| Disclosure of accounting policies, change in accounting policies and changes in estimates explanatory 1) Summary of Significant Accounting Policies A.Principles of Consolidation The Consolidated Financial Statements comprise the financial statements of Lodha Developers Private Limited (‘the Company’) and all of its Subsidiaries, Associates, Limited Liability Partnerships and Partnership Firms under control (hereinafter collectively referred to as the “Group”). The Consolidated Financial Statements have been brpared on the following basis: | 1 | The Consolidated Financial Statements of the Company and its Subsidiaries / Limited Liability Partnerships / Partnership Firms under control are combined on a line-by-line basis, by adding together the book values of like items of assets, liabilities, incomes and expenses in accordance with Accounting Standard (“AS”) 21 “Consolidated Financial Statements”. Investments in Associates are accounted for in accordance with Accounting Standard (“AS”) 23 “Accounting for Investments in Associates”. The Intra Group Balances / transactions and unrealised profits / losses resulting from such transactions are eliminated. | | | | | | | 2 | In case of foreign subsidiaries being non-integral operations, revenue items are consolidated at the exchange rate brvailing on the day of the transaction and all assets and liabilities are converted at the closing rate. Any exchange difference arising on consolidation of foreign operation is transferred to Foreign Currency Translation Reserve. | | | | | | | 3 | The excess of the Company’s investment in a subsidiary over the subsidiary’s net assets on the date of investment is recognized in the financial statements as goodwill. The excess of the subsidiary’s net assets on the date of investment over its investment is recognized as capital reserve. | | | Goodwill arising on Consolidation is stated at cost and impairment is recognized, where applicable. | | | | | | | 4 | The difference between the proceeds from disposal of investments in subsidiaries / limited liability partnerships and the carrying amount of its assets less liabilities as on the date of disposal is recognized as profit or loss on disposal of investment in subsidiaries / limited liability partnerships. | | | | | | | 5 | Investments in associates are accounted for using the equity method. The excess of cost of investment over the proportionate share in equity of the associate as at the date of acquisition of stake is identified as goodwill or capital reserve as the case may be and included in the carrying value of the investment in the associate. The carrying amount of the investment is adjusted thereafter for the post acquisition change in the share of net assets of the associate. However, the share of losses is accounted for only to the extent of the cost of investment. Additional losses are provided for to the extent that the Group has incurred obligations or made payments on behalf of the associate to satisfy obligations of the associate that the Group has guaranteed or to which the Group is otherwise committed. Subsequent profits of such associates are not accounted for unless the accumulated losses (not accounted for by the Group) are recouped. | | | | | | | 6 | Minority interest in the net assets of subsidiaries comprises the aggregate of the amount of equity attributable to the minority shareholders as on the dates on which investments are made by the Company in the subsidiary companies and minority share in the Profit / Loss subsequent to acquisition. Where accumulated losses attributable to the minorities are in excess of their equity, in the absence of any contractual obligation of the minorities, it is absorbed by the Group. |
Other Significant Accounting Policies | 1 | Basis of Accounting : | | | The financial statements have been brpared on an accrual basis under the historical cost convention and as a going concern in accordance with the Indian Generally Accepted Accounting Principles (GAAP) in compliance with the Accounting Standards as specified Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014 (as amended). The accounting policies have been consistently applied by the Group. | | | | | | | 2 | Use of Estimates : | | | The brparation of financial statements in conformity with GAAP requires the management to make estimates andassumptionsthat affect the reported balances of assets and liabilities (including contingent liabilities) on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that the estimates used in the brparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. |
