BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comTABLE OF CONTENTS:SIGNI...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comDepreciationonthe same ...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com6 Depreciation(i) Depre...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com7 Investments(i) Long–t...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comRevenue isrecognizedonp...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com12 Employee BenefitsPro...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSignificantAccounting P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comlease period,the same i...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com6 Depreciation(i) Depre...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comIn the case of BGGTS (5...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comDepreciationforassets p...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comIn the case of BGGTS (5...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com(iii) All translationva...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com(iii) Warrantyclaims/ex...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comE Valuation of Inventor...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comA disclosure of conting...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comThe Companyoffsets,ona ...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comR Earnings PerShareBasi...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSignificantAccounting P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.come.The consolidatedfinan...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comii.InSeptember2011, the...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comG InvestmentsLong termi...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comJ Revenue RecognitionRe...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comN Impairmentof AssetsAt...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comBuilding/specificidenti...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comiv.Developmentrightsrep...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comv. Income frominteresti...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comBorrowingcoststhat are ...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comThe liabilityrecognised...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.como. EmployeesStock Optio...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comsharesare computedbased...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING P...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comiii.The ConsolidatedFin...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.come. Tangible assets,capi...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comimmediatelyfollowingthe...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comCurrentinvestmentsare s...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comix) Inventoriesat retai...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comb) Revenue fromfixedpri...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.coma) Premiumisrecogniseda...
BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comon the percentage of re...
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
Significant accounting policies of five major indian companies
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Significant accounting policies of five major indian companies

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Significant accounting policies of five major companies in India

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Significant accounting policies of five major indian companies

  1. 1. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING POLICIESOFFIVE MAJOR INDIAN COMPANIESBYCA RAJU S NARAYANAN
  2. 2. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comTABLE OF CONTENTS:SIGNIFICANTACCOUNTINGPOLICIESOF BHEL ………… Page 3SIGNIFICANTACCOUNTINGPOLICIESOFCIPLA ……….Page 17SIGNIFICANTACCOUNTINGPOLICIESOFDLF ……….. Page 28SIGNIFICANTACCOUNTINGPOLICIESOFINFOSYS ……….Page 50SIGNIFICANTACCOUNTINGPOLICIESOFTATA MOTORS ……. Page 58
  3. 3. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING POLICIESOFBHEL:SignificantAccounting PoliciesofStandalone Company1 Basis of preparation ofFinancial StatementsThe financial statementshave beenpreparedasof a goingconcern onhistorical costconventionandon accrual methodof accountinginaccordance withthe generallyacceptedaccountingprinciplesand the provisionsof the CompaniesAct,1956 as adoptedconsistentlybythe Company.2 FixedAssetsFixedassets(otherthanlandacquiredfree fromState Government) are carriedatthe cost ofacquisitionorconstructionorbookvalue lessaccumulateddepreciation.Cost includesvalueof internal transfersfor capital works,takenatactual / estimatedfactorycostormarketprice,whicheverislower.Effectof extraordinaryeventssuchasdevaluation/revaluationinrespectof longterm liabilities/loansutilisedforacquisitionof fixedassetsisaddedto /reducedfromthe cost.Land acquiredfree of costfrom the State GovernmentisvaluedatRe 1/- exceptforthat acquiredafter16th July1969, in whichcase the same isvaluedatthe acquisitionprice of the StateGovernmentconcerned,bycorresponding credittocapital reserve.3 LeasesFinance LeaseA) (i) AssetsGivenonLease Priorto1st April 2001Assetsmanufacturedandgivenonfinance leaseare capitalisedatthe normal sale price/fairvalue/contractedprice andtreatedassales.Depreciationonthe same ischargedat the rate applicable tosimilartype of fixedassetsasperAccountingPolicyon‘Depreciation’.Againstlease rentals,matchingcharge ismade throughLeaseEqualisationAccount.Finance income isrecognisedoverthe lease period.(ii) AssetsGivenonLease onorafter1st April 2001Assetsmanufacturedandgivenonfinance leaseare recognisedassalesatnormal sale price / fairvalue /NPV.Finance income isrecognisedoverthe lease period.Initial directcostsare expensedatthe commencementof lease.B) AssetsTakenonLease on or after1stApril 2001Assetstakenonlease are capitalisedatfairvalue /NPV /contracted price.
  4. 4. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comDepreciationonthe same ischargedat the rate applicable tosimilartype of fixedassetsasperAccountingPolicyon‘Depreciation’.If the lease assetsare returnable tothe lessoronexpiryof lease period,the same isdepreciatedoveritsuseful life orlease period,whicheverisshorter.Lease paymentsmade are apportionedbetweenfinance chargesandreductionof outstandingliabilityinrelationtoassetstakenonlease.OperatingLeaseA) AssetsGivenonLease:Assetsmanufacturedandgivenonoperatinglease are capitalised.Leaseincome arisingtherefromisrecognisedasincome overthe lease period.B) AssetsTakenonLease:Lease paymentsmade forassetstakenonoperatinglease are recognisedasexpenseoverthe leaseperiod.4 Intangible AssetsA) Intangible assetsare capitalisedatcostifa. it isprobable thatthe future economicbenefitsthatare attributable tothe assetwill flowtothecompany,andb. the companywill have control overthe assets,andc. the cost of these assetscanbe measuredreliablyandismore thanRs. 10,000/-. Intangible assetsare amortisedovertheirestimatedusefullivesnotexceedingthree yearsincase of software andnotexceedingtenyearsincase of otherson a straightline pro-ratamonthlybasis.B) a. Expenditureonresearchincludingthe expenditureduringthe researchphase of Research&DevelopmentProjectsischargedtostatementof profitandlossaccount inthe year of incurrence.b. ExpenditureincurredonDevelopmentincludingthe expenditure duringthe developmentphaseofResearch& DevelopmentProjectmeetingthe criteriaasperAccountingStandardonIntangibleAssets,istreatedasintangible asset.c. Fixedassetsacquiredforpurposesof researchanddevelopmentare capitalised.5 Borrowing CostsBorrowingcoststhat are attributable tothe manufacture,acquisitionorconstructionof qualifyingassets,are includedaspart of the costof such assets.A qualifyingassetisone thatnecessarilytakesmore thantwelve monthstogetreadyforintendeduse or sale.Otherborrowingcostsare recognisedasexpense inthe periodinwhichtheyare incurred.
  5. 5. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com6 Depreciation(i) Depreciationonfixedassets(otherthanthose usedabroadundercontract) ischargedupto thetotal cost of the assetson straight-line methodasperthe ratesprescribedinSchedule XIV of theCompaniesAct,1956, exceptwhere depreciationischargedatratesdeterminedonthe basisof thetechnicallyassessedestimateduseful livesshownhereunder:Single Shift Double Shift Triple ShiftGeneral Plant&Machinery8% 12% 16%Automatic/Semi-AutomaticMachines10% 15% 20%ErectionEquipment,Capital Tools& Tackles20%TownshipBuildings– SecondClass– ThirdClass2.5%3.5%RailwaySidings 8%Locomotives&Wagons8%Electrical Installations 8%Office &OtherEquipments8%Drainage,Sewerage &Water supply3.34%ElectronicDataProcessingEquipment20%In respectof additionsto/deductionsfromthe fixedassets,depreciationischargedonproratamonthlybasis.(ii) Fixedassetsusedoutside Indiapursuanttolongtermcontractsare depreciatedoverthe durationof the initial contract.(iii) FixedassetscostingRs.10,000/- or lessandthose whose writtendownvalue asatthe beginningof the yearis Rs.10,000/- or less,are depreciatedfully.Insofar as townshipbuildingsareconcerned,the costper tenementisthe basisforthe limitof Rs.10,000/-.(iv) Aterection/projectsites:The costof roads, bridgesandculvertsisfullyamortizedoverthetenure of the contract, while sheds,railwaysidings,electrical installationsandothersimilarenablingworks(otherthanpurelytemporaryerections,woodenstructures) are sodepreciatedafterretaining10% as residual value.(v) PurelyTemporaryErectionsuchaswoodenstructuresare fullydepreciatedinthe yearofconstruction.(vi) LeaseholdLandandBuildingsare amortisedoverthe periodof lease.Buildingsconstructedonlandtakenon lease are depreciatedovertheiruseful life orthe lease period,whicheverisearlier.
  6. 6. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com7 Investments(i) Long–terminvestmentsare carriedatcost.Decline,otherthantemporary,inthe value of suchinvestments,isrecognisedandprovidedfor.(ii) Currentinvestmentsare carriedat costor quoted/fairvalue whicheverislower.Unquotedcurrentinvestmentsare carriedatcost.(iii) The costof investmentincludesacquisitionchargessuchas brokerage,feesandduties.Anyreductioninthe carryingamount& anyreversalsof suchreductionsare chargedor credited totheStatementof Profit&Loss.8 InventoryValuation(i) Inventoryisvaluedatactual/estimatedcostornet realisablevalue,whicheverislower.(ii) FinishedgoodsinPlantandworkinprogressinvolvingHydroandThermal setsincludinggasbasedpowerplants,boilers,boilerauxiliaries,compressorsandindustrial turbosetsare valuedatactual/estimatedfactorycostor at 97.5% of the realisablevalue,whicheverislower.(iii) Inrespectof valuationof finishedgoodsinplantandwork-in-progress,costmeansfactorycost;actual/estimatedfactorycostincludesexcise dutypayable onmanufacturedgoods.(iv) Inrespectof raw material,components,loose tools,storesandsparescostmeansweightedaverage cost.(v) (a) For Constructioncontractsenteredintoonor after01.04.2003:Where currentestimatesof costand sellingprice of acontract indicatesloss,the anticipatedlossinrespectof such contract isrecognisedimmediatelyirrespective of whetherornotwork hascommenced.b) For all other contracts:Where currentestimatesof costand sellingprice of anindividuallyidentifiedprojectformingpartofa contract indicatesloss,the anticipatedlossinrespectof suchprojectonwhichthe work hadcommenced,isrecognised.c) In arrivingat the anticipatedloss,total income includingincentivesonexports/deemedexportsistakenintoconsideration.(vi) The componentsandothermaterialspurchased/manufacturedagainstproductionordersbutdeclaredsurplusare chargedoff to revenue retainingresidualvalue basedontechnical estimates.9 Revenue RecognitionSalesare recordedbasedonsignificantrisks andrewardsof ownershipbeingtransferredinfavourofthe customer.Salesinclude goodsdispatchedtocustomersbypartial shipment.A. Forconstructioncontracts enteredintoonorafter 01.04.2003 :
  7. 7. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comRevenue isrecognizedonpercentage completionmethodbasedonthe percentage of actual costincurreduptothe reportingdate to the total estimatedcostof the contract.B. For all othercontracts(i) Recognitionof salesrevenueinrespectof longproductioncycle items(HydroandThermal setsincludinggas-basedpowerplants,boilers,boilerauxiliaries,compressorsandindustrial turbosets) ismade on technical estimates.Whenthe aggregate valueof shipmentsrepresents30% or more of therealizable value,theyare consideredat97.5% of the realizable valueorinitsabsence,quotedprice.Otherwise,theyare consideredatactual/estimatedfactorycostor 97.5% of the realizable value,whicheverislower.The balance 2.5%is recognizedasrevenueoncompletionof suppliesunderthecontract.(ii) Income fromerectionandprojectmanagementservicesisrecognizedonworkdone basedon:Percentage of completion;orThe intrinsicvalue,reckonedat97.5% of contract value,the balance 2.5% is recognizedasincomewhenthe contract iscompleted.(iii) Income fromengineeringservicesrenderedisrecognizedatrealizable value basedonpercentage of workcompleted.(iv) Income fromsupply/erectionof non-BHELequipment/systemsandcivil worksisrecognizedbasedon dispatchestocustomer/workdone atprojectsite.10 Accounting for ForeignCurrency TransactionsTransactionsinforeigncurrenciesare recordedatthe exchange ratesprevailingonthe date of thetransaction.Foreigncurrencymonetaryassetsandliabilitiesare translatedatyearendexchangerates.Exchange difference arisingonsettlementof transactionsandtranslationof monetaryitemsare recognizedasincome orexpense inthe yearinwhichtheyarise.11 Translation of Financial Statements ofIntegralForeignOperations(i) Itemsof income andexpenditure are translatedataverage rate except depreciation,whichisconvertedatthe rates adoptedforthe correspondingfixedassets.(ii) Monetaryitemsare translatedatthe closingrate;non-monetaryitemscarriedathistorical costare translatedatthe rates inforce on the date of the transaction;non-monetaryitemscarriedatfairvalue are translatedat exchange ratesthatexistedwhenthe value weredetermined.(iii) All translationvariancesare takentoProfit& LossAccount.
