1.1 Basis of Accounting and Preparation of Financial Statements
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(GAAP) to comply with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of Companies Act, 1956. The financial statements
have been prepared on accrual basis under historical convention. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
1.2 Use of Estimates
The Preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions considered in the
reported amounts of assets and liabilities (including contingent
liabilities) and the reported income and expenses during the year. The
Management believes that the estimates used in preparation of financial
statements are prudent and reasonable. Future results could differ due
to these estimates and the difference between the actual results and
the estimates are recognized in the periods in which the results are
known / materialise.
1.3 Fixed Assets
Fixed assets are carried at cost of acquisition less accumulated
depreciation and impairment losses, if any.
1.4 Depreciation and Amortisation
Depreciation on fixed assets has been provided on written down value
method as per the rates and in the manner prescribed in Schedule XIV to
the Companies Act, 1956.
1.5 Borrowing Costs
a) Borrowing costs specifically for the purpose of acquisition and
construction of qualifying assets that are directly attributable to the
qualifying asset, is capitalized as part of the cost of the asset.
B) Borrowing costs not attributable to the acquisition of any
qualifying asset are recognised as expense in the period in which they
1.6 Impairment of Assets
The carrying value of assets, other than inventory, is reviewed at each
balance sheet date for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised whenever the carrying amount of an asset
exceeds its recoverable amount.
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
Inventories are valued at the lower of cost and the net realisable
value after providing other losses, wherever considered necessary.
Property and infrastructure development projects under development are
valued at cost. Cost includes direct development expenditure, borrowing
cost, appropriate overheads and all charges in bringing the inventory
to the point of sale.
1.9 Foreign Currency Transactions
Foreign currency transactions are recorded using the exchange rates
prevailing on the date of the respective transactions. Exchange
difference arising on foreign currency transactions settled during the
year is recognized in the profit and loss account.
Monetary assets and liabilities denominated in foreign currencies as at
the balance sheet date, not covered by forwarded exchange contracts are
translated at year-end rates. The resultant exchange difference is
recognized in the profit and loss account. Non-monetary assets are
recorded at the rates prevailing on the date of the transaction.
1.10 Revenue Recognition
i. On property and infrastructure development projects
a) Recognized on the ''Percentage of Completion Method'' of accounting.
Revenue comprises the aggregate amounts of sale price in terms of the
agreements entered into and is recognized on the basis of percentage of
actual costs incurred thereon, including proportionate land cost and
total estimated cost of the projects under execution, subject to such
actual costs being 30 percent or more of the total estimated cost.
b) Where aggregate of the payment received provide insufficient
evidence of buyers commitment to make the complete payment, revenue is
recognized only to the extent of realization.
c) The estimates of the saleable areas and costs are reviewed
periodically by the management and any effect of changes in estimates
is recognized in the period such changes are determined. However, when
the total project cost is estimated to exceed total revenues from the
project, the loss is recognized immediately.
ii. On construction contracts (undertaken as contractors) the Company
follows percentage completion method for accounting of construction
iii. Price escalation is carried out in the year of settlement of
iv. Rent Receipts are recognized on accrual basis.
v. Interest on deployment of funds is recognised using the
time-proportion method, based on interest rates implicit in the
vi. Property management services are recognised on rendering services
and billing thereof.
vii. Dividend income is accounted when the right to receive dividend is
1.11 Revenue Receipts on Joint Venture Contracts
In work sharing joint venture agreements revenues, expenses, assets and
liabilities are accounted in the Company''s books to the extent work is
executed by the Company.
1.12 Income Tax
a) Current tax is the amount of tax payable on the taxable income for
the year as determined in accordance with the provisions of the Income
Tax Act, 1961.
b) Minium Alternate Tax (MAT) paid in accordance with the tax laws,
which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
MAT is recognized as an asset in the Balance sheet when it is probable
that future economic benefit associated with it will flow to the
c) Deferred tax is recognized on timing differences being the
differences between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted as at the reporting date. Deferred tax liabilities are
recognized for all timing differences. Deferred tax assets in respect
of unabsorbed depreciation and carry forward losses are recognized only
if there is virtual certainity that there will be sufficient future
taxable income available to realize such assets.
1.13 Employee Benefits
i. Short Term Employee Benefits:
All employees'' benefits payable wholly within twelve months of
rendering the service are classified as short term employee benefits
and they are recognized in the period in which the employee renders the
ii. Long Term and Post-employment benefits:
a) Defined Contribution Plans
Defined contribution plans are post employment benefit plans under
which the Company pays fixed contributions into separate entities
(funds) or to financial institutions or state managed benefit schemes.
The Company contributions to defined contribution plans are recognized
in the Statement of Profit and Loss in the financial year to which they
relate. The Company makes specified monthly contributions towards
Employee Provident Fund Scheme and Employee State Insurance Scheme.
b) Defined Benefit Obligation
Gratuity liability is defined obligation and is provided for on the
basis of an actuarial valuation on Projected Unit Credit method made at
the end of each financial year.
1.14 Earning Per Share (EPS)
In arriving at the EPS, the Company''s net profit after tax, computed in
terms of the GAAP, is divided by the weighted average number of equity
shares outstanding on the last day of the reporting period. The EPS
thus arrived at is known as ''Basic EPS''. To arrive at the diluted EPS
the net profit after tax, referred above, is divided by the weighted
average number of equity shares, as computed above and the weighted
average number of equity shares that could have been issued on
conversion of shares having potential dilutive effect subject to the
terms of issue of those potential shares. The date/s of issue of such
potential shares determine the amount of the weighted average number
potential equity shares.
1.15 Prior Period Items
Prior period items are included in the respective heads of account and
material items are disclosed by way of notes to accounts.
1.16 Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an out flow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingency liability as made when there is a possible
obligation or a present obligation that may, but probability will not,
require an outflow of resources. Where there is possible obligation or
a present obligation in respect of which the likely hood of outflow of
resources is remote, no provision or disclosure is made.
Provision for onerous contracts, i.e. contracts where the expected
unavoidable costs of meeting the obligation under the contact exceeds
the economic benefits expected to be received under it, are recognized
when it is probable that an outflow of resources embodying economic
benefits will be required to settle a present obligation as a result of
an obligating event, based on reliable estimate of such obligation.
Operating lease payments are recognized as an expense in the profit and
loss account on the basis of lease agreement.
1.18 Cash Flow Statement
Cash flows are reported ausing the indirect method, whereby profit /
(loss) before tax is adjusted for the effects of transactions of
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on available
1.19 Service Tax Input Credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilizing the credits.