SIGNIFICANT ACCOUNTING POLICIES A. NATURE OF OPERATIONS Ansal Properties and Infrastructure Ltd. ("APIL" or the "Company''), was incorporated in 1967. The Company's main business is real estate promotion and development in residential and commercial segment. BASIS OF brPARATION OF ACCOUNTS The Financial Statement of the company have been brpared in accordance with generally accepted accounting principles in India. The company has brpared these financial statements to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent applicable, as adopted consistently by the Company. The Financial Statements have been brpared under the historical cost convention, on the basis of going concern and on an accrual basis except as stated otherwise. USE OF ESTIMATES The brparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized. FIXED ASSETS Fixed Assets are stated at cost less accumulated debrciation. Cost comprises the purchase price and any cost attributable to bringing the asset to its working condition for its intended use. Some of the building properties owned by the Company which have been revalued are stated at revalued amounts less accumulated debrciation. Intangible Assets are recognised on the basis of recognition criteria as set out in Accounting Standard - (AS-26) "Intangible Assets". Bought out softwares are recognised at cost of purchase. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs required to make the sale. DEbrCIATION All fixed assets (including intangible assets) are stated at historical cost less any accumulated debrciation/ amortisation. Cost includes original cost of acquisition including incidental expenses related to such acquisition. Debrciation on fixed assets other than Plant and Machinery relating to Windmill is provided on Written down value method over the estimated useful life as brscribed under Schedule II to the Companies Act, 2013. Pursuant to this policy, debrciation is provided at the following rates which are in line with the corresponding useful life brscribed in Schedule II to the Companies Act, 2013:- G. INVESTMENTS Investment intended to be held for more than a year are classified as long term investments. All other investments are classified as current investments. Current investments are stated at lower of cost and market/fair value. Long term investments are stated at cost. Decline in value of long term investments is recognized, if considered other than temporary. H. REVENUE RECOGNITION i. The Company follows "Percentage of Completion Method" of accounting for contracts and constructed residential, institutional and commercial properties. As per this method, the revenue is recognized in proportion to the actual costs incurred as against the total estimated cost of the projects under execution subject to actual cost being 30% or more of the total estimated cost. Effective 1 April 2012, in accordance with the "Guidance Note on Accounting for Real Estate Transactions (Revised 2012)" (Guidance note) all projects commencing on or after the said date or projects where revenue is recognized for the first time on after the above date, construction revenue on such projects have been recognized on percentage of completion method provided the following thresholds have been met in addition to the existing conditions. (a) All critical approvals necessary for the project commencement have been obtained. (b) The expenditure incurred on construction and development cost (excluding land costs) is not less than 25% of the total estimated construction and development costs. (c) At least 25% of the saleable project area is secured by agreements with buyers; and (d) at least 10% of the sale proceeds relating to agreements secured are realized at the reporting date in respect of such contracts. ii. Income from know how fee is recognized as per the terms of the agreement with the recipient of know how. iii. The estimates relating to saleable area, sale value, estimated costs etc., are revised and updated periodically by the management and necessary adjustments are made in the accounts in the year in which the estimates are revised. iv. Indirect costs (Note no. 23,24,25,26) are treated as "Period Costs" and are charged to the Statement of Profit & Loss in the year in which they are incurred. v. Surrender of flats by buyers are valued at cost and accounted for as surrender of rights under 'Cost of Construction' in the case of projects in progress and once sold, proceeds are treated as 'Sales'. vi. For recognizing income and working out related cost of construction, in case of developed land, flats / shops/ houses/ farms etc., major self contained residential township projects are divided into various schemes such as plotted area, constructed houses, commercial area, malls etc. vii. Whereas all income and expenses are accounted for on accrual basis, interest on delayed payments by customers against dues and holding charges, interest claims for delay in projects and assured returns to customers are taken into account on realization or payment owing to practical difficulties and uncertainties involved. viii. Income from Windmill is accounted for on the basis of power supplied to the Customer as per the terms of the Power Purchase Agreement with the respective party. ix. Interest income on fixed deposit with banks is recognized on time