NOTES ON FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES: A. Basis of brparation a) These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, till the Standards of Accounting or any addendum thereto are brscribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been brpared to comply all material aspects with the Accounting Standards notified under Section 211(3C) of Companies Act, 1956 (Companies (Accounting Standards) Rules, 2006, as amended) and other relevant provisions of the Companies Act, 2013. All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle to be 5 years for the purpose of current- non-current classification of assets and liabilities. b) Use of estimates The brparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities as on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognised in accordance with the requirements of the respective accounting standard. B. Fixed assets a) Tangible assets Fixed assets are stated at cost of acquisition or construction, net of recoverable taxes, trade discounts, rebates, debrciation accumulated and accumulated impairment losses. All costs relating to the acquisition and installation of fixed assets are capitalised and includes borrowing costs relating to borrowed funds attributable to construction or acquisition of fixed assets, up to the date the asset is put to use. Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the Statement of Profit and Loss. Losses arising from the retirement of and gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss. Projects under which assets are not ready for their intended use are shown as Capital Work-in-Progress. b) Intangible assets I ntangible assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. Gains or losses arising from the retirement or disposal of the asset are recognised as income or expense in the Statement of Profit and Loss. C. Method of Debrciation and amortisation Effective 1st April, 2014, debrciation on tangible assets is provided on the straight-line method over the useful lives of assets as specified in Schedule II of the Companies Act, 2013, as against the earlier practice of debrciating at the rates brscribed in Schedule XIV of the Companies Act, 1956. Debrciation for assets purchased / sold during a year is proportionately charged. Intangible assets are amortised over their respective estimated useful lives on a straight-line basis, commencing from the date of asset is available to the Company for its use. Based on an independent technical evaluation, the useful life of Mobile Phones has been estimated as 3 years, which is different from that brscribed in Schedule II of the Act. D. Investments Investments that are readily realisable and are intended to be held for not more than a year from the date, on which such investments are made, are classified as current investments and are carried at lower of cost and fair value determined on an individual investment basis whereas all other investments are classified as long-term investments and are carried at cost. Provision for diminution in value of long term investment is made to recognise a decline other than temporary as specified in Accounting Standard (AS 13) on "Accounting for Investments". E. Inventories Inventories are valued as follows: Inventory comprises of completed property for sale, transferable development rights, F.S.I. and projects in progress. (i) Completed property for sale and transferable development rights are valued at lower of cost or net realisable value. Cost formulae used are 'First-in-First-out'. Cost includes cost of land, land development rights, acquisition of tenancy rights, materials, services, borrowing costs and other related overheads as the case may be. (ii) Projects in progress are valued at lower of cost or net realisable value. Cost formulae used are 'First-in-First-out'. Cost includes cost of land, land development rights, materials, services, borrowing costs, acquisition of tenancy rights and other related overheads. Cost incurred / items purchased specifically for projects are taken as consumed as and when incurred / received. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. (iii) I n the case of acquisition of land for development and construction, the rights are acquired from the owners of the land and the conveyance and registration thereof will be executed between the original owners and the ultimate purchasers as per trade practice. As a result, in the intermediate period, generally, the land is not registered in the name of the Company. F. Revenue recognition Revenue from the projects is recognised by applying Percentage of Completion Method in compliance of Guidance Note on Accounting for Real Estate Transaction (Revised 2012) issued by the Institute of the Chartered Accountants of India. However, for the ongoing projects as on the date of introduction of Guidance Note on Accounting for Real Estate Transaction (Revised 2012) and also where Company has already commenced the recognisation of the revenue from the projects, the Company follows completed project method of accounting ("Project Completion Method of Accounting") where in allocable expenses incurred during the year are debited to work-in-progress account and the income is accounted for as and when the projects get completed or substantially completed and also the revenue is recognised to the extent it is probable and the economic benefits will flow to the Company and the revenue can be reliably measured. a) Sale: