1. Presentation and Disclosure of financial statements Change in
During the year ended 31 March, 2012, the revised schedule VI notified
under the Companies Act, 1956, has become applicable to the company,
for preparation and presentation of its financial statements. The
adoption of revised schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The company has also
reclassified the previous years figure in accordance with the
requirement applicable in the current year.
2. Basis of Preparation of Financial Statements
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(GAAP). The company has prepared these financial statements to comply
in all material respects with the Accounting Standards notified under
the Companies (Accounting Standard) Rules 2006, (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis under the historical
3. Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of financial statements, disclosure regarding
financial statements and reported amount of revenue and expenses during
the reported period. These estimates are based upon management''s
knowledge of current events and actions. Actual results could differ
from those estimates and differences, if any, are recognised in the
period in which the results are known /materialised.
4. Fixed Assets
Fixed assets are stated at cost (Gross Block) less accumulated
depreciation. Cost comprises the purchase price and any attributable
cost of bringing the asset to its working condition for its intended
use. (Depreciation on fixed assets is provided at the rates and in the
manner prescribed in schedule XIV of the Companies Act, 1956)
Capital Work in Progress represents expenditure incurred in respect of
Capital Projects under development and are carried at cost includes
land, related acquisition expenses, development / construction costs,
borrowing costs and other direct expenses, including advance to
contractors and others.
Depreciation on fixed assets has been provided on the basis of straight
line method as per the rates prescribed in Schedule XIV of the
Companies Act, 1956.
Inventories comprise completed units for sale and property under
construction (Work in progress):
a. Completed unsold inventory is valued at lower of cost or net
realisable value. Cost is determined by including cost of land,
materials, services and related overheads.
b. Work in progress is valued at cost. Cost comprises value of land
(including development rights), materials, services and other overheads
related to projects under construction.
6. Recognition of Income & Expenses:
a) The revenue is recognised on the basis of ''Percentage of completion
Method'' of accounting. Revenue is recognised, in relation to sold areas
only, on the basis of percentage of actual cost incurred thereon
including land as against the total estimated cost of the project under
execution subject to such actual cost being 20% or more of the total
The estimates of saleable area and costs are revised periodically by
the management. The effect of such changes to estimates is recognised
in the period such changes are determined. However, the revenue, in
respect of project undertaken before March 31, 2010 is accounted for on
the basis of actual receipts and instalment fallen due during the year
towards booking of properties, subject to final adjustments on the
completion of respective projects. However, change in this accounting
policy doesn''t have any significant impact on the profitability of the
Further interest on delayed payments, if any, is accounted for on
realisation due to uncertainties in recovery.
c) Cost of construction/development (including cost of land) incurred
is charged to the profit & loss account in proportion to project area
sold. Adjustments if required are made on completion of the respective
d) Interest and direct expenditure attributable to specific projects
are capitalized in the cost of project, other interest and indirect
costs are treated as ''Period Cost'' and charged to Profit & Loss account
in the year in which it is incurred.
e) Brokerage paid/ fallen due on Fixed Deposits is accounted during the
f) Municipal Taxes are accounted for in the year of payment.
g) All other incomes and expenditures except mentioned above are
accounted for on accrual basis.
7. Retirement Benefits to employees
Company''s contribution to Provident Fund and ESIC charged to profit and
loss account on the actual liability basis.
Provision for gratuity & Leave Encashment is determined on the
actuarial valuation carried out at the balance sheet date in accordance
with transitional provision of revised AS-15.
Income tax comprises current tax and deferred tax. Current tax is the
amount payable as determined in accordance with the provisions of
Income Tax Act, 1961. Provision for Income Tax is made after taking
into consideration benefits admissible under the provisions of the
Income Tax Act, 1961.Deferred tax resulting from timing difference
between the book and the taxable profits is accounted for using the tax
rates and law that are enacted or substantively enacted as on the
balance sheet date. Deferred tax assets are recognised only to the
extent there is reasonable certainty that the asset can be realised in
the future. However if there is unabsorbed depreciation or carried
forward loss under taxation laws, deferred tax assets are recognised
only if there is virtual certainty of realisation of such assets.