  8. 8. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com12 Employee BenefitsProvidentFundandEmployees’FamilyPensionScheme contributionsare accountedforonaccrualbasis.LiabilityforEarnedLeave,Half PayLeave,Gratuity,Travel claimsonretirementandPostRetirementMedical Benefitsare accountedforinaccordance withactuarial valuation.CompensationunderVoluntaryRetirementScheme ischargedoff inthe yearof incurrence ona pro-rata monthlybasis.13 Claims by/against the Company(i) Claimsforliquidateddamagesagainstthe Companyare recognisedinaccountsbasedonmanagement’sassessmentof the probable outcome withreference tothe available informationsupplementedbyexperience of similartransactions.(ii) Claimsforexportincentives/dutydrawbacks/duty refundsandinsurance claimsetc.are takenintoaccount on accrual.(iii) Amountsdue inrespectof price escalationclaimsand/orvariationsincontractworkarerecognisedasrevenue onlywhenthere are conditionsinthe contractsforsuch claimsor variationsand/orevidence of the acceptabilityof the same fromcustomers.However,escalationisrestrictedtointrinsicvalue.14 Provisionfor Warranties(i) Forconstructioncontracts enteredintoonorafter 01.04.2003:The company provideswarrantycostat 2.5% of the revenue progressivelyasandwhenitrecognisesthe revenue andmaintainthe same throughthe warrantyperiod.(ii) Forall othercontracts:Provisionforcontractual obligationsinrespectof contractsunderwarrantyat the year endismaintainedat2.5% of the value of contract.In the case of contracts for supplyof more than a singleproduct2.5% of the value of eachcompletedproductisprovided.(iii) Warrantyclaims/expensesonrectificationworkare accountedforagainstnatural headsas andwhenincurredandchargedto provisionsinthe yearend.15 GovernmentGrantsGovernmentGrantsare accountedwhenthere isreasonablecertaintyof theirrealisation.Grants relatedtofixeddepreciable assetsare adjustedagainstthe grosscostof the relevantassetswhile those relatedtonon-depreciableassetsare creditedtocapital reserve.Grantsrelatedtorevenue,unlessreceivedascompensationforexpenses/losses,are recognisedasrevenueovertheperiodtowhichthese are relatedonthe principle of matchingcoststorevenue.Grants inthe formof non-monetaryassetsare accountedforat the acquisitioncost,orat nominalvalue if receivedfree.
  9. 9. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSignificantAccounting Policies(ConsolidatedFinancial Statement)1 Basis of preparation ofFinancial StatementsThe financial statementshave beenpreparedasof a goingconcern onhistorical costconventionandon accrual methodof accountinginaccordance withthe generallyacceptedaccountingprinciplesand the provisionsof the CompaniesAct,1956 as adoptedconsistentlybythe Company.2 FixedAssets(a) Fixedassets(otherthanlandacquiredfree fromState Government) are carriedatthe cost ofacquisitionorconstructionorbookvalue lessaccumulateddepreciation.(b) Costincludesvalue of internal transfersforcapital works,takenatactual / estimatedfactorycostor marketprice,whicheverislower.Effectof extraordinaryeventssuchasdevaluation/revaluationinrespectof longtermliabilities/loansutilizedforacquisitionof fixedassetsisaddedto/reducedfromthe cost.(c) Land acquiredfree of cost fromthe State GovernmentisvaluedatRs.1/- exceptforthatacquiredafter16th July1969, in whichcase the same isvaluedatthe acquisitionprice of the StateGovernmentconcerned,bycorrespondingcredittocapital reserve.3 LeasesFinance LeaseA) i) AssetsGivenonLease Priorto 1st April 2001Assetsmanufacturedandgivenonfinance leaseare capitalizedatthe normal sale price/fairvalue/contractedprice andtreatedassales.Depreciationonthe same ischargedat the rate applicable tosimilartype of fixedassetsasperAccountingPolicyon‘Depreciation’.Againstlease rentals,matchingcharge ismade throughLeaseEqualizationAccount.Finance income isrecognizedoverthe lease period.(ii) AssetsGiven onLease onorafter1st April 2001Assetsmanufacturedandgivenonfinance leaseare recognizedassalesatnormal sale price / fairvalue /NPV.Finance income isrecognizedoverthe lease period.Initial directcostsare expensedatthe commencement of lease.B) AssetsTakenonLease on or after1st April 2001Assetstakenonlease are capitalizedatfairvalue /NPV/contractedprice.Depreciationonthe same ischargedat the rate applicable tosimilartype of fixedassetsasperAccountingPolicyon‘Depreciation’.If the lease assetsare returnabletothe lesseronexpiryof
  10. 10. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comlease period,the same isdepreciatedoveritsuseful life orlease period,whicheverisshorter.Lease paymentsmade are apportionedbetweenfinance chargesandreductionof outstandingliabilityinrelationtoassetstakenonlease.OperatingLeaseAssetsGivenonLease:Assetsmanufacturedandgivenonoperatinglease are capitalized.Lease income arisingtherefromisrecognizedasincome overthe lease period.AssetsTakenonLease:Lease paymentsmade forassetstakenonoperatinglease are recognizedasexpenseoverthe leaseperiod.4 Intangible AssetsA. Intangible assetsare capitalizedatcostifa. It isprobable thatthe future economicbenefitsthatare attributable tothe assetwill flow tothecompany,andb. The companywill have control overthe assets,andc. The cost of these assets canbe measuredreliablyandismore thanR 10,000/-.Intangible assetsare amortizedovertheirestimatedusefullivesnotexceedingthree yearsincase ofsoftware andnot exceedingtenyearsincase of otherson a straightline pro-ratamonthlybasis.B. a. Expenditure onresearchincludingthe expenditure duringthe researchphase of Research&DevelopmentProjectsischargedtoprofitand lossaccountin the yearof incurrence.b. ExpenditureincurredonDevelopmentincludingthe expenditure during the developmentphaseofResearch& DevelopmentProjectmeetingthe criteriaasperAccountingStandardonIntangibleAssets,istreatedasintangible asset.c. Fixedassetsacquiredforpurposesof researchanddevelopmentare capitalized.5 Borrowing CostsBorrowingcoststhat are attributable tothe manufacture,acquisitionorconstructionof qualifyingassets,are includedaspart of the costof such assets.A qualifyingassetisone thatnecessarilytakesmore thantwelve monthstogetreadyforintendeduse or sale.Otherborrowingcostsare recognizedasexpense inthe periodinwhichtheyare incurred.
  11. 11. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com6 Depreciation(i) Depreciationonfixedassets(otherthanthose usedabroadundercontract) ischargedup to thetotal cost of the assetson straight-line methodasperthe ratesprescribedinSchedule XIV of theCompaniesAct,1956, exceptwhere depreciationischargedatratesdeterminedonthe basisof thetechnicallyassessedestimateduseful livesshownhereunder:Single Shift Double Shift Triple ShiftGeneral Plant&Machinery8% 12% 16%Automatic/Semi-AutomaticMachines10% 15% 20%ErectionEquipment,Capital Tools& Tackles20%TownshipBuildings– SecondClass– ThirdClass2.5%3.5%RailwaySidings 8%Locomotives &Wagons8%Electrical Installations 8%Office &OtherEquipments8%Drainage,Sewerage &Water supply3.34%ElectronicDataProcessingEquipment20%In respectof additionsto/deductionsfromthe fixedassets,depreciationischargedonpro-ratamonthlybasis.(ii) Fixedassetsusedoutside Indiapursuanttolongtermcontractsare depreciatedoverthe durationof the initial contract.(iii) FixedassetscostingR10,000/- or lessandthose whose writtendownvalue asatthe beginningofthe year isR10,000/- or less,are depreciatedfully.Insofaras townshipbuildingsare concerned,thecost pertenementisthe basisforthe limitof Rs.10,000/-.(iv) Aterection/projectsites:The costof roads, bridgesandculvertsisfullyamortizedoverthetenure of the contract, while sheds,railwaysidings,electrical installationsandothersimilarenablingworks(otherthanpurelytemporaryerections,woodenstructures) are sodepreciatedafterretaining10% as residual value.(v) PurelyTemporaryErectionsuchaswoodenstructuresare fullydepreciatedinthe yearofconstruction.(vi) LeaseholdLandandBuildingsare amortizedoverthe periodof lease. Buildingsconstructedonlandtakenon lease are depreciatedovertheiruseful life orthe lease period,whicheverisearlier.
  12. 12. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comIn the case of BGGTS (50% JV)Depreciationonfixedassetsisprovidedusingthe straightlinemethodoverthe useful lifeof theassetsas estimatedbythe management.The ratesof depreciationprescribedinSchedule XIV totheCompaniesAct,1956 are consideredthe minimumrates.If the management’sestimateof the usefullife of a fixedassetatthe time of acquisitionof the assetorof the remaininguseful life onasubsequentreviewisshorterthanthe envisagedinthe aforesaidschedule,depreciationisprovidedat a higherrate basedonthe management’sestimateof the useful life/remaininguseful life.Pursuantto this policy,depreciationonassetshasbeenprovidedatthe ratesbasedonthe followinguseful livesof fixedassetsasestimatedbymanagement.Assetcategory Estimateduseful lifePlantand machinery 2-15Electrical Installations 3-10Civil Structures 5-10Furniture andfixtures 1-8Computers 3Office equipment 3-5Depreciationiscalculatedonapro-ratabasisfrom / upto the month the assetsare purchased/sold.Individual assetscostinglessthanR5,000/each are depreciatedinfull inthe yearof purchase.In the case of RAICHUR POWER CORPORATION LIMITED(46% JV)Depreciationisprovidedonstraightline method atthe ratesprescribedinthe ElectricitySupplyAct1948. Inrespectof assetsforwhichratesare not specifiedinthe ElectricitySupplyAct1956,depreciationisprovidedatthe ratesspecifiedunderscheduleXIV of the CompaniesAct1956.Assetsare depreciatedtothe extentof 90% of the cost and 10% is retainedasresidual value.Depreciationonadditionstoassetsisprovidedforthe full yearirrespectiveof the date of addition.In the case of NTPCBHEL POWER PROJECTSPVT LTD.Depreciationon fixedassetsischargeduptothe total cost of the assetsona straightline methodasperthe ratesprescribedinScheduleXIV of the CompaniesAct,1956.In the case of UDANGUDI POWER CORPORATION LTD.Depreciationonsome assetsisprovidedonthe straightline methodbasedonuseful life of assetsasestimatedbymanagement.DepreciationonotherassetsisprovidedonStraightline methodsperthe rates andin the mannerprescribedunderSchedule XIV of the CompaniesAct,1956.