| 3 | Fixed Assets : | | | Fixed Assets are stated at cost of acquisition or construction less accumulated debrciation thereon. Cost includes all incidental expenses related to acquisition, construction, installation, other br-operation expenses and borrowing costs in case of construction. | | | | | | | | Software, which is not an integral part of the hardware is classified as an intangible asset. | | | | | | | | Fixed assets not yet ready for their intended use are shown under Capital Work in Progress and carried at cost comprising direct cost, related incidental expenses and attributable interest cost. | | | | | | | | The carrying amount of cash generating units / assets is reviewed at the balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated at the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. |
| 4 | Goodwill on Amalgamation : | | | Goodwill arising on amalgamation is amortized over a period of five years. |
| 5 | | Debrciation : | | a) | | Debrciation on Tangible Assets is provided on Written Down Value basis, at the rates determined with reference to useful lives specified in Schedule II of the Companies Act, 2013 except the following: | | | | | | | i) | | The carrying value of Tangible Fixed Assets as on 1st April, 2014 is debrciated equally over the remaining useful life of the asset. | | | | | | | ii) | | Cost of site / sales office and sample flats are being amortized over the duration of the project. However, if the same is demolished earlier, the unamortised portion is charged off in the year of demolition. | | | | | | | iii) | | Leasehold improvements and fixed assets used for brmises given on lease are amortized equally over the lease term. | | | | | | | b) | | Intangible assets (other than Brand Cost) are amortized proportionately over a period of five years or over the useful life of the assets, whichever is earlier. Brand Cost is amortized over the life of the project in proportion to the Revenue Recognized. | | | | | | | c) | | Debrciation on Additions / Deletions of assets is provided on a pro-rata basis. | | | | | | | d) | | In case of Partnership Firms, debrciation is provided on Written Down Value basis at the rates applicable and in the manner provided in the Income Tax Act, 1961. | | | | | | | e) | | The debrciation on assets other than those used for construction of Capital Assets is treated as period cost. |
| 6 | Investments : | | | Investments are classified into non-current and current investments. | | | | | | | | Long term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognize a decline, other than of a temporary nature. | | | | | | | | Current investments are carried individually at lower of cost and fair value and the resultant decline, if any, is charged to revenue. | | | | | | | 7 | Inventories : | | | Realty Operations: | | | Inventories are stated at lower of cost or net realisable value. The cost of building material is determined on the basis of the weighted average method. Construction Work-in-Progress includes cost of land, shares rebrsenting occupancy rights, brmium for development rights, construction costs, contribution as a shareholder towards Land, Construction and development costs, Borrowing Costs and other overheads incidental to the projects undertaken. | | | | | | | | Manufacturing Operations: | | | Inventories are stated at lower of cost or net realisable value. Cost of raw material is ascertained on weighted average basis. Cost in case of Finished goods and work-in-progress includes material cost, labour cost and manufacturing overheads absorbed on the basis of normal capacity of production. | | | | | | | | | | | | | Shares / Debentures: | | | Valuation of stock in trade of listed Shares and Debentures is carried out at lower of its cost and quoted market price, computed script wise. Cost is ascertained on First-in-First-out basis. |
| 8 | Equity Derivative Transactions : | | | Profit / (Loss) in respect of Equity / Index Futures / Options are accounted in the Statement of Profit and Loss on the expiry of the respective contract or on the same being settled. | | | | | | | | In case of outstanding contracts as at the Balance Sheet date, mark to market difference is recognised in the case of losses and ignored in the case of profits, in accordance with the conservative principle of accounting. | | | | | | | 9 | Operating Cycle : | | | The Operating cycle of the Group’s realty operations varies from project to project depending on the size of the project, type of development, project complexities and related approvals. Assets and Liabilities are classified into current and non current based on the Operating Cycle. |