proportion basis taking into account the amount outstanding and the rates applicable. x. Dividend income from investments is recognized when the Company's right to receive payment is established. I. ADVANCES TO SUBSIDIARIES, ASSOCIATES AND OTHERS FOR PURCHASE OF LAND Advances given to subsidiary and land holding companies for acquiring land are initially classified as 'Advances' for purchase of land under Loans & Advances. On obtaining the license for a land, the full cost of the land is transferred to cost of land, an item of cost of construction, from 'Advance against land'. J. RETIREMENT AND OTHER BENEFITS i. Contribution to the Provident Fund is charged to the revenue each year. ii. Provisions for Gratuity and leave encashment are made on the basis of actuarial valuation at the year-end in accordance with Accounting Standard (AS-15) 'Employee Benefits'. The actuarial valuation is done as per Projected Unit Credit Method (PUCM). Actuarial gains/losses are immediately taken to Statement of profit & Loss in the year in which such gains or losses arise. K. FOREIGN CURRENCY TRANSLATION / CONVERSION Transactions in foreign currency are recorded at the exchange rate brvailing on the date of transactions. Gains / Losses arising due to fluctuations in the exchange rates are recognized in the Statement of Profit & Loss in the period in which they arise. Gains / Losses on foreign exchange rate fluctuations relating to translation of monetary items at the year-end are accounted for in the Statement of Profit & Loss. L. BORROWING COSTS Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are considered as part of cost of that asset. In accordance with Accounting Standard (AS-16) - " Borrowing Costs", a qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Other borrowing costs are expensed as period costs. Borrowing costs that are directly attributable to the projects are charged to the respective Project on the basis of expenditure incurred net of customer collections. M. TAXES ON INCOME Income tax expense is accounted for in accordance with AS-22, "Accounting for Taxes on Income", as stated below: i. Provision for current tax is made based on taxable income for the year computed in accordance with provisions of the Income Tax Act, 1961. ii. Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. iii. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. iv. Deferred tax asset is recognized and carried forward to the extent that there is a reasonable certainty of realization. In the case of unabsorbed debrciation and carry forward tax losses deferred tax asset is recognized, to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. N. SEGMENT POLICIES The Company's reportable segments are identified based on activities/products, risk and reward structure, organization structure and internal reporting systems. O. ACCOUNTING FOR JOINT VENTURES i. Jointly controlled operations - The Company's share of revenue, expenses, assets and liabilities are included in the financial statements as revenue, expenses, assets and liabilities respectively. ii. Jointly controlled entities - The Company's investment in jointly controlled entities is reflected as investment and accounted for in accordance with the Company's accounting policy of Investments. (See Note No. 1(G) above) P. IMPAIRMENT At each Balance Sheet date, the management reviews the carrying amounts of Fixed Assets to determine whether there is any indication that these assets suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss and necessary provisions are made against such impairment. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital. Reversal of impairment loss is recognized as income in the Statement of Profit & Loss to the extent of impairment loss brviously recognized. Q. LEASE When the Company is the lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. When the Company is the lessor Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including debrciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss. R. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS A provision is recognised when an enterprise has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate 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. Contingent liabilities are shown by way of note in the Notes to Accounts in respect of obligations where based on the evidence available, their existence at the balance sheet date is considered not probable. Contingent assets are neither recognized in the accounts nor disclosed. S. EARNINGS PER SHARE Basic earning per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all potential dilutive equity shares. T. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash at bank, cash/ cheques in hand and fixed deposits with banks with maturity period of three months or less. . Previous year figures have been regrouped / rearranged wherever considered necessary, to make them comparable with current year's figures. As per report of even date For S.S. KOTHARI MEHTA & Co. Chartered Accountants SUSHIL ANSAL Chairman PRANAV ANSAL Vice Chairman For and on behalf of the Board ANIL KUMAR Joint Managing Director & CEO ARUN K. TULSIAN Partner Membership No. 89907 AMITAV GANGULY Sr. Group Company Secretary SUNIL KUMAR GUPTA Sr. GM (Finance & Accounts) & Acting CFO Date: 16th May, 2015 Place: New Delhi |