  13. 13. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comDepreciationforassets purchased/soldduringthe periodisproportionatelycharged.100%depreciationischargedonassetsacquiredforprice upto Rs. 5000/-, Managementestimatesusefullife of assetsasfollows1. TemporaryShed1 Year2. Computer& Accessories5Years7 Investments(i) Long–terminvestmentsare carriedatcost.Decline,otherthantemporary,inthe value of suchinvestments,isrecognizedandprovidedfor.(ii) Currentinvestmentsare carriedat costor quoted/fairvalue whicheverislower.Unquotedcurrentinvestmentsare carriedatcost.(iii) The costof investmentincludesacquisitionchargessuchas brokerage,feesandduties.Anyreductioninthe carryingamount& anyreversalsof suchreductionsare chargedor creditedtothe Profit& Loss Account.8 InventoryValuation(i) Inventoryisvaluedatactual/estimatedcostornet realizablevalue,whicheverislower.(ii) FinishedgoodsinPlantandworkinprogressinvolvingHydroandThermal setsincludinggasbasedpowerplants,boilers,boilerauxiliaries,compressorsandindustrial turbosetsare valuedatactual/estimatedfactorycostor at 97.5% of the realizablevalue,whicheverislower.(iii) Inrespectof valuationof finishedgoodsinplantandwork-in-progress,costmeansfactorycost;actual/estimatedfactorycostincludesexcise dutypayable onmanufacturedgoods.(iv) Inrespectof raw material,components,loose tools,storesandsparescostmeansweightedaverage cost.(v) a) For Constructioncontractsenteredintoonorafter01.04.2003:Where currentestimatesof costand sellingprice of acontract indicatesloss,the anticipatedlossinrespectof such contract isrecognizedimmediatelyirrespective of whetherornotwork hascommenced.b) For all other contracts:Where current estimatesof costandsellingprice of anindividuallyidentifiedprojectformingpartof a contract indicatesloss,the anticipatedlossinrespectof suchprojecton whichthe workhad commenced,isrecognized.c) In arrivingat the anticipatedloss,total income includingincentivesonexports/deemedexportsistakenintoconsideration.(vi) The componentsandothermaterialspurchased/manufacturedagainstproductionordersbutdeclaredsurplusare chargedoff to revenue retainingresidualvalue basedontechnical estimates.
  14. 14. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comIn the case of BGGTS (50% JV)Tradedstock isvaluedat the lowerof cost andnet realizablevalue.Costisdeterminedunderthefirst-in-first-outmethod.9 Revenue RecognitionSalesare recordedbasedonsignificantrisksandrewardsof ownershipbeingtransferredinfavourofthe customer.Salesinclude goodsdispatchedtocustomersbypartial shipment.A. Forconstructioncontracts enteredintoonorafter 01.04.2003:Revenue isrecognizedonpercentage completionmethodbasedonthe percentage of actual costincurredupto the reportingdate tothe total estimatedcostof the contract.B. For all othercontracts:(i) Recognitionof salesrevenueinrespectof longproductioncycle items(HydroandThermal setsincludinggas-basedpowerplants,boilers,boilerauxiliaries,compressorsandindustrial turbosets) ismade on technical estimates.Whenthe aggregate valueof shipmentsrepresents30% or more of therealizable value,theyare consideredat97.5% of the realizable valueorinitsabsence,quotedprice.Otherwise,theyare consideredatactual/estimatedfactorycostor 97.5% of the realizable value,whicheverislower.The balance 2.5%is recognizedasrevenueoncompletionof suppliesunderthecontract.(ii) Income fromerectionandprojectmanagementservicesisrecognizedonworkdone basedon:Percentage of completion;orThe intrinsicvalue,reckonedat97.5% of contract value,the balance2.5% is recognizedasincome whenthe contractiscompleted.(iii) Income fromengineeringservicesrenderedisrecognizedatrealizable value basedonpercentage of workcompleted.(iv) Income fromsupply/erectionof non-BHELequipment/systemsandcivil worksis recognizedbasedon dispatchestocustomer/workdone atprojectsite.10 Accounting for ForeignCurrency TransactionsTransactionsinforeigncurrenciesare recordedatthe exchange ratesprevailingonthe date of thetransaction.Foreigncurrencymonetaryassetsandliabilitiesare translatedatyearendexchangerates.Exchange difference arisingonsettlementof transactionsandtranslationof monetaryitemsare recognizedasincome orexpense inthe yearinwhichtheyarise.11 Translation of Financial Statements ofIntegral ForeignOperations(i) Itemsof income andexpenditure are translatedataverage rate exceptdepreciation,whichisconvertedatthe rates adoptedforthe correspondingfixedassets.(ii) Monetaryitemsare translatedatthe closingrate;non-monetaryitemscarriedathistorical costare translatedatthe rates inforce on the date of the transaction;non-monetaryitemscarriedatfairvalue are translatedat exchange ratesthatexistedwhenthe value weredetermined.
  15. 15. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com(iii) All translationvariancesare takentoProfit& LossAccount.In the case of BGGTS (50% JV)Forwardcontracts are enteredintotohedge the foreigncurrencyriskof the underlyingoutstandingat the yearend.The premiumordiscountonall suchcontracts arisingat the inceptionof eachcontract is amortisedasexpenseorincome overthe life of the contract.The exchange differenceson sucha forwardcontract isthe difference between(i) the foreigncurrencyamountof the contracttranslatedatthe exchange rate onthe reportingdate,orthe settlementdate where the transactionissettledduringthe periodand(ii) the same foreigncurrencyamounttranslatedatthe latterof thedate of inceptionof the forwardexchange contractorthe last reportingdate. Anyprofitorlossarisingonsuch cancellationorrenewal of sucha forwardcontract isrecognisedasincome orexpense forthe year.12 Employee BenefitsProvidentFundandEmployees’FamilyPensionScheme contributionsare accountedforonaccrualbasis.LiabilityforEarnedLeave,Half PayLeave,Gratuity,Travel claimsonretirementandPostRetirementMedical Benefitsare accountedforinaccordance withactuarial valuation.CompensationunderVoluntaryRetirementScheme ischargedoff inthe year of incurrence ona pro-rata monthlybasis.13 Claims by /against the Company(i) Claimsforliquidateddamagesagainstthe Companyare recognizedinaccountsbasedonmanagement’sassessmentof the probable outcome withreference tothe available informationsupplementedbyexperience of similartransactions.(ii) Claimsforexportincentives/dutydrawbacks/duty refundsandinsurance claimsetc.are takenintoaccount on accrual.(iii) Amountsdue inrespectof price escalationclaimsand/orvariationsincontractworkarerecognizedasrevenue onlywhenthere are conditionsinthe contractsforsuch claimsor variationsand/orevidence of the acceptabilityof the same fromcustomers.However,escalationisrestrictedto intrinsicvalue.14 Provisionfor Warranties(i) Forconstructioncontracts enteredintoonorafter 01.04.2003:The company provideswarrantycostat 2.5% of the revenue progressivelyasandwhenitrecognisesthe revenue andmaintainthe same throughthe warrantyperiod.(ii) Forall othercontracts:Provisionforcontractual obligationsinrespectof contractsunderwarrantyat the year endismaintainedat2.5% of the value of contract.In the case of contracts for supplyof more than a singleproduct2.5% of the value of eachcompletedproductisprovided.
  16. 16. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.com(iii) Warrantyclaims/expensesonrectificationworkare accountedforagainstnatural headsas andwhenincurredandchargedto provisionsinthe year end.15 GovernmentGrantsGovernmentGrantsare accountedwhenthere isreasonablecertaintyof theirrealization.Grants relatedtofixeddepreciable assetsare adjustedagainstthe grosscostof the relevantassetswhile those relatedtonon-depreciableassetsare creditedtocapital reserve.Grants relatedtorevenue,unlessreceivedascompensationforexpenses/losses,are recognizedasrevenue overthe periodtowhichthese are relatedonthe principle of matchingcoststorevenue.Grants inthe formof non-monetaryassetsare accountedforat the acquisitioncost,orat nominalvalue if receivedfree.
  17. 17. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING POLICIESOFCIPLASignificantAccounting PoliciesofCiplaStandalone CompanyA Basis of PreparationThe financial statementsare preparedinaccordance withgenerallyacceptedaccountingprinciplesinIndia.The Companyhas preparedthese financial statementstocomplyinall material respectswiththeAccountingStandardsnotifiedunderthe Companies(AccountingStandards) Rules,2006 issuedundersection211(3C) of the CompaniesAct,1956. The financial statementshave beenpreparedonan accrual basisand underthe historical costconvention.The accountingpoliciesadoptedinpreparationof the financial statementsare consistentwiththose of the previousyear.Duringthefinancial yearended31stMarch 2012 the revisedSchedule VInotifiedunderthe CompaniesAct,1956 has become applicabletothe Company,forpreparationandpresentationof itsfinancialstatements.The Companyhasalsore-classifiedthe previousyearfiguresinaccordance withtherequirementsapplicableinthe currentyear.B Use of EstimatesThe preparationof financial statementsrequiresthe Managementof the Companytomakeestimatesandassumptionsthataffectthe reportedbalance of assetsandliabilities,revenue andexpensesanddisclosuresrelatingtocontingentliabilities.The Managementbelievesthattheestimatesusedinthe preparationof the financial statementsare prudentandreasonable.Futureresultscoulddifferfromthese estimates.Anyrevisionof accountingestimatesisrecognisedprospectivelyinthe currentandfuture periods.C. FixedAssetsFixedassetsare statedat costof acquisition(netof recoverable taxesandGovernmentgrantsandothersubsidies,whereveravailed) orconstructionorotheramountssubstitutedforhistorical costson revaluationlessaccumulateddepreciation.Where several fixedassetsare acquiredforconsolidatedprice,the considerationisapportionedtofixedassetsonfairvalue basis.D DepreciationDepreciationonfixedassetsisprovidedonthe StraightLine Methodat the ratesand inthe mannerprescribedunderSchedule XIV of the CompaniesAct,1956.All individual itemsof fixedassets,where the actual costdoesnotexceed`5000 have beenwrittenoff entirelyinthe yearof acquisition.Cost of leaseholdlandincludingpremiumisamortisedoverthe primary periodof lease.
  18. 18. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comE Valuation of InventoriesRaw materialsandpackingmaterialsare valuedatlowerof costor net realisablevalue afterprovidingforobsolescence,if any.However,these itemsare consideredtobe realisable atcostif thefinishedproducts,inwhichtheywill be used,are expectedtobe soldat or above cost.Work-in-processandfinishedgoodsare valuedatlowerof costor netrealisable value.Finishedgoodsand work-in-processinclude costsof raw material,labour,conversioncostsandothercostsincurredinbringingthe inventoriestotheirpresentlocationandcondition.Cost of finishedgoodsincludesexcise duty,whereverapplicable.Cost of inventoriesiscomputedonweightedaveragebasis.F InvestmentsLong terminvestmentsare statedatcost,lessprovisionfordiminution(otherthantemporary) invalue.Currentinvestmentsare statedatlowerof cost or fair value.G ForeignExchange TransactionsTransactionsinforeigncurrenciesare recordedatthe exchange rates prevailingonthe date of thetransaction.Foreigncurrencymonetaryassets& liabilitiesandforwardcontractsare restatedatyear endexchange rates.Exchange differencesarisingonthe settlementof foreigncurrencymonetaryitemsor on reportingCompany’sforeigncurrencymonetaryitemsatratesdifferentfromthose atwhichtheywere initiallyrecordedduringthe yearorreportedinthe previousfinancial statements,arerecognisedasincome orexpense inthe yearinwhichtheyarise.Non-monetaryforeigncurrencyitemsare carriedat the ratesprevailingonthe date of thetransaction.In respectof forwardcontracts,the premiumordiscountonthese contractsis recognisedasincomeor expenditure overthe periodof the contract.Anyprofitorlossarisingoncancellationorrenewalof suchcontracts is recognisedasincome orexpenseof the year.Foreignbranchesare identifiedasintegral foreignoperations.Alltransactionsare transferredatratesprevailingonthe date of transaction.Monetaryassetsandliabilitiesof the branchare restatedat the yearendrates.H Provisions,ContingentLiabilitiesandContingentAssetsA provisionisrecognisedwhenthe Companyhasapresentobligationasaresultof a pastevent,itisprobable thatan outflowof resourceswillbe requiredtosettle the obligation,inrespectof whichareliable estimatecanbe made.Provisionsare notdiscountedtoitspresentvalue andaredeterminedbasedonbestestimate requiredtosettle the obligationatthe Balance Sheetdate.