| 10 | | Revenue Recognition : | | A | | Income from Property Development | | i) | | Income from property development and value of shares rebrsenting occupancy rights of units of immovable property is recognized upon transfer of all significant risks and rewards of ownership to the buyers and no significant uncertainty exists regarding the amount of consideration and ultimate collection. However, if at the time of transfer, substantial acts are yet to be performed under the contract, revenue is recognized on proportionate basis as the acts are performed i.e. on the percentage completion method: | | | | | | | | | a) Revenue is recognized on achieving at least 30% of Physical Progress of the Project and Receipt of 20% of Sales Consideration in projects where first time revenuerecognitionhappened on or before 31st March, 2012. The percentage of completion is stated on the basis of physical measurement of work actually completed as at the balance sheet date and certified by an Architect. | | | | | | | | | b) For projects other than covered under clause (a) above, as per revised Guidance Note on “Accounting for Real Estate Transactions”, revenue is recognised on incurring at least 25% of estimated construction and development cost (excluding land and borrowing cost), at least 25% of the total saleable area is secured by agreement or letter of allotment with buyers and receipt of 10% of the sales consideration per contract. The percentage of completion is worked out based on the total project cost incurred to the total estimated project cost including land and borrowing cost. | | | | | | | | | As the projects necessarily extend beyond one year, revision in costs and revenues estimated during the course of the contract are reflected in the accounting period in which the said estimates are revised. | | | | | | | ii) | | Determination of revenue under the percentage of completion method necessarily involves making estimates by the Group, some of which are technical in nature, concerning, where relevant, the percentage of completion, costs to completion, the expected revenues from the project and the foreseeable losses to completion. Provision for foreseeable losses, determination of profit from real estate projects and valuation of construction work in progress is based on such estimates. | | | | | | | B | | Revenue from Sale of Land (Development Rights), Building Materials, Manufactured Goods and Shares / Debentures are recognized upon transfer of significant risks and rewards to the buyers / Customers. | | | | | | | C | | Income of Contract / Support Services is recognised as per the terms of Contracts / Agreements. |
| 11 | Borrowing Costs : | | | Borrowing costs that are directly attributable to long term project development activities are inventorised / capitalized as part of project cost. Other borrowing costs are recognized as an expense in the period in which they are incurred. | | | | | | | | Borrowing costs are inventorised / capitalized as part of project cost when the activities that are necessary to brpare the inventory / asset for its intended use or sale are in progress. Borrowing costs are suspended from inventorisation / capitalization on the project when development work on the project is interrupted for extended periods and there is no imminent certainty of recommencement of work. | | | | | | | | Borrowing Costs includes exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest Cost. | | | | | | | 12 | Foreign Exchange Transactions : | | | The transactions in foreign exchange are recorded at the exchange rates brvailing on the date of transactions. All monetary assets and liabilities in foreign currency are translated at the exchange rate brvailing at the date of the Balance Sheet. Any exchange gains or losses arising on the translation or settlement of such transaction are accounted for in the Statement of Profit and Loss. |
| 13 | | Employee Benefits : | | | | Expenses and liabilities in respect of employee benefits are recorded in accordance with Revised Accounting Standard 15 - Employee Benefits: | | a) | | Provident Fund | | | | The Group makes contribution to statutory providentfund inaccordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee. | | | | | | | b) | | Gratuity | | | | Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the brsent value of the defined benefit / obligation at the balance sheet date less the fair value of plan assets, together with any adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit / obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from the past experience and changes in actuarial assumptions are charged or credited to the Statement of Profit and Loss in the period to which such gains or losses are determined. | | | | | | | c) | | Earned Leave | | | | Liability in respect of earned leave expected to become due or expected to be availed within one year from the balance sheet date is recognized on the basis of undiscounted value of benefit expected to be availed by the employees. Liability in respect of earned leave expected to become due or expected to be availed beyond one year after the balance sheet date is estimated on the basis of actuarial valuation performed by an independent actuary using the projected unit credit method. | | | | | | | d) | | Other Short Term Benefits | | | | Expense in respect of other short term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employees. |
