NOTES FORMING PART OF THE ACCOUNTS NOTE 1 Significant Accounting Policies I) Accounting Convention The financial statements are brpared under the historical cost convention in accordance with generally accepted accounting principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 2013 (‘the Act’). II) Revenue Recognition (a) The Company follows the Mercantile System of Accounting and recognizes Income and Expenditure on an accrual basis, unless mentioned otherwise. (b) The Company is mainly in the business of Construction & Real Estate Development. The Company is following the “Percentage of Completion Method” of accounting. As per this method,revenue from sale of properties under construction is recognized on the basis of actual bookings done (provided the significant risks and rewards have been transferred to the buyer and there is reasonable certainty of realization of the monies) proportionate to the percentage of physical completion of construction/ development work as certified by the Architect. Expenses related to property development are booked as Realty inventory on a reasonable basis by management as per supporting documents and assumptions where necessary. (c) Revenue from sale of completed properties(Finished Realty Stock) is recognized upon transfer of significant risks and rewards to the buyer. (d) Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer. (e) Dividend Income is recognized when the right to receive the same is established. III) Fixed Assets Tangible assets (a) Fixed Assets are carried at cost of acquisition less accumulated debrciation/ amortization, and impairment loss, if any, except for assets that have been revalued and are shown at revalued amounts. Cost includes all incidental and br-operational expenses. Borrowing cost attributable to acquisition or construction of fixed assets is capitalized. (b) In respect of revalued assets, the difference between the written down value of the assets as on the date of revaluation, and the value of the assets on revaluation, has been transferred to Revaluation Reserve. IV) Debrciation (a) Debrciation is charged as per the rates brscribed in Schedule II of the Act, as under: • On straight line method for Buildings, Plant and Machinery and Electrical Installations. • On written down value method on other assets (b) Temporary structure is debrciated on a straight line basis over the estimated useful life of four years. (c) Debrciation on differential increase in values arising out of revaluation is recouped from Revaluation Reserve (d) In respect of additions and deletions of fixed assets during the year, debrciation is provided on a prorata basis. V) Investments (a) Long Term investments are stated at cost, less provision for other than temporary diminution in value. (b) Current investments are stated at the lower of cost or net realizable value. VI) Inventories (a) Inventories are valued at lower of cost or net realizable value. (b) Cost of finished goods for the purpose of valuation is computed on the basis of direct cost and other related overhead incurred to bring the stocks to their current condition and location. Sales overheads are excluded. (c) Work in Progress (including land inventory) rebrsents cost incurred in respect of project under construction / development in proportion to the amount wherein the revenue is not recognized. Operating cost includes all construction/ development cost directly related to the project and other expenditure, as identified by the Management, which are incurred for the purpose of executing and securing the completion of the project VII) Finance Cost (a) Finance cost attributable to realty projects have been treated as project cost. (b) Other finance costs are charged to statement of Profit & Loss in the year in which they are incurred. VIII)Foreign Exchange Transactions in foreign exchange are recorded at the rate of exchange in force at the time the transactions are affected. Exchange differences arising on realization of export proceeds are recognized in the profit and loss account. IX) Employee Benefits (a) Short term employee benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employee is recognised as an expense during the year. Benefits such as salaries and wages, etc. and the expected cost of ex-gratia, if any are recognised in the period in which the employee renders the related service. (b) Post-employment benefits Defined contribution plans The Company makes specified monthly contributions towards employees’ provident fund to Government administered provident fund scheme, which is a defined contribution scheme. The Company’s contribution paid / payable under the scheme is recognised as an expense in the statement of profit and loss during the period in which the employee renders the related service. Defined benefit plans The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its brsent value, and the fair value of any plan assets, if any, is deducted. The brsent value of the obligation under such defined benefit plan is determined based on actuarial valuation, carried out by an independent actuary at each Balance sheet date, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rates used for determining the brsent value of the obligation under defined benefit plan are based on the market yields on Government Securities as at the Balance sheet date. Actuarial gains and losses are recognized immediately in the Statement of profit and loss. (c) Other employee benefits Leave encashment is accounted on cash basis. X) Taxation (a) Income-Tax expense comprises Deferred Tax charge. (b) Current Taxes is measured at the amount expected to be paid to the Tax Authorities, using the applicable tax rates and tax laws. (c) Deferred tax asset and liability are recognized by applying tax rate and tax laws that have been enacted or substantively enacted as at Balance Sheet date. Deferred tax assets arising on account of brought forward losses and unabsorbed debrciation under tax laws are recognized, only if there is a virtual certainty of its realization. At each Balance Sheet date, the carrying amount of Deferred tax liabilities and assets are reviewed to reassure realization. (d) Provision for tax and Advance tax is netted off. XI) Use of Estimates The brparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumption that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the period in which the results are known. Management believes that the estimates used in the brparation of financial statements are prudent and reasonable. XII) Provisions and Contingent Liabilities (a) Provisions are recognized in the accounts in respect of brsent probable obligations, the amount of which can be reliably estimated. (b) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. XIII)Earning per Share (EPS) In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extra – ordinary / exceptional items. The number of shares in computing basic earnings per share is the number of shares outstanding at the end of the period. XIV) Current Assets, Loans and Advances are approximately of the value stated, if realized in the ordinary course of business, and provisions for all known liabilities and debrciation is adequate and not in excess of amounts reasonably necessary. XV) Previous year’s figures have been regrouped / recast wherever necessary so as to make them comparable with those of the current year. Rupee amounts have been rounded off to lakhs for convenient brsentation. Notes forming part of the Accounts NOTE 24 Additional information to the Financial Statements I) The plan for developing the construction project was approved by Pune Municipal Corporation on 14.07.2011 and subsequently modified on 04.04.2012 & 21.05.2015 All cost directly related to the approved construction project and other expenditure identifiable as related to the property development project are booked as realty inventories (WIP) and cost in the Statement of Profit and Loss on a reasonable basis as determined by the Management as per supporting documents and assumptions where necessary. Further, estimates of total area to be developed and total project cost are also determined similarly by the Management II) Remuneration to Managing Director has been paid as Minimum Stipulated Remuneration under Schedule V of the Companies Act 2013 read with section 197 of the Act. Estimated value of perquisites provided to the Managing Director is Rs. 21,88,800/- (brvious year Rs.18,63,176/-). Total remuneration to Managing Directors including perquisites is Rs. 57,88,800/- (brvious year Rs. 51,66,509/-). III) The Company is in the process of identifying the status of suppliers under the Micro, Small and Medium Enterprises Development Act, 2006, and hence, the particulars regarding the same are not furnished. IV) Pursuant to the implementation of Schedule II to the Companies Act, 2013, the Company has revised the useful life of its fixed assets. The debrciation charge during the year pertaining to assets whose revised useful life has expired prior to commencement of the financial year has been adjusted against retained earnings in terms of Schedule II. |