  19. 19. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comA disclosure of contingentliabilityismade whenthere isapossibleobligationora presentobligationthat may,but probablywill not,requireanoutflow of resources.Where there isapossible obligationor a presentobligationinrespectof whichthe likelihoodof outflowof resourcesisremote,noprovisionordisclosure ismade.Contingentassetsare neitherrecognisednordisclosedinthe financialstatements.I. Revenue RecognitionRevenue isrecognisedtothe extentthatisprobable thatthe economicbenefitswill flow totheCompanyandthe revenue canbe reliablymeasured.Revenue fromsale of goodsisrecognisedwhensignificantrisksandrewardsof ownershipof thegoodshave beenpassedtothe buyer,whichordinarilycoincideswithdespatchof goodstocustomers.Revenuesare recordedatinvoice value,netof salestax,returnsandtrade discounts.Revenue fromrenderingof servicesare recognisedoncompletionof services.Benefitsonaccountof entitlementof exportincentivesare recognisedasandwhenthe righttoreceive isestablished.Technical Know-how/Feesare recognisedasandwhenthe rightto receive suchincome isestablishedaspertermsand conditionsof relevantagreement.Interestincome isrecognisedontime proportionbasis.Dividendincomeisrecognisedwhenthe righttoreceive is established.J Employee BenefitsLiabilityonaccountof short termemployee benefitsisrecognisedonanundiscountedandaccrualbasisduringthe periodwhenthe employeerendersservice/vestingperiodof the benefit.PostretirementcontributionplanssuchasProvidentFundare chargedtothe Statementof Profitand Lossfor the year whenthe contributionstothe respective fundsaccrue.Postretirementbenefitplanssuchasgratuityand leave encashmentare determinedonthe basisofactuarial valuationmade byan independentactuaryas at the Balance Sheetdate.Actuarial gainsand lossesare recognisedimmediatelyinthe Statementof ProfitandLoss.K Income TaxCurrentincome tax ismeasuredat the amountexpectedtobe paidto the tax authoritiesinaccordance withthe provisionsof local Income Tax Lawsas applicable tothe financial year.Deferredincome taxesreflectthe impactof currentyear timingdifferencesbetweentaxable incomeand accountingincome of the yearand reversal of timingdifferencesof earlieryears.Deferredtax ismeasuredbasedonthe tax rates and the tax lawsenactedor substantivelyenactedatthe BalanceSheetdate.
  20. 20. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comThe Companyoffsets,ona year-on-yearbasis,the currenttax assetsandliabilities,where ithas alegallyenforceable rightandwhere itintendstosettlesuchassetsandliabilitiesonanetbasis.L. Borrowing CostsBorrowingcostsattributable toacquisitionand/orconstructionof qualifyingassetsare capitalisedasa part of the cost of such assets,up tothe date such assetsare readyfor theirintendeduse.Otherfinancing/borrowingcostsare chargedto the Statementof ProfitandLoss.M Impairment ofAssetsAt eachBalance Sheetdate,the Companyassesseswhetherthere isanyindication thatanyassetmay be impaired.If anysuchindicationexists,the carryingvalue of suchassetsisreducedtoitsestimatedrecoverableamountandthe amountof such impairmentlossischargedtothe Statementof ProfitandLoss.If,at the Balance Sheet date,there isanindicationthata previouslyassessedimpairmentlossnolongerexists,the recoverableamountisreassessedandthe assetisreflectedatthe recoverable amountsubjecttoa maximumof depreciatedhistorical cost.N Research and DevelopmentRevenue expenditure onResearchandDevelopmentisrecognisedasexpense inthe yearinwhichitisincurred.Capital expenditureonResearchandDevelopmentisshownasadditiontoFixedAssets.O Expenditure on Regulatory ApprovalsExpenditure incurredforobtainingregulatoryapprovalsandregistrationof productsforoverseasmarketsischarged torevenue.P GovernmentGrantsand SubsidiesCapital subsidy/Governmentgrantsare accountedfor where itisreasonablycertain thattheultimate collectionwill be made.Capital subsidy/Governmentgrantsrelatedtospecificdepreciableassetsare shownasdeductionfromthe grossvalue of the assetconcernedinarrivingat itsbookvalue.The grant/subsidyisthusrecognisedin the Statementof ProfitandLossoverthe useful lifeof suchdepreciable assetsbywayof a reduceddepreciationcharge.Q LeasesWhere the Companyisa LesseeLease rentalsonassetstakenon operatinglease are recognisedasexpense inthe Statement ofProfitandLoss on an accrual basisoverthe lease terminaccordance withthe lease agreement.Where the Companyisa LessorLease rentalsonassetsgivenonoperatinglease are recognisedasincome inthe Statementof Profitand Losson an accrual basisin accordance withthe lease agreement.
  21. 21. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comR Earnings PerShareBasic earningspershare iscalculatedbydividingthe netprofitorlossforthe periodattributable toequityshareholdersbythe weightedaveragenumberof equitysharesoutstandingduringtheperiod.For the purpose of calculatingdilutedearningspershare,the netprofitattributable toequityshareholdersandthe weightedaverage numberof sharesoutstandingare adjustedforthe effectofall dilutive potential equitysharesfromthe exercise of optionsonunissuedshare capital.Thenumberof equitysharesisthe aggregate of the weightedaverage numberof EquitySharesandtheweightedaverage numberof equityshareswhichwouldbe issuedonthe conversionof all thedilutive potential equitysharesintoequityshares.
  22. 22. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSignificantAccounting PoliciesofGroupA Basis of PreparationThe consolidatedfinancial statementsare preparedunderthe historical costconventiononaccrualbasisinaccordance withthe Companies(AccountingStandards) Rules,2006 issuedundersection211(3C) of the CompaniesAct,1956. During the financial year ended31stMarch 2012 the revisedSchedule VInotifiedunderthe CompaniesAct,1956 has become applicable tothe Company,forpreparationandpresentationof itsfinancial statements.The Companyhasalsore-classifiedthepreviousyearfiguresinaccordance withthe requirementsapplicableinthe currentyear.B Use of EstimatesThe preparationof financial statementsrequiresthe managementof the Companytomakeestimatesandassumptionsthataffectthe reportedbalance of assetsandliabilities,revenue andexpensesanddisclosuresrelatingtocontingentliabilities.The managementbelievesthattheestimatesusedinthe preparationof the financial statementsare prudentandreasonable.Futureresultscoulddifferfromthese estimates.Anyrevisionof accountingestimatesisrecognisedprospectivelyinthe currentandfuture periods.C PrinciplesofConsolidationThe consolidatedfinancial statementsrelate toCiplaLtd.(the ‘Company’),itssubsidiariesandassociates.The consolidatedfinancial statementshave beenpreparedonthe followingbasis:a. The financial statementsof the Companyanditssubsidiarieshave beencombinedonaline-by-line basisbyaddingtogetherthe bookvaluesof like itemsof assets,liabilities,incomeandexpenses,afterfullyeliminatingintra-groupbalancesandintra-grouptransactionsandresultingunrealisedprofitsor losses.Unrealisedlossesresultingfromintra-grouptransactionsare eliminatedunlesscostcannotberecovered.b. The differencebetweenthe costof investmentinthe subsidiaries,overthe netassetsatthe timeof acquisitionof the sharesinthe subsidiariesisrecognisedinthe financialstatementsasGoodwill/CapitalReserve asthe case may be.c. Entitiesinwhichthe Companyhassignificantinfluence butnotacontrollinginterestareconsideredasassociatesandinvestmentthereinare reportedaccordingtothe equitymethodi.e.the investmentisinitiallyrecordedatcostidentifyinganyGoodwill/Capital Reserve arisingatthetime of acquisition.The carryingamountof the investmentisadjustedthereafterforthe postacquisitionchange inthe investor’sshare of netassetsof the associate,basedonthe availableinformation.The consolidatedStatementof ProfitandLossincludesthe investor’sshare ofProfit/Lossof the operationsof the associate.d. The financial statementsof the subsidiariesandassociatesusedinconsolidationare drawnuptothe same reportingdate as of the Company.
  23. 23. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.come.The consolidatedfinancialstatementshave beenpreparedusinguniformaccountingpoliciesforlike transactionsandothereventsinsimilarcircumstancesandare presentedtothe extentpossible,inthe same manner,asthe Company’sseparate financial statements.f.The subsidiariesandassociatesconsideredinthe consolidatedfinancialstatementsare:Name of the Company CountryofIncorporation% ownershipinterestas at 31st March 2012WitheffectfromSubsidiaries(helddirectly)CiplaFZE UnitedArabEmirates 100 04/10/2006GoldencrossPharmaPvt.Ltd.India 100 14/05/2010Cipla(Mauritius) Ltd. Mauritius 100 27/01/2011MeditabSpecialitiesPvt.Ltd.India 100 01/10/2010Subsidiaries(heldindirectly)Four MPropack Pvt.Ltd.India 100 14/05/2010Cipla(UK) Ltd. UnitedKingdom 100 27/01/2011Cipla-OzPtyLtd. Australia 100 04/03/2011STD ChemicalsLtd. UnitedKingdom 100 27/01/2011MedisprayLaboratoriesPvt.Ltd.India 100 01/10/2010SitecLabs Pvt.Ltd. India 100 01/10/2010MeditabHoldingsLtd. Mauritius 100 01/10/2010MeditabPharmaceuticalsSouthAfrica(Pty) Ltd.SouthAfrica 100 14/01/2011MeditabSpecialitiesNewZealandLtd.NewZealand 100 21/01/2011AssociatesQualityChemicalIndustriesLtd.Uganda 36.55 01/10/2010StempeuticsResearchPvt.Ltd.India 49 01/10/2010BiomabHoldingLtd. Hong Kong 25 01/09/2011JiangsuCdymaxPharmaceuticalsCo.Ltd.China 48.22 10/02/2012Notes:i. On20th February 2012, CiplaLtd.(the Company) throughitssubsidiar y/stepdownsubsidiariesacquireda whollyownedsubsidiaryCiplaIlaçTicaretAnonimSirketi,Turkey.Itsfirstaccountingperiodshall endon31st December2012. In view of the Management,asthere are no significanttransactionsfromthe date of acquisitiontill31stMarch 2012, otherthan transactionrelatedtoinvestmentmentionedherein,itsconsolidationisnotconsiderednecessary.The Companythroughitssubsidiary/stepdownsubsidiarieshasinvested`0.14 crore in CiplaIlaçTicaretAnonimSirketi,Turkeytowards50,000 fullypaid-upsharesof TRY1 each.
  24. 24. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comii.InSeptember2011, the CompanyenteredintoanagreementwithAspenPharmaPtyLtd.,Australiatoforma JointVenture entityAspen-CiplaAustraliaPtyLtd.Itsfirstaccountingperiodshallendon 30th June 2012. In viewof the Management,asthere are no significanttransactionsfromthedate of acquisitiontill31stMarch 2012, otherthan transactionrelatedtoinvestmentmentionedherein,itsconsolidationisnotconsiderednecessary.The Companyhasinvested`51.97 inAspen-CiplaAustraliaPtyLtd.towards1 fullypaid-upordinaryshare of AUD1.iii.Duringthe yearMeditabSpecialitiesPvt.Ltd.andMeditabHoldingsLtd.(togetherreferredtoas“MeditabGroup”) enteredintoanagreementtodispose of itsinvestmentinDesanoHoldingsLtd.for USD 78 million(equivalent`396.82 crore).Towardsthe saidsale of investment,the MeditabGroup has receivedpartial considerationduringthe yearended31stMarch 2012 and the balanceconsiderationhasbeenreceivedinApril 2012.D FixedAssetsFixedAssetsare statedatcost of acquisition(netof recoverable taxesandGovernmentgrantsandothersubsidies,whereveravailed) orconstructionorotheramountssubstitutedforhistorical costson revaluationlessaccumulateddepreciation.Where several fixedassetsare acquiredforconsolidatedprice,the considerationisapportionedtofixedassetsonfairvalue basis.E DepreciationDepreciationonfixedassetsisprovidedbythe Companyon the StraightLine Methodat the ratesand inthe mannerprescribedunderScheduleXIV tothe CompaniesAct,1956 in the parentcompany.The depreciationonfixedassetsinIndiansubsidiariesisprovidedonWrittenDownValue methodatthe rates andin the mannerprescribedunderSchedule XIV tothe CompaniesAct,1956.All individual itemsof fixedassets,where the actual costdoesnotexceed`5000 have beenwrittenoff entirelyinthe yearof acquisition.Cost of leaseholdlandincludingpremiumisamortisedoverprimaryperiodof lease.F Valuationof InventoriesRaw materialsandPackingmaterialsare valuedatlowerof costor netrealisable valueafterprovidingforobsolescence,if any.However,these itemsare consideredtobe realisable atcostif thefinishedproducts,inwhichtheywill be used,are expectedtobe soldat or above cost.Work-in-processandfinishedgoodsare valuedatlowerof costor netrealisable value.Finishedgoodsand work-in-processinclude costsof raw material,labour,conversioncostsandothercostsincurredinbringingthe inventoriestotheirpresentlocationandcondition.Cost of finishedgoodsincludesexcise duty,whereverapplicable.Cost of inventoriesiscomputedonweightedaveragebasis.
