N. Provisions, Contingent Liabilities, Contingent assets and Commitments:
A provision is recognized when the company has a present obligation (legal or constructive) as a result of past
events and it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on managements' best estimates required to settle the obligation at
the Balance Sheet date.
These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. The expense
relating to a provision is presented in the statement of profit and loss.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events, whose
existence would be confirmed by the occurrence or non-occurrence of one or more future events not wholly
within control of the Company.
Contingent liability is disclosed in the case of:
• present obligation arising from past events, when it is not probable that an outflow of resources will be
required to settle the obligation;
• A present obligation arising from past events, when no reliable estimate is possible;
• A present obligation arising from past events, unless the probability of outflow of resources is remote.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Contingent Assets are neither recognized nor disclosed in the Standalone Financial Statement. However, when
an inflow of economic benefits is probable, such contingent assets are disclosed in the notes to the financial
statements. When the realization of income is virtually certain, the related asset is recognized.
O. Financial instruments:
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
i. Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortized cost.
• Financial assets at fair value.
When assets are measured at fair value, gains and losses are either recognized entirely in the statement
of profit and loss (i.e. fair value through profit or loss), or recognized in other comprehensive income
(i.e. fair value through other comprehensive income). A financial asset that meets the following two
conditions is measured at amortized cost (net of any write down for impairment) unless the asset is
designated at fair value through profit and loss under fair value option.
When assets are measured at fair value, gains and losses are either recognized entirely in the statement
of profit and loss (i.e. fair value through profit or loss), or recognized in other comprehensive income
(i.e. fair value through other comprehensive income). A financial asset that meets the following two
conditions is measured at amortized cost (net of any write down for impairment) unless the asset is
designated at fair value through profit and loss under fair value option.
A financial asset that meets the following two conditions is measured at fair value through other
comprehensive income unless the asset is designated at fair value through profit and loss under fair
value option.
• Business model test: The financial asset is held within a business model whose objective is achieved
by both collected contractual cash flows and selling financial instruments.
• Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Derecognition
When the Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a 'pass -
through' arrangement; it evaluates if and to what extent it has retained the risks and rewards of
ownership.
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar
financial assets) is primarily derecognized when:
• The rights to receive cash flows from the asset have expired, or
• Based on above evaluation, either
(a) The Company has transferred substantially all the risks and rewards of the asset, or
(b) The Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to recognize the transferred asset to the extent
of the Company's continuing involvement. In that case, the Company also recognizes an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement
and recognition of impairment loss on the following financial assets and credit risk exposure:
Trade receivables that result from transactions that are within the scope of Ind AS 18
The application of simplified approach does not require the Company to track changes in credit risk.
Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right
from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines
that whether there has been a significant increase in the credit risk since initial recognition. If credit risk
has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit
risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the
instrument improves such that there is no longer a significant increase in credit risk since initial
recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with
the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted
at the original EIR. When estimating the cash flows, an entity is required to consider:
• All contractual terms of the financial instrument (including prepayment, extension, call and similar
options) over the expected life of the financial instrument. However, in rare cases when the expected
life of the financial instrument cannot be estimated reliably, then the entity is required to use the
remaining contractual term of the financial instrument
• Cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/
expense in the statement of profit and loss. This amount is reflected in the statement of profit and loss
in other expenses. The balance sheet presentation for various financial instruments is described below:
• Financial assets measured as at amortized cost, trade receivables and lease receivables: ECL is
presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance
sheet. The allowance reduces the net carrying amount. Until the asset meets write-o- criteria, the
Company does not reduce impairment allowance from the gross carrying amount.
ii. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss or at amortized cost, as appropriate. All financial liabilities are recognized initially at fair value
and, in the case of loans and borrowings, net of directly attributable transaction costs. The Company's
financial liabilities include trade payables and other payables.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial
liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Company
that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109.
Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the profit
or loss. The Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings and other payables are subsequently
measured at amortised cost using the EIR method. Gains and losses are recognized in profit or loss
when the liabilities are derecognized as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit and loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or
expires.
iii. Off setting of financial instruments
Financial assets and financial liabilities are off-set and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to off-set the recognized amounts and there is an intention to
settle on a net basis, to realise the assets and settle the liabilities simultaneously.
P. SEGMENT REPORTING:
The Company is mainly engaged in the business of Construction of residential buildings/commercial complexes
and activities connected and incidental thereto. The Company operates in only one geographical segment -
within India.
Q. CASH & CASH EQUIVALENTS:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits
with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and bank balances,
as defined above.
R. EARNING PER SHARE:
The Company presents basic and diluted earnings per share ("EPS") data for its equity shares. Basic EPS is
calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted
average number of equity shares outstanding during the period. The diluted EPS is calculated on the same
basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless the effect of the
potential dilutive equity shares is anti-dilutive.
a. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are described below. The Company based its
assumptions and estimates on parameters available when the financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market
changes or circumstances arising that are beyond the control of the Company. Such changes are reflected
in the assumptions when they occur:
b. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are described below. The Company based its
assumptions and estimates on parameters available when the financial statements were prepared.
Existing circumstances and assumptions about future developments, however, may change due to market
changes or circumstances arising that are beyond the control of the Company. Such changes are reflected
in the assumptions when they occur:
i. Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and
timing of future taxable income. Given the wide range of business relationships and the long-term
nature and complexity of existing contractual agreements, differences arising between the actual
results and the assumptions made, or future changes to such assumptions, could necessitate future
adjustments to tax income and expense already recorded. The Company establishes provisions,
based on reasonable estimates, for possible consequences of audits by the tax authorities. The
amount of such provisions is based on various factors, such as experience of previous tax audits and
differing interpretations of tax regulations by the taxable entity and the responsible tax authority.
Such differences of interpretation may arise on a wide variety of issues depending on the conditions
prevailing in the Company's domicile.
ii. Defined benefit plans (gratuity benefits)
The Company's obligation on account of gratuity and compensated absences is determined based on
actuarial valuations. An actuarial valuation involves making various assumptions that may differ
from actual developments in the future. These include the determination of the discount rate;
future salary increases and mortality rates. Due to the complexities involved in the valuation and its
long-term nature, these liabilities are highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount
rate, the management considers the interest rates of government bonds in currencies consistent
with the currencies of the post-employment benefit obligation. The mortality rate is based on
publicly available mortality tables for the specific countries. Those mortality tables tend to change
only at interval in response to demographic changes. Future salary increases and gratuity increases
are based on expected future inflation rates for the respective countries. Further details about
gratuity obligations are given in Refer Note 36.
iii. Property, plant and equipment
Refer Point (E) of Note - 1 for estimated useful lives of property, plant and equipment. The carrying
value of property, plant and equipment has been disclosed at Note 2A.
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 prices in active markets, their fair value is measured using valuation
techniques including the Discounted Cash Flow Model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgment is required
in establishing fair values. Judgments 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.
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