Deferred tax assets/liabilities are reviewed at each balance sheet
Investments intended to be held for more than a year are classified as
long term investments. All other investments are classified as current
investments. Long term investments are stated at cost. However
provision for diminution is made to recognize any decline, other than
temporary, in the value of investments. Current investments are stated
at lower of cost or market value on an individual investment basis.
10. Foreign Currency Transaction
Transaction in foreign currency is recorded at exchange rate prevailing
on the date of transaction. Monetary assets and liabilities denominated
in foreign currency are translated at the exchange rate prevailing on
the Balance sheet date and exchange difference on translation of
monetary assets and liabilities and resultant gain or loss is
recognized in the Profit & loss account.
Non Monetary assets and liabilities are translated at the rate
prevailing on the date of transaction.
11. Borrowing Cost
The borrowing costs that are directly attributable to the acquisition
or construction of qualifying assets are capitalized as part of the
cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Profit & Loss account as an expense in
the year in which they are incurred.
12. Impairment of Assets:
The Company assesses at each balance sheet date whether there is any
indication that an asset may suffer impairment loss. If any such
indication exists, the Company estimates the recoverable amount of the
asset or the recoverable amount of cash generating unit to which the
assets belongs. Recoverable amount is the higher of an asset''s net
selling price and value in use. In assessing value in use, the
estimated future cash flow expected from the continuing use of the
asset and from its disposal is discounted to their present value using
a pre-discount rate that reflect the current market assessment of the
time value of money and risk specific to the asset. In case recoverable
amount is less than its carrying amount then its carrying amount is
reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognized in the Profit and Loss Account. If at
the Balance Sheet date there is an indication that if a previously
assessed impairment loss no longer exists the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
13. Provisions, Contingent Liabilities and Contingent Assets
A) Provisions are recognized for liabilities that can be measured only
by using a substantial degree of estimation if: -
a) The Company has present obligation as a result of past event.
b) A probable outflow of resources is expected to settle the obligation
and the amount of obligation can be reliably estimated. Provisions are
determined based on management 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 management
B) Reimbursement expected in respect of expenditure required to settle
a provision is recognized only when it is virtually certain that the
reimbursement will be received.
C) Contingent Liability is disclosed in the case of:
a) A Present obligation arising from the past event, in case it is not
probable that an outflow of resources will be required to settle the
b) A Possible obligation, unless the probability of outflow of
resources is remote.
D) Contingent Assets are neither recognized nor disclosed.
14. Employee Stock Compensation Cost
In respect of stock options granted by the Company, the intrinsic value
of the options (excess of market price of the share on the date of
grant over the exercise price of the option) is treated as deferred
employee compensation cost and is amortized over the vesting period on
straight line basis in accordance with SEBI guidelines in this regard.
Lease arrangements, where risks and rewards incident to ownership of an
asset substantially vest with the lessor are recognized as operating
lease. Lease rentals in respect of operating lease arrangement are
recognized as business income/expense in the profit and loss account as
and when due in accordance with the terms of the related agreement.
16. Earning per share
The earnings considered in ascertaining the Company''s Earnings Per
Share (EPS) comprises the net profit after tax (and include the post
tax effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares
outstanding during the period / year. The number of shares used in
computing Diluted EPS comprises of weighted average number of equity
shares and dilutive potential equity shares outstanding during the
17. Segment Reporting
Revenue and expenses have been identified to segments on the basis of
their relationship to the operating activities of the segment. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segments on a reasonable basis, have been included under
unallocated corporate expenditure.
18. Amalgamation Expenses
Amalgamation expenses arising due to merger of Capital Homes Limited
with the Company are being amortized over the period of five years.
19. Cash and Cash Equivalents
The company considers all highly liquid financial instruments, which
are readily convertible into cash and have original maturities of three
months or less from the date of purchase, to be cash equivalent.