  25. 25. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comG InvestmentsLong terminvestments,otherthaninvestmentinassociates,are statedatcost,lessprovisionfordiminution(otherthantemporary) invalue.Currentinvestmentsare statedatlowerof cost and fairvalue.H ForeignExchange TransactionsTransactionsinforeigncurrenciesare recordedatthe exchange ratesprevailingonthe date of thetransaction.Foreigncurrencymonetaryassets&liabilitiesandforwardcontractsare restatedatyear endexchange rates.Exchange differencesarisingonthe settlementof foreigncurrencymonetaryitemsoronreportingCompany’sforeigncurrencymonetaryitemsatratesdifferentfromthose atwhichtheywereinitiallyrecordedduringthe yearorreportedinthe previousfinancial statements,are recognisedasincome or expenseinthe yearinwhichtheyarise.Non-monetaryforeigncurrencyitemsare carriedat the ratesprevailingonthe date of thetransaction.In respectof forwardcontracts,the premiumordiscounton these contractsis recognisedasincomeor expenditure overthe periodof the contract.Anyprofitorlossarisingoncancellationorrenewalof suchcontracts is recognisedasincome orexpenseof the year.Foreignbranchesare identifiedasintegral foreignoperations.Alltransactionsare transferredatratesprevailingonthe date of transaction.Monetaryassetsandliabilitiesof the branchare restatedat the yearendrates.Overseassubsidiariesare classifiedasnonintegral operationsasperAS-11- The Effectsof ChangesinForeignExchange Rates.All the assetsandliabilitiesare translatedusingexchangerate prevailingat the Balance Sheetdate andincome/expenditureare translatedusingaverage exchangerateprevailingduringthe reportingperiod.The resultanttranslationexchangegain/loss,have beendisclosedas“ForeignCurrencyTranslationReserve”underReservesandSurplus.I Provisions,ContingentLiabilitiesandContingentAssetsA provisionisrecognisedwhenthe Companyhasapresentobligationasaresultof a pastevent,itisprobable thatan outflowof resourceswillbe requiredtosettle the obligation,inrespectof whichareliable estimatecanbe made.Provisionsare notdiscountedtoitspresentvalue andaredeterminedbasedonbestestimate requiredtosettle the obligationatthe Balance Sheetdate.A disclosure of contingentliabilityismade whenthere isapossibleobligationora presentobligationthat may,but probablywill not,requireanoutflow of resources.Where there isapossible obligationor a presentobligationinrespectof whichthe likelihoodof outflowof resourcesisremote,noprovisionordisclosure ismade.Contingentassetsare neitherrecognisednordisclosedinthe financialstatements.
  26. 26. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comJ Revenue RecognitionRevenue isrecognisedtothe extentthatisprobable thatthe economicbenefitswill flow totheCompanyandthe revenue canbe reliablymeasured.Revenue fromsale of goodsisrecognisedwhensignificantrisksandrewardsof ownershipof thegoodshave beenpassedtothe buyer,whichordinarilycoincideswithdespatchof goodstocustomers.Revenuesare recordedatinvoice value,netof salestax,returnsandtrade discounts.Revenue fromrenderingof servicesare recognisedoncompletionof services.Benefitsonaccountof entitlementof exportincentivesare recognisedasandwhenthe righttoreceive isestablished.Technical Know-how/Feesare recognisedasandwhenthe rightto receive suchincome isestablishedaspertermsand conditionsof relevantagreement.Interestincome isrecognisedontime proportionbasis.Dividendincomeisrecognisedwhenthe righttoreceive isestablished.K Employee BenefitsLiabilityonaccountof short termemployee benefitsisrecognisedonanundiscountedandaccrualbasisduringthe periodwhenthe employeerendersservice/vestingperiodof the benefit.PostretirementcontributionplanssuchasProvidentFundare chargedtothe Statementof Profitand Lossfor the year whenthe contributionstothe respective fundsaccrue.Postretirementbenefitplanssuchasgratuityand leave encashmentare determinedonactuarialvaluationmade byan independentactuaryasat the Balance Sheetdate.Actuarial gainsandlossesare recognisedimmediatelyinthe Statementof ProfitandLoss.L Income TaxCurrentincome tax ismeasuredat the amountexpectedtobe paidto the tax authoritiesinaccordance withthe provisionsof local Income Tax Lawsas applicable tothe financial year.Deferredincome taxesreflectthe impactof currentyear timingdifferencesbetweentaxable incomeand accountingincome of the yearand reversal of timingdifferencesof earlieryears.Deferredtax ismeasuredbasedonthe tax rates and the tax lawsenactedor substantivelyenactedatthe BalanceSheetdate.The Companyoffsets,ona year-on-yearbasis,the currenttax assetsandliabilities,where ithasalegallyenforceable rightandwhere itintends tosettlesuchassetsandliabilitiesonanetbasis.M Borrowing CostsBorrowingcostsattributable toacquisitionand/orconstructionof qualifyingassetsare capitalisedasa part of the cost of suchassets,up tothe date such assetsare readyfor theirintendeduse.Otherfinancing/borrowingcostsare chargedto the Statementof ProfitandLoss.
  27. 27. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comN Impairmentof AssetsAt eachBalance Sheetdate,the Companyassesseswhetherthere isanyindicationthatanyassetmay be impaired.If anysuchindicationexists,the carryingvalue of suchassetsisreducedtoitsestimatedrecoverableamountandthe amountof such impairmentlossischargedtothe Statementof ProfitandLoss.If,at the Balance Sheetdate,there isanindicationthata previouslyassessedimpairmentlossnolongerexists,the recoverableamountisreassessedandthe assetisreflectedatthe recoverable amountsubjecttoa maximumof depreciatedhistorical cost.O Research and DevelopmentRevenue expenditure onResearchandDevelopmentisrecognisedasexpense inthe yearinwhichitisincurred.Capital expenditureonResearchandDevelopmentisshownasadditiontoFixedAssets.P Expenditure on RegulatoryApprovalsExpenditure incurredforobtainingregulatoryapprovalsandregistrationof productsforoverseasmarketsischarged torevenue.Q GovernmentGrants and SubsidiesCapital subsidy/Governmentgrantsare accountedfor where itisreasonablycertainthattheultimate collectionwill be made.Capital subsidy/Government grantsrelatedtospecificdepreciableassetsare shownasdeductionfromthe grossvalue of the assetconcernedinarrivingat itsbookvalue.The grant/subsidyisthusrecognisedinthe Statementof ProfitandLossoverthe useful lifeof suchdepreciable assetsbywayof a reduceddepreciationcharge.R LeasesWhere the Companyisa LesseeLease rentalsonassetstakenon operatinglease are recognisedasexpense inthe StatementofProfitandLoss on an accrual basisoverthe lease terminaccordance withthe lease agreement.Where the Companyisa LessorLease rentalsonassetsgivenonoperatinglease are recognisedasincome inthe Statementof Profitand Losson an accrual basisin accordance withthe lease agreement.The audited/unauditedfinancial statementsof foreignsubsidiaries/associateshave beenpreparedinaccordance withthe GenerallyAcceptedAccountingPrinciplesof itscountryof incorporationorInternational Financial ReportingStandards.The differencesinaccountingpoliciesof the Companyand itssubsidiariesare notmaterial.
  28. 28. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING POLICIESOFDLF:SIGNIFICANTACCOUNTING POLICIESINRELATION TO STANDALONE FINANCIALSTATEMENTS OFDLFa. Basis ofaccountingThe Financial Statementsare preparedunder historical costconvention,onaccrual basis,inaccordance withthe generallyacceptedaccountingprinciplesinIndiaandtocomplywiththeAccountingStandardsprescribedinthe Companies(AccountingStandards) Rules,2006 issuedbytheCentral Governmentinexercise of the powerconferredundersub-section(1)(a) of Section642 andthe relevantprovisionsof the CompaniesAct,1956 (the “Act”).All assetsandliabilitieshave beenclassifiedascurrentor non-current,whereverapplicable asperthe operatingcycle of the Companyas perthe guidance assetout inthe RevisedScheduleVItotheCompaniesAct,1956.b. Use of estimatesThe preparationof financial statementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresthe managementtomake estimatesandassumptionsthataffectthe reportedamountsofassetsand liabilitiesandthe disclosure of contingentliabilitiesonthe date of the financialstatementsandthe resultsof operationsduringthe reportingperiods.Althoughthese estimatesarebaseduponmanagement’sknowledge of currenteventsandactions,actual resultscoulddifferfromthose estimatesandrevisions,if any,are recognisedinthe currentandfuture periods.c. Intangible assets and amortisationi.Softwareswhichare notintegral part of the hardware are classifiedasintangiblesandare statedatcost lessaccumulatedamortisation.These are beingamortisedoverthe estimateduseful life of 5years,as determinedbythe management.ii.The Companyhas acquiredexclusiveusage rightsfor30 years underthe build,own,operate andtransferscheme of the PublicPrivate Partnership(‘PPP’) Schemeinrespectof propertiesdevelopedas automatedmulti-levelcarparkingand commercial space andclassifiedthemunder the“Intangible Assets –Righton BuildingandRightonPlant& Machinery”.The Companyhasarrivedatthe cost of suchintangible assetsinaccordance withprovisionsof relevantAccountingStandards.The cost of these rightsisbeingamortisedoverthe concessionperiodinthe proportioninwhichtheactual revenue receivedduringthe accountingyearbearstothe ProjectedRevenue fromsuchIntangiblestill the endof concessionperiodinaccordance withthe notificationNo.G.S.R.298 (E)datedApril 17, 2012 as notifiedinMinistryof Corporate Affairs(“MCA”) onthe IntangibleAssetsofSchedule XIV of the CompaniesAct,1956.d. Fixedassetsand depreciationi.Fixedassets(grossblock) are statedathistorical costlessaccumulateddepreciationandimpairment(if any).Costcomprisesthe purchase price andanyattributable costof bringingtheassetto itsworkingconditionforitsintendeduse.
  29. 29. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comBuilding/specificidentifiableportionsof building,includingrelatedequipmentsare capitalisedwhenthe constructionissubstantiallycompleteoruponreceiptof the occupancycertificate,whicheverisearlier.Depreciationonassets(includingbuildingsandrelatedequipment’srentedoutandincludedundercurrentassetsas inventories) isprovidedon straight-line methodatthe ratesand inthe mannerprescribedinScheduleXIV tothe CompaniesAct,1956.ii.Capital work-in-progress(includingintangible assetsunderdevelopment)representsexpenditureincurredinrespectof capital projects/intangible assetsunderdevelopmentandare carriedat cost.Cost includesland,relatedacquisitionexpenses,development/constructioncosts,borrowingcostsand otherdirectexpenditure.iii.Leaseholdland,underperpetual lease,isnotamortised.Leaseholdland,otherthanonperpetuallease,are beingamortisedontime proportionbasisovertheirrespective lease periods.e. InvestmentsInvestmentsare classifiedasnon-currentorcurrent,basedonmanagement’sintentionatthe timeof purchase.Investmentsthatare readilyrealisable andintendedtobe heldfornotmore than ayearare classifiedascurrentinvestments.All otherinvestmentsare classifiedasnon-currentinvestments.Trade investmentsare the investmentsmade fororto enhance the Company’sbusinessinterests.Currentinvestmentsare statedatlowerof cost and fairvalue determinedonanindividualinvestmentbasis.Non-currentinvestmentsare statedatcost and provisionfordiminutionintheirvalue,otherthantemporary,ismade inthe financial statements.Profit/lossonsale of investmentsiscomputedwithreference tothe average costof the investment.f. InventoriesInventoriesare valuedasunder:i) Land and plotsotherthanarea transferredtoconstructedpropertiesatthe commencementofconstructionare valuedatlowerof cost/ approximate average cost/asrevaluedonconversiontostock andnet realisablevalue.Costincludesland(includingdevelopmentrightsandlandunderagreementstopurchase) acquisitioncost,borrowingcost,estimatedinternaldevelopmentcostandexternal developmentcharges.ii.ConstructedpropertiesotherthanSpecial EconomicZone (SEZ) projectsincludesthe costof land(includingdevelopmentrightsandlandunderagreementstopurchase),internaldevelopmentcosts,external developmentcharges,constructioncosts,overheads,borrowingcost,development/constructionmaterialsandisvaluedatlowerof cost/estimatedcostandnetrealisable value.iii.Incase of SEZ projects,constructedpropertiesinclude internal developmentcosts,externaldevelopmentcharges,constructioncosts,overheads,borrowingcost,development/constructionmaterials,andisvaluedatlowerof cost/ estimatedcost,andnetrealisable value.