| 14 | Leases : | | | Where the Group is Lessee: | | | Lease arrangements where the risks and rewards incidental to ownership of assets substantially vest with the lessor 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. | | | | | | | | Where the Group is Lessor: | | | Assets rebrsenting operating lease arrangements are included in Fixed Assets / Inventory. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Cost, including debrciation is recognised as an expense in the Statement of Profit and Loss. | | | | | | | 15 | Taxation : | | | Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. | | | | | | | | MAT asset is recognized when it is highly probable that future economic benefit associated with it will flow to the entity. | | | | | | | | Deferred Tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized and carried forward only to the extent that there is a virtual / reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. | | | | | | | 16 | Provisions and Contingent Liabilities: | | | Provisions are recognized in the accounts in respect of brsent probable obligation, the amount of which can be reliably estimated. 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 Group. |
23. Defined Benefit Plan The employees' gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The brsent value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity: | | Particulars | Gratuity
(funded*) | | Leave encashment (unfunded) | | | | | For the year ended
31-March-16 | For the year ended
31-March-15 | For the year ended
31-March-16 | For the year ended
31-March-15 | | a | Reconciliation of opening and closing balances of Defined Benefit obligation | | | | | | | Defined Benefit obligation at beginning of the year | 1,828.00 | 1,112.86 | 963.69 | 874.70 | | | Current Service Cost | 308.42 | 387.83 | 519.09 | 385.06 | | | Interest cost | 183.17 | 162.92 | 152.62 | 80.70 | | | Actuarial (gain) / loss | (213.15) | (309.85) | 175.42 | (563.35) | | | Benefits Paid | (247.18) | 107.23 | (461.13) | (87.36) | | | Defined Benefit obligation at year end | 1,859.26 | 1,828.00 | 1,349.68 | 963.69 | | | | | | | | | b | Reconciliation of opening and closing balances of fair value of plan assets | | | | | | | Fair value of plan assets at beginning of the year | 384.92 | 323.77 | - | - | | | Expected return on plan assets | 46.08 | 31.76 | - | - | | | Actuarial (gain) / loss | 13.12 | 80.91 | - | - | | | Employer contribution | - | - | - | - | | | Benefits Paid | (1.41) | (6.17) | - | - | | | Fair value of plan assets at year end | 416.49 | 384.92 | - | - | | | Actual return on plan assets | 415.14 | 383.53 | - | - | | | | | | | | | c | Reconciliation of fair value of assets and obligation | | | | | | | Present value of obligation as at 31-March-16 | 1,859.26 | 1,828.00 | 1,349.68 | 963.69 | | | Fair value of plan assets as at 31-March-16 | 416.48 | 384.94 | - | - | | | (Accrued liability) / Prepaid benefit | (1,442.78) | (1,439.89) | (1,349.68) | (963.69) | | | | | | | | | d | Expenses recognized during the year | | | | | | | Current service cost | 308.42 | 384.66 | 519.09 | 385.06 | | | Interest cost | 183.17 | 162.92 | 152.62 | 80.70 | | | Expected return on plan assets | (46.08) | (31.76) | - | - | | | Actuarial (gain) / loss | (200.05) | (228.94) | 175.42 | (563.35) | | | Net cost | 245.46 | 286.88 | 847.13 | (97.59) | | | | | | | | | e | Investment details | % invested as at 31-March-16 | % invested asat31-March-15 | | | | | L.I.C. Group Gratuity (Cash Accumulation) Policy | 100% | 100% | | | | | | | | | | | f | Actuarial assumptions | | | | | | | Mortality Table (L.I.C.) | LIC 1994-96 | LIC 1994-96 | | | | | | Ultimate | Ultimate | Ultimate | Ultimate | | | Discount Rate (Per annum) | 8.50% p.a. | 8.50% p.a. | 8.50% p.a. | 8.50% p.a. | | | Expected rate of return on plan assets (per annum) | 9% p.a. | 9% p.a. | - | - | | | Rate of escalation in salary (per annum) | 5% | 5% | 5% | 5% |
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by an actuary. * In case of few subsidiaries though yet to be funded, the same being immaterial has been ignored for this purpose. |