i) Unit in real estate: Revenue is recognised when the significant risks and rewards of ownership of the units in real estate have passed to the buyer. ii) Sale / trading of goods and materials: Sales are recognised when goods are supplied and are recorded net of returns, trade discounts, rebates and indirect taxes. b) Rent: Revenue is recognised on accrual basis. c) Interest: i) Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. ii) I nterest due on delayed payments by customers is accounted for on receipts basis due to uncertainty of recovery of the same. d) Dividends: Revenue is recognised when the shareholders' right to receive payment is established by the Balance Sheet date. e) Share of profit from joint ventures: Share of profit/(loss) from partnership firms is accounted for in respect of the financial year ending on or before the Balance Sheet date. f) Share in revenue of entertainment vertical: Revenue is recognised on accrual basis. g) Profit on sale of investment: It is recognised on its liquidation / redemption. G. Employees benefits a) Defined Contribution Plans such as Provident Fund etc., are charged to the Statement of Profit and Loss as and when incurred. b) Defined Benefit Plans - The brsent value of the obligation under such plan, is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognised immediately in the Statement of Profit and Loss. In case of funded defined benefit plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on net basis. The Company has an obligation to make good the shortfall, if any. c) Other Long term Employee Benefits are recognised in the same manner as Defined Benefit Plans. d) Termination benefits are recognised as and when incurred. H. Borrowing cost Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset (including real estate projects) are considered as part of the cost of the qualifying asset. Other borrowing costs are treated as period costs and charged to Statement of Profit and Loss as and when they are incurred. I. Foreign currency transactions a) Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or that approximates the actual rate at the date of transaction. b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. c) Non-monetary foreign currency items are carried at cost. d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss. J. Leases a) As a lessor Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Recurring costs are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised in the Statement of Profit and Loss. b) As a lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership during the leased term, are classified as operating leases. Operating lease payments are charged to the Statement of Profit and Loss. K. Impairment (i) The carrying amounts of assets are reviewed at each Balance Sheet date when required to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. (ii) After impairment, debrciation is provided on the assets revised carrying amount over its remaining useful life. (iii) A brviously recognised impairment loss is increased or decreased depending on change in circumstances. However, an impairment loss is not decreased to an amount higher than the carrying amount that would have been determined has no impairment loss been recognised. L. Income taxes a) Tax expense comprises of current and deferred tax charge or credit. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. b) Deferred income tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. M. Segment reporting policies The main business of the Company is real estate development and construction of residential and commercial properties, infrastructure facilities and all other related activities revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS - 17) on "Segment Reporting". N. Earnings per share Basic earnings per equity share are calculated by dividing the net profit / (loss) for the year attributable to equity shareholders (after deducting attributable taxes) by weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for event of fresh issue of shares to the public. For the purpose of calculating diluted earnings per equity share, the net profit or (loss) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. O. Provisions, contingent liabilities and contingent assets A provision is recognised when there is a brsent obligation as a result of a past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation. Provision is not discounted to its brsent value and is determined based on the last estimate required to settle the obligation at the year end. These are reviewed at each year end and adjusted to reflect the best current estimate. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements. 2. COMMITMENTS Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances and deposits) 3. NATURE OF OPERATIONS: Housing Development and Infrastructure Limited (HDIL) is a leading real estate and infrastructure development Company. 4. Previous year figures have been reclassified to conform to this year's classification. For THAR & CO. Chartered Accountants Firm Registration No. 110958W Jayesh R. Thar (Partner) Membership No. 032917 Rakesh Kumar Wadhawan Executive Chairman Sarang Wadhawan Vice Chairman and Managing Director Raj Kumar Aggarwal Director Lalit Mohan Mehta Director Ashok Kumar Gupta Director Shyam Sunder Dawra Director Hazari Lal Director Sandhya Baliga Director Darshan D. Majmudar Chief Financial Officer and Company Secretary Place: Mumbai Date: May 15, 2015 |