  30. 30. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comiv.Developmentrightsrepresentsamountpaidunderagreementtopurchase land/developmentrightsand borrowingcostincurredbythe Companyto acquire irrevocable andexclusive licenses/developmentrightsinidentifiedlandandconstructedproperties,the acquisitionof whichisatanadvancedstage.v. Construction/developmentmaterial isvaluedatlowerof costand netrealisable value.vi.Rentedbuildingsandrelatedequipmentsare valuedatlowerof cost(lessaccumulateddepreciation) andnetrealisable value.g. Revenue recognitioni.Revenue fromconstructedproperties:(a) Revenue fromconstructedproperties,otherthanSEZprojects,isrecognisedonthe “percentageof completionmethod”.Total sale considerationasperthe dulyexecuted,agreementstosell/applicationforms(containingsalienttermsof agreementtosell),isrecognisedasrevenuebasedonthe percentage of actual projectcosts incurredthereontototal estimatedprojectcost,subjecttosuch actual cost incurredbeing30 per centor more of the total estimatedprojectcost.Estimatedprojectcost includescostof land/developmentrights,borrowingcosts,overheads,estimatedconstructionanddevelopmentcostof suchproperties.The estimatesof the saleable areaandcostsare reviewedperiodicallyandeffectof anychangesinsuch estimatesisrecognisedinthe periodinwhichsuchchangesare determined.However,whenthe total projectcostis estimatedtoexceedtotal revenuesfromthe project,lossisrecognisedimmediately.(b) For SEZ projects,revenue fromdevelopmentchargesisrecognisedonthe percentage ofcompletionmethodinaccordance withthe termsof the Co-developerAgreements/Memorandumof Understanding(‘MOU’),readwithaddendum, if any.The total developmentchargesis recognisedas Revenue onthe percentage of actual projectcostincurredthereontototal estimatedprojectcost, subjecttosuch actual cost incurredbeing30 percentor more of the total estimatedprojectcost. The estimatedprojectcostincludesconstructioncost,developmentandconstructionmaterial,internal developmentcost,external developmentcharges,borrowingcostandoverheadsof suchproject.Revenue fromLease of landpertainingtosuchprojectsisrecognisedinaccordance withthetermsof the Co-developerAgreements/MOU on accrual basis.ii.Sale of landand plots(includingdevelopmentrights) isrecognisedinthe financial yearinwhichthe agreementtosell/applicationforms(containingsalienttermsof agreementtosell) isexecuted.Where the Companyhas anyremainingsubstantialobligationsasperthe agreements,revenueisrecognisedonthe percentage of completionmethodof accounting,asper(i)(a) above.iii.Sale of developmentrightsisrecognizedinthe financialyearinwhichthe agreementsof sale areexecutedandthere isnouncertaintyinthe ultimate collections.iv.Revenue fromwindpowergenerationisrecognisedonthe basisof actual powersold(netofreactive energyconsumed),asperthe termsof the powerpurchase agreementsenteredintowiththe respective purchasers.
  31. 31. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comv. Income frominterestisaccountedforontime proportionbasistakingintoaccountthe amountoutstandingandthe applicable rate of interest.vi.Dividendincome isrecognisedwhenthe righttoreceive isestablishedbythe reportingdate.vii.Share of profit/lossfromfirmsinwhichthe Companyisa partner isaccountedforin the financialyearendingon(or immediatelybefore) the date of the balance sheet.viii.Rent,service receiptsandinterestfromcustomersunderagreementtosell isaccountedforonaccrual basisexceptincaseswhere ultimate collectionisconsidereddoubtful.ix.Sale of CertifiedEmissionReductions(CERs) andVoluntaryEmissionReductions(VERs) isrecognised asincome onthe deliveryof the CERs/VERstothe customer’saccountandreceiptofpayment.h. UnbilledreceivablesUnbilledreceivablesdisclosedunderNote No.19 - “OtherCurrentAssets”representsrevenuerecognisedbasedonPercentage of completion method[asperparano.g (i) andg(ii) above],overand above the amountdue as perthe paymentplansagreedwiththe customers.i. Cost of revenuei.Cost of constructedpropertiesotherthanSEZprojects,includescostof land(includingcostofdevelopmentrights/landunderagreementstopurchase),estimatedinternal developmentcosts,external developmentcharges,borrowingcosts,overheads,constructioncostsanddevelopment/constructionmaterials,whichischargedtothe statementof profitand lossbasedonthe percentageof revenue recognisedasperaccountingpolicyno. - g (i) above,inconsonance withthe conceptofmatchingcosts andrevenue.Final adjustmentismade uponcompletionof the specificproject.For SEZ projects,costof constructedpropertiesincludesestimatedinternal developmentcosts,external developmentcharges,borrowingcosts,overheads,constructioncostsanddevelopment/constructionmaterials,whichischargedtothe statementof profitandlossbasedonthe percentageof revenue recognisedasperaccountingpolicyno. – g (i) above,inconsonance withthe conceptofmatchingcosts andrevenue.Final adjustmentismade uponcompletionof the specificproject.ii.Costof landand plotsincludesland(includingdevelopmentrights) acquisitioncost,estimatedinternal developmentcostsandexternal developmentcharges,whichischargedtostatementofprofitandlossbasedon the percentage of land/plottedareainrespectof whichrevenue isrecognisedasperaccountingpolicyno- g (ii) above tothe saleable total land/plottedareaof thescheme,inconsonance withthe conceptof matchingcostand revenue.Final adjustmentismade uponcompletionof the specificproject.iii.Costof developmentrightsismeasured atthe rate at whichthe same have beenpurchasedfromthe Land OwningCompanies(LOCs) asperthe agreement.j. Borrowing costs
  32. 32. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comBorrowingcoststhat are attributable tothe acquisitionand/orconstructionof qualifyingassetsarecapitalisedaspartof the cost of such assets,inaccordance withnotifiedAccountingStandard16“BorrowingCosts”.A qualifyingassetisone thatnecessarilytakesasubstantial periodof time togetreadyfor itsintendeduse.Capitalisationof borrowingcostsissuspendedinthe periodduringwhichthe active developmentisdelayeddue to,otherthantemporaryinterruption.All otherborrowingcosts are charged to the statementof profitandlossas incurred.k. TaxationTax expense forthe yearcomprisescurrentincome tax anddeferredtax .Currentincome tax isdeterminedinrespectof taxable incomewithdeferredtax beingdeterminedasthe tax effectoftimingdifferencesrepresentingthe differencebetweentaxableincome andaccountingincome thatoriginate inone period,andare capable of reversal inone ormore subsequentperiod(s).Such deferredtax isquantifiedusingratesandlawsenactedorsubstantivelyenactedasatthe endof the financial year.l. Foreigncurrency transactionsTransactionsinforeigncurrencyare accountedfor at the exchange rate prevailingonthe date of thetransaction.All monetaryitemsdenominatedinforeigncurrencyare convertedintoIndianrupeesatthe year-endexchange rate.Income andexpenditureof the overseasliaisonoffice istranslatedatthe yearlyaverage rate of exchange.The exchange differencesarisingonsuchconversionandonsettlementof the transactionsarerecognisedinthe statementof profitandloss.In termsof the clarification providedbyMinistryof Corporate Affairs(“MCA”) vide anotificationno.G.S.R.913(E) on AccountingStandard – 11 “ChangesinForeignExchange Rates”,the exchangegain/lossonlong-termforeigncurrencymonetaryitemsisadjustedinthe costof depreciable capitalassets.The otherexchange gains/losseshave beenrecognisedinthe statementof profitandloss.m. Employee benefitsExpensesandliabilitiesinrespectof employeebenefitsare recordedinaccordance withthe notifiedAccountingStandard15 - Employee Benefits.i. ProvidentfundThe Companymakescontributiontostatutoryprovidentfundinaccordance withthe Employees’ProvidentFundsandMiscellaneousProvisionsAct,1952. In termsof the Guidance onimplementingthe revisedAS – 15, issuedbythe AccountingStandardsBoardof the ICAI,the providentfundtrustsetup by the Companyistreatedas a definedbenefitplansince the Companyhastomeettheinterestshortfall,if any.Accordingly,the contributionpaidorpayable andthe interestshortfall,ifany isrecognisedasan expenseinthe periodinwhichservicesare renderedbythe employee.ii.GratuityGratuityis a post-employmentbenefitandisinthe nature of a definedbenefitplan.
  33. 33. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comThe liabilityrecognisedinthe balance sheetinrespectof gratuityisthe presentvalue of the definedbenefit/obligationatthe balance sheetdate,togetherwithadjustmentsforunrecognisedactuarialgainsor lossesandpast service costs.The definedbenefit/obligationiscalculatedatornearthebalance sheetdate byan independentactuaryusingthe projectedunitcreditmethod.Actuarial gainsandlossesarisingfrompastexperience andchangesinactuarial assumptionsarecreditedorchargedto the statementof profitandlossinthe yearin whichsuchgainsor lossesaredetermined.iii.CompensatedabsencesLiabilityinrespectof compensatedabsencesbecomingdue orexpectedtobe availedwithinoneyearfrom the balance sheetdate isrecognisedonthe basisof undiscountedvalue of estimatedamountrequiredtobe paidor estimatedvalue of benefitexpectedtobe availedbythe employees.Liabilityinrespectof compensatedabsencesbecomingdue orexpectedtobe availedmore thanoneyearafter the balance sheetdate isestimatedon the basisof anactuarial valuationperformedbyanindependentactuaryusingthe projectedunitcreditmethod.Actuarial gainsandlossesarisingfrompastexperience andchangesinactuarial assumptionsarecreditedorchargedto the statementof profit andlossinthe yearin whichsuchgainsor lossesaredetermined.iv.Employee ShadowOptionScheme(CashSettledOptions)Accountingvalue of CashSettledOptionsgrantedtoemployeesunderthe “EmployeesShadowOptionScheme”isdeterminedonthe basisof intrinsicvaluerepresentingthe excessof the averagemarketprice,duringthe monthbefore the reportingdate,overthe exercise price of the shadowoption.The same ischarged as employee benefitsoverthe vestingperiod,inaccordance withGuidance Note No.18 “Share BasedPayments”,issuedbythe ICAI.v. Othershort-termbenefitsExpense inrespectof othershort-termbenefitsisrecognisedonthe basisof the amountpaidorpayable forthe periodduringwhichservicesare renderedbythe employee.Contributionmade towardsSuperannuationFund[fundedbypaymentstoLife InsuranceCorporationof India(LIC)] ischargedto the statementof profi tand losson accrual basis.n. LeasesAssetssubjecttooperatingleasesare includedunderfixed assetsorcurrentassetsasappropriate.Rent(Lease) income isrecognisedinthe statementof profitandlossona straight-line basisoverthelease term.Costs,includingdepreciation,are recognisedasanexpense inthe statementof profitand loss.
