: In accordance with Circular No. 14/2021 date 25th August, 2021 in respect of Section 135 of Companies Act, the excess amount of CSR expenditure incurred by the Company during the Financial year are to be set off against the required 2% CSR expenditure up to immediately succeeding three financial years subject to compliance of conditions as stipulated under rule 7(3) of Companies (CSR Policy) Rule, 2014.
NOTE 46: EMPLOYEE BENEFIT OBLIGATIONS
1) Post-Employment Obligations - Gratuity
The Company provides gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees' last drawn basic salary per month computed proportionately for 15 days salary multiplied by the number of years of service. For the funded plan the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
o. Description of Risk Exposures:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow-
A. Salary Increases- Actual salary increases will increase the Plan's liability. Increase in salary increase rate assumption in future valuations will also increase the liability.
B. Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.
C. Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan's liability.
D. Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.
E. Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan's liability.
2) Leave Encashment
Provision for leave encashment in respect of un-availed leaves standing to the credit of employees is made on actuarial basis. The Company does not maintain any fund to pay for leave encashment. The total leave encashment liability of Rs. 2.29 Crore (PY Rs. 2.08 Crore) is classified as non-current and Rs. 0.78 Crore (PY 0.76 Crore) as current and does not require disclosure as mentioned in para 158 of IND AS 19.
3) Defined Contribution Plans
The Company also has defined contribution plan i.e. contributions to provident fund in India for employees. The Company makes contribution to statutory fund in accordance with Employees Provident Fund and Misc. Provision Act, 1952. This is post-employment benefit and is in the nature of defined contribution plan. The contributions are made to registered provident fund administered by the government. The provident fund contribution charged to statement of profit & loss for the year ended 31 March, 2024 amount to Rs. 0.92 Crore (PY Rs. 0.88 Crore).
Note 49: During the financial year ended 31 March 2024, in view of one-time full and final resolution of all disputes and differences (including but not limited to the disputes and differences related to shareholding, directorship, control, management, affairs and any other matters of like nature of Omaxe Group Companies and family matters) among the Promoter/members of promoter group of the Company, i.e., Mr. Rohtas Goel, Promoter & Chairman of the Company, and his brother Mr. Sunil Goel, M/s Sunil Goel HUF & Mrs. Seema Goel (SG Group), both the Parties have initiated withdrawal/ quashing, as the case may be, and to close all litigations filed against each-other and pending before any courts/ tribunals/ judicial & quasi-judicial authorities/ statutory authorities/ regulatory authorities/ financial institutions/ private institutions/ police and any other authority or body of a like nature; transfer of shareholding of SG Group in Omaxe Group Companies.
This has no impact on the financial statements of the Company so far other than inter-se change in promoter holding upon effecting transfer of shares within promoter group pursuant to aforesaid settlement.
Credit risk
Credit risk is the risk that counterparty fails to discharge its obligation to the Company. The Company's exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls.
Credit risk management
Credit risk rating
The Company assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.
NOTE 52: CAPITAL MANAGEMENT POLICIES (a) Capital Management
The Company's capital management objectives are to ensure the Company's ability to continue as a going concern as well as to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
'The Company monitors capital on the basis of the carrying amount of equity plus its subordinated loan, less cash and cash equivalents as presented on the face of the statement of financial position and cash flow hedges recognised in other comprehensive income.
'The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The amounts managed as capital by the Company are summarised as follows:
Note 55: Advances given to others includes advances given against Land acquisition, goods / services / acquisition of development right to Vendors related parties and security deposits takes substantial period of time to conclude. These advances / securities deposits given in the opinion of management are in accordance with normal trade practices in Real Estate Business and are not loans or advances in the nature of loans, hence classified accordingly.
Note 56: Standards issued and amended but not effective
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. MCA has not notified any new standards or amendments to the existing standards applicable to the Company subsequent to 31st March 2024.
Note 57:
(a) No funds have been advanced/loaned/invested (from borrowed fund or from share premium or from any other sources/ kind of fund) by the company to any other person(s) or entity (ies), including foreign entities(intermediaries), with the understanding (whether recorded in writing or otherwise) that the intermediary shall (i) directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or like to or on behalf of the Ultimate Beneficiaries.
(b) No funds have been received by the company from any person(s) or entity (ies), including foreign entities (funding Parties), with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Note 58: The Indian parliament has approved the Code of Social Security, 2020 which would impact the contribution by the company towards provident fund and gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020. The company will assess the impact and its evaluation once the subject rules are notified. The company will give appropriate impact in its financial statement in the period in which, the code become effective and the related rules to determine the financial impact are published.
Note 59: The Company has used an accounting software for maintaining its books of account for the year ended 31st March 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software.
Note 60: Previous year figures have been regrouped or reclassified to confirm current year classification.
The notes referred to above form an integral part of standalone financial statements.
As per our audit report of even date attached
For and on behalf of For and on behalf of Board of Directors
B S D & Co.
Chartered Accountants (Firm Reg. No. 000312S)
Sd/- Sd/- Sd/-
Sujata Sharma Mohit Goel Vinit Goyal
Partner DIN: 02451363 DIN: 03575020
M. No. 087919 Managing Director Wholetime Director
Sd/- Sd/-
Place: New Delhi Manoj Kumar Dua Deshabandhu Rajesh Srikanta
Date: 28 May, 2024 Chief Financial Officer Company Secretary
M. No. F3992
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