  34. 34. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.como. EmployeesStock OptionPlan (ESOP)Accountingvalue of stockoptionsisdeterminedonthe basisof “intrinsicvalue”representingtheexcessof the marketprice on the date of grant overthe exercise price of the optionsgrantedunderthe “EmployeesStockOptionScheme”of the Company,and isbeingamortisedas“Deferredemployeecompensation”ona straight-line basisoverthe vestingperiodinaccordance withthe SEBI(Employee StockOptionScheme andEmployee StockPurchase Scheme) Guidelines,1999 andGuidance Note No.18 “Share BasedPayments”issuedbythe ICAI.p. Impairment ofassetsThe Companyassessesateach balance sheetdate whetherthere isanyindicationthatanassetmaybe impaired.If anysuch indicationexists,the Companyestimatesthe recoverable amountof theasset.If such recoverable amountof the assetorthe recoverable amountof the cashgeneratingunitto whichthe assetbelongsislessthanitscarryingamount,the carrying amountisreducedto itsrecoverable amountandthe reductionistreatedasan impairment lossandisrecognisedinthestatementof profitandloss.If at the balance sheetdate there isan indicationthatapreviouslyassessedimpairmentlossnolongerexists,the recoverable amountisreassessedandthe assetisreflectedatthe recoverable amountsubjecttoa maximumof depreciatedhistorical costandisaccordinglyreversedinthe statementof profitandloss.q. ContingentliabilitiesandprovisionsDependinguponthe factsof eachcase and afterdue evaluationof legal aspects,claimsagainsttheCompanyare accountedfor as eitherprovisionsordisclosedascontingentliabilities.Inrespectofstatutoryduesdisputedandcontestedbythe Company,contingentliabilitiesare providedforanddisclosedasperoriginal demandwithouttakingintoaccountanyinterestorpenaltythatmayaccruethereafter.The Companymakesa provisionwhenthere isapresentobligationasaresultof a pasteventwherethe outflowof economicresourcesisprobable andareliable estimateof the amountof obligationcan be made.Possiblefuture orpresentobligationsthatmaybutwill probablynotrequire outflowof resourcesorwhere the same cannotbe reliablyestimated,isdisclosedascontingentliabilityinthe Financial Statements.r. Earnings pershareBasic earningspershare iscalculatedbydividingthe netprofitorlossforthe periodattributable toequityshareholdersbythe weightedaveragenumberof equitysharesoutstandingduringtheperiod.The weightedaverage numbersof equitysharesoutstandingduringthe periodare adjustedfor eventsincludingabonusissue,bonuselementinarightsissue toexistingshareholders,sharesplit,andreverse share split(consolidationof shares).For the purpose of calculatingdilutedearningspershare,the netprofitorlossforthe periodattributable toequityshareholdersandthe weightedaverage numberof sharesoutstandingduringthe periodare adjustedforthe effectsof all dilutivepotential equityshares.The periodduringwhich,numberof dilutivepotential equityshareschange frequently,weightedaverage numberof
  35. 35. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comsharesare computedbasedona meandate in the quarter,as impactis immaterial onearningspershare.
  36. 36. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comSIGNIFICANTACCOUNTING POLICIESINRELATION TO CONSOLIDATED FINANCIALSTATEMENTS OFDLFa. Nature of operationsDLF Limited(‘DLF’orthe ‘Company’),apubliclimitedCompany,togetherwithitssubsidiaries,jointventuresandassociates(collectivelyreferredtoasthe ‘Group’) isengagedprimarilyinthe businessof colonisationandreal estate development.The operationsof the Groupspan all aspectsof realestate development,fromthe identificationandacquisitionof land,toplanning,execution,constructionandmarketingof projects.The Groupis alsoengagedinthe businessof generationofpower,provision of maintenance services,hospitalityandrecreational activities,life insurance andretail chainoutlets.b. Basis of accountingThe ConsolidatedFinancial Statementsare preparedunderhistorical costconventiononanaccrualbasis,inaccordance with the generallyacceptedaccountingprinciplesinIndiaandtocomplywiththe AccountingStandardsprescribedinthe Companies(AccountingStandards)Rules,2006 issuedbythe Central Governmentinexercise of the powerconferredundersub-section(1) (a) of Section642of the CompaniesAct,1956 (the ‘Act’),otherpronouncementsof The Instituteof CharteredAccountantsof India(ICAI) andguidelinesissuedbyThe SecuritiesandExchange Boardof India,tothe extentapplicable.c. Principlesof consolidationThe ConsolidatedFinancial Statementsinclude the financial statementsof DLFLimited,itssubsidiaries,jointventures,partnershipfirmsandassociates.The ConsolidatedFinancial Statementsof the Group have beenpreparedinaccordance withAccountingStandard(AS) 21‘ConsolidatedFinancial Statements’,AS23 ‘AccountingforInvestmentsinAssociatesinConsolidatedFinancialStatements’andAS27 ‘Financial Reportingof InterestsinJointVentures’,(asapplicable),notifiedpursuantto the Companies(AccountingStandards) Rules,2006. The ConsolidatedFinancialStatementsare preparedonthe followingbasis:i.The ConsolidatedFinancial Statementsincludeconsolidatedbalance sheet,consolidatedstatementof profitandloss,consolidatedstatementof cashflowsandnotestothe ConsolidatedFinancial Statementsandexplanatorystatementsthatformanintegral partthereof.TheConsolidatedFinancialStatementsare presented,tothe extentpossible,inthe same formatasthatadoptedbythe parent for standalone financialstatements.ii.The ConsolidatedFinancial Statementsinclude the financial statementsof the Companyandall itssubsidiaries,whichare more than50 percentownedor controlledandpartnershipfirmswhere theCompany’sshare inthe profitsharingratioismore than50 per centduringthe year. Investmentsinentitiesthatwere notmore than50 per centownedorcontrolledandpartnershipfirmswheretheprofitsharingratiowas notmore than 50 per centduringthe year have beenaccountedforinaccordance withthe provisionsof AccountingStandard13 ‘AccountingforInvestments’,orAccountingStandard23 ‘AccountingforInvestmentsinAssociatesinConsolidatedFinancialStatements’,orAccountingStandard27 ‘Financial Reportingof InterestsinJointVentures’(asapplicable) notifiedpursuanttothe Companies(AccountingStandards)Rules,2006.
  37. 37. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comiii.The ConsolidatedFinancial Statementshave beencombinedonaline-by-line basisbyaddingthebookvaluesof like itemsof assets,liabilities,incomeandexpensesaftereliminatingintra-groupbalances/transactionsand resultingeliminationof unrealisedprofitsinfull.The amountsshowninrespectof reservescomprise the amountof the relevantreservesasperthe balance sheetof theparentcompanyand itsshare in the post-acquisitionincrease inthe relevantreservesof the entityto be consolidated.Financial interestinjointventureshasbeenaccountedforundertheproportionate consolidationmethod.iv.Investmentsinassociatesare accountedforusingthe equitymethod.The excessof costofinvestmentoverthe proportionateshare inequityof the associate asatthe date of acquisitionofstake isidentifiedasgoodwill andincludedinthe carryingvalue of the investmentinthe associate.The carrying amountof the investmentisadjustedthereafterforthe postacquisitionchange intheshare of netassetsof the associate.However,the share of lossesisaccountedforonlytothe extentof the cost of investment. Subsequentprofitsof suchassociatesare notaccountedforunlesstheaccumulatedlosses(notaccountedforbythe Group) are recouped.Where the associate preparesand presentsConsolidatedFinancial Statements,suchConsolidatedFinancial Statementsof theassociate are usedfor the purpose of equityaccounting.Inothercases,standalone financialstatementsof associatesare usedforthe purpose of consolidation.v. Minorityinterestrepresentsthe amountof equityattributable tominorityshareholders/partnersat the date on whichinvestmentinasubsidiary/partnershipfirmismade anditsshare ofmovementsinequitysince thatdate.Anyexcessconsiderationreceivedfromminorityshareholdersof subsidiaries/minoritypartnersofpartnershipfirmsoverthe amountof equityattributable tothe minorityonthe date of investmentisreflectedunderReservesandSurplus.vi Notesto the ConsolidatedFinancialStatements,representsnotesinvolvingitemswhichareconsideredmaterialandare accordinglydulydisclosed.Materialityforthe purpose isassessedinrelationtothe informationcontainedinthe ConsolidatedFinancial Statements.Further,additional statutoryinformationdisclosedinseparate financial statementsof the subsidiaryand/ora parenthavingnobearingonthe true and fairview of the ConsolidatedFinancialStatementshasnotbeendisclosedinthe ConsolidatedFinancial Statements.d. Use of estimatesThe preparationof ConsolidatedFinancialStatementsinconformitywithgenerallyacceptedaccountingprinciplesrequiresmanagementtomake estimatesandassumptionsthataffectthereportedamountsof assetsandliabilitiesanddisclosureof contingentliabilitiesonthe date of theConsolidatedFinancialStatementsandthe resultsof operationsforthe reportingperiods.Althoughthese estimatesare baseduponmanagement’sknowledge of currenteventsandactions,actual resultscoulddifferfromthose estimatesandrevisions,if any,are recognisedinthe currentand future periods.
  38. 38. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.come. Tangible assets,capital work-in-progressand depreciation/amortisationi) Fixedassets(grossblock) are statedathistorical costlessaccumulateddepreciationandimpairment,if any.Costcomprisesthe purchase price andanyattributable cost of bringingthe assetto itsworkingconditionforitsintendeduse.Building/specificidentifiable portionsof building,includingrelatedequipmentsare capitalisedwhenthe constructionissubstantiallycomplete oruponreceiptof the occupancycertificate,whicheverisearlier.ii) Inrespectof certainoverseashotel propertiesthathave commencedcommercial operations,arestatedinthe balance sheetattheirrevaluedamounts,lessanysubsequentaccumulateddepreciationandsubsequentaccumulated impairmentlosses.Revaluationsare performedwithsufficientregularitysuchthatthe carrying amountdoesnotdiffermateriallyfromthatwhichwouldbe determinedusingfairvaluesatthe balance sheetdate.Anyrevaluationincrease arisingontherevaluationof suchhotel propertiesiscreditedtothe revaluationreserve.iii) Capital work-in-progress(includingintangible assetsunderdevelopment) representsexpenditureincurredinrespectof capital projects/intangible assetsunderdevelopmentandiscarriedat cost.Cost includesland,relatedacquisitionexpenses,development/constructioncosts,borrowingcostscapitalisedandotherdirectexpenditure.iv) Depreciationonfixedassets(includingbuildingsandrelatedequipmentrentedoutandincludedundercurrentassetsas inventories) isprovidedonastraightline method,atthe ratesand inthemannerprescribedinScheduleXIV tothe CompaniesAct,1956, or basedon the estimatedusefullivesof assets,whicheverishigher,asapplicable.The useful livesasestimatedbythe managementisasfollows:Description Estimateduseful life (years)Leaseholdland Overthe effectivetermof the leaseBuildings 25-62Plantand machinery 4-20Computersandsoftware 2-6Furniture andfixtures 10-15Office equipment 8Vehicles 2-10Depreciationinrespectof assetsrelatingtothe powergeneratingdivisionof one of the subsidiarycompaniesisprovidedonthe straightline methodintermsof the Electricity(Supply) Act,1948 onthe basisof Central GovernmentNotificationNo.S.O266 (E) datedMarch 29, 1994, fromthe year
  39. 39. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comimmediatelyfollowingthe yearof commissioningof the assetsinaccordance withthe clarificationissuedbythe Central ElectricityAuthorityasperthe accountingpolicyspecifiedunderthe Electricity(Supply) AnnualAccountsRules,1985.Depreciationonrevaluedpropertiesof certainoverseashotelpropertiesischargedtostatementofprofitandloss.On subsequentsale orretirementof a revaluedproperty,the attributablerevaluationsurplusremaininginthe revaluationreserve istransferreddirectlytoreservesandsurplus.v) Leaseholdlandunderperpetualleaseare notbeingamortised.The leaseholdland, otherthanperpetual lease,are beingamortisedonatime proportionbasisovertheirrespective lease periods.f. Intangiblesi.ComputerSoftwareSoftwareswhich are notintegral partof the hardware are classifiedasintangiblesandare statedatcost lessaccumulatedamortisation.Softwaresare beingamortisedoverthe estimateduseful life of three tofive years,asapplicable.ii.Usage rightsThe Companyhas acquiredexclusive usage rightsfor30 yearsunderthe build,own,operate andtransferscheme of the publicprivate partnership(‘PPP’) scheme inrespectof propertiesdevelopedas automatedmultilevel carparkingandcommercial space andclassifiedthemunderthe “IntangibleAssets– Righton BuildingandRightonPlant& Machinery”.The Companyhas arrivedat the cost ofsuch intangibleassetsinaccordance withprovisionsof relevantAccountingStandards.The costofthese rightsisbeingamortisedoverthe concessionperiodinthe proportioninwhichthe actualrevenue receivedduringthe accountingyearbearstothe ProjectedRevenuefromsuchIntangiblestill the endof concessionperiodinaccordance withthe NotificationNo.G.S.R.298 (E) datedApril17, 2012 as notifiedinMinistryof Corporate Affairs(“MCA”) onthe Intangible Assetsof Schedule XIVof the CompaniesAct1956.iii.GoodwillThe difference betweenthe costof investmenttothe Groupin SubsidiariesandJointVenturesandthe proportionate share inthe equityof the investee companyasatthe date of acquisitionof stakeisrecognisedinthe ConsolidatedFinancial StatementsasGoodwill orCapital Reserve,asthe casemay be.g. InvestmentsInvestmentsare classifiedasnon-currentorcurrent,basedonmanagement’sintentionatthe timeof purchase.Investmentsthatare readilyrealisable andintendedtobe heldfornotmore than ayearare classifiedascurrentinvestments.All otherinvestmentsare classifiedasnon-currentinvestments.Trade investmentsare the investmentsmade fororto enhance the Company’sbusinessinterests.
  40. 40. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comCurrentinvestmentsare statedatlowerof cost and fairvalue determinedonanindividualinvestmentbasis.Non-currentinvestmentsare statedatcost and provisionfordiminutionintheirvalue,otherthantemporary,ismade inthe financial statements.Profit/lossonsale of investmentsiscomputedwithreference tothe average costof the investment.In respectof Life Insurance business,investmentsare made inaccordance withthe Insurance Act,1938 and Insurance Regulatory&DevelopmentAuthority(Investment) Regulations,2000. TheseInvestmentsare recordedatcoston date of purchase includingbrokerage andstatutorylevies.h. InventoriesInventoriesare valuedasunder:i) Land and plotsotherthanarea transferredtoconstructedpropertiesatthe commencementofconstructionare valuedatlowerof cost / approximate average cost/as re-valuedonconversiontostock andnet realisablevalue.Costincludesland(includingdevelopmentrights)acquisitioncost,borrowingcost,estimatedinternal developmentcostsandexternal developmentcharges.ii) ConstructedpropertiesotherthanSpecial EconomicZone (SEZ) projectsincludesthe costof land(includingdevelopmentrightsandlandunderagreementstopurchase),internaldevelopmentcosts,external developmentcharges,constructioncosts,overheads,borrowingcost,development/constructionmaterials,andisvaluedatlowerof cost/ estimatedcostandnetrealisable value.iii) Incase of SEZ projects,constructedpropertiesinclude internaldevelopmentcosts,externaldevelopmentcharges,constructioncosts,overheads,borrowingcost,development/constructionmaterials,andisvaluedatlowerof cost/ estimatedcost,andnetrealisable value.iv) Developmentrightsrepresentamountpaidunderagreementtopurchase land/developmentrightsand borrowingcostincurredbythe Companyto acquire irrevocable andexclusive licenses/developmentrightsinidentifiedlandandconstructedproperties,the acquisitionof whichisatanadvancedstage.v) Cost of construction/ developmentmaterial isvaluedatlowerof costor net realisablevalue.vi) Rentedbuildingsandrelatedequipmentsare valuedatcostlessaccumulateddepreciation.vii) Inrespectof the powergeneratingdivisionof one of the subsidiarycompanies,materials&componentsand stores& sparesare valuedat lowerof cost or netrealisable value.The costisdeterminedonthe basisof movingweightedaverage.Loose toolsare valuedatdepreciatedvalue.Depreciationhasbeenprovidedonastraightlinemethodat the rate of tenper centper annum.viii) Stocksformaintenance andrecreationalfacilities(includingstoresandspares) are valuedatcost or netrealisable value,whicheverislower.Costof inventoriesisascertainedonaweightedaverage basis.
  41. 41. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comix) Inventoriesat retail chainoutletsare valuedatlowerof cost,computedona movingweightedaverage basisandestimatednetrealisablevalue afterprovidingforcostof obsolescence andotheranticipatedlosseswhereverconsiderednecessary.x) Stock of foodand beveragesisvaluedatcostor netrealisable value,whicheverislower.Costcomprisesof costof material includingfreightandotherrelatedincidentalexpensesandisarrivedaton firstinfirstout basis.Slowmovinginventoryisdeterminedonmanagement estimates.i. Revenue recognitioni) Revenue fromconstructedpropertiesa) Revenue fromconstructedproperties,otherthanSEZprojects,isrecognisedonthe percentage ofcompletionmethod.Total sale considerationasperthe dulyexecutedagreement tosell /application(containingsalienttermsof agreementtosell),isrecognisedasrevenue basedonthe percentageof actual projectcostsincurredthereontototal estimatedprojectcost,subjecttosuchactual cost incurredbeing30 percentor more of the total estimatedprojectcost.Projectcostincludescostof land,costofdevelopmentrights,estimatedconstructionanddevelopmentcost,borrowingcostof suchproperties.The estimatesof the saleable areaandcostsare reviewedperiodicallyandeffectof anychange in suchestimatesisrecognisedinthe periodsuchchangesare determined.However,whenthe total projectcostis estimatedtoexceedtotal revenuesfromthe project,the lossisrecognisedimmediately.b) For SEZ projects,revenue fromdevelopmentchargesisrecognisedonthe percentage ofcompletionmethodinaccordance withthe termsof the Co-developerAgreements/Memorandumof Understanding(‘MOU’),readwithaddendum, if any.The total developmentchargesarerecognisedasRevenue onthe percentage of actual projectcostincurredthereontototal estimatedprojectcost,subjectto suchactual cost incurredbeing30% or more of the total estimatedprojectcost. The estimatedprojectcostincludesconstructioncost,development andconstructionmaterial,internal developmentcost,external developmentcharges,borrowingcostandoverheadsof suchproject.Revenue fromleaseof landpertainingtosuchprojectsisrecognisedinaccordance withthetermsof the Co-developerAgreements/MOU on accrual basis.ii) Sale of landand plotsSale of landand plots(includingdevelopmentrights) isrecognisedinthe financial yearinwhichtheagreementtosell /applicationcontainingsalienttermsof agreementtosell isexecuted.Where theCompanyhasany remainingsubstantialobligationsasperagreements,revenue isrecognisedon‘percentage of completionmethod’asper(i)(a) above.iii) Constructioncontractsa) Revenue fromcostpluscontractsisrecognisedwithrespecttothe recoverable costsincurredduringthe periodplusthe margininaccordance withthe termsof the agreement.
  42. 42. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comb) Revenue fromfixedprice contractisrecognisedunderpercentageof completionmethod.Percentage of completionmethodisdeterminedasaproportion of cost incurredupto the reportingdate to the total estimatedcontractcost.iv) Rental incomeRental income isrecognisedinthe statementof profitandlossonaccrual basisinaccordance withthe termsof the respective lease agreements.v) Powersupplya) Revenue frompowersupplytogetherwithclaimsmade oncustomersisrecognisedintermsofpowerpurchase agreementsenteredintowiththe respective purchasers.b) Revenue fromenergysystemdevelopmentcontractsisrecognisedonpercentage of completionmethodandaccountedfor inclusiveof excisedutyrecovered,whereapplicable.Accordingly,revenue isrecognisedwhencostincurred(includingappropriate portionof allocable overheads) onthe contract is estimatedat30 percentor more,of the total costto be incurred(includingallforeseeable lossesandanappropriate portionof allocable overheads) forthe completionofcontract, whereverapplicable.c) Revenue fromwindpowergenerationprojectsisrecognisedonthe basisof actual powersold(netof reactive energyconsumed),asperthe termsof the relevantpowerpurchase agreementswiththe purchasers.d).Sale of CertifiedEmissionReductions(CERs) andVoluntaryEmissionReductions(VERs) isrecognisedasincome onthe deliveryof the CERs/VERs to the customer’saccountand receiptofpayment.vi) Hospitalityservicesandrecreational facilityincomea) Subscriptionandnon-refundablemembershipfeeisrecognisedonproportionatebasisovertheperiodof the subscription/membership.b) Revenue fromfoodandbeverage isrecordednetof salestax /value addedtax and discounts.c) Salesof merchandise are statednetof goodssoldonconsignmentbasisasd) Revenue fromhotel operationsandrelatedservicesisrecognisednetof discountsandsalesrelatedtaxesinthe periodinwhichthe servicesare rendered.e) Income fromgolf operations,course capitation,sponsorshipetc.isfixedandrecognisedaspertheagreementwiththe parties,asandwhenservicesare rendered.f) Sale of cinematicketsisstatednetof discounts.vii) Life insurance
  43. 43. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.coma) Premiumisrecognisedasincome whendue.Unallocatedpremiumonlapsedpoliciesisnotrecognisedasincome unlessreinstated.b) For linkedbusiness,premiumincomeisrecognisedwhenthe associatedunitsare allocated.Top-up premium(i.e.premiumpaidinexcessof annual targetpremiumasperpolicycontract) arerecognisedassingle premium.Feesonlinkedpoliciesincludingfundchargesetc.are recoveredfromthe linkedfundandrecognisedinaccordance withtermsandconditionsof the policies.c) Premiumcededisaccountedatthe time of recognitionof premiumincome inaccordance withtreatyor in principle agreementwiththe reinsurers.viii) Retail chainoutletsIncome fromsalesisrecognisedwhensignificantrisksandrewardsinrespectof ownershipof thegoodsare transferredtothe customersandis statednetof trade discounts,value addedtaxesandestimatedsalesreturn,whereverapplicable.ix) Othersa) Revenue fromdesignandconsultancyservicesisrecognisedonpercentage of completionmethodto the extentitisprobable that the economicbenefitswillflow tothe groupandthe revenue canbereliablymeasured.b) Revenue inrespectof maintenance servicesisrecognisedonanaccrual basis,inaccordance withthe termsof the respective contract.c) Dividendincomeisrecordedwhenthe righttoreceive the dividendisestablishedbythe reportingdate.d) Service receiptsandinterestfromcustomersunderagreementstosell isaccountedforonanaccrual basisexceptincaseswhere ultimate collectionisconsidereddoubtful.e) Interestincome isaccountedforontime proportionbasistakingintoaccountthe amountoutstandingandthe applicable rate of interest.f) Share of profit/ lossfromfirmsinwhichthe Companyisa partnerisaccountedfor inthe financialyearendingon(or immediatelybefore) the date of the balance sheet.j. UnbilledreceivablesUnbilledreceivablesdisclosedunderNote 19 – ‘OtherCurrentAssets’representsrevenuerecognisedbasedonpercentage of completionmethod(asperParaNo.(i)(i) and (i)(ii) above),overand above the amountdue as perthe paymentplansagreedwiththe customers.k. Cost of revenuesi) Cost of constructedpropertiesotherthanSEZprojects,includescostof land(includingcostofdevelopmentrights/landunderagreementstopurchase),estimatedinternal developmentcosts,external developmentcharges,costof developmentrights,constructionanddevelopmentcost,borrowingcost,constructionmaterials,whichischargedtothe statementof profitandlossbased
  44. 44. BookpreparedbyCA Raju S Narayananwhocan be contactedatrajusnarayanan@financialconsultantindelhi.comon the percentage of revenue recognisedasperaccountingpolicy(i)(i) above,inconsonance withthe conceptof matchingcostsand revenue.Final adjustmentismade oncompletionof the applicableproject.For SEZ projects,costof constructedpropertiesincludesestimatedinternal developmentcosts,external developmentcharges,constructionanddevelopmentcost,borrowingcost,constructionmaterials,whichischargedtothe statementof profitandlossbasedon the percentage of revenuerecognisedasperaccountingpolicy(i)(i) above,inconsonance withthe conceptof matchingcostsand revenue.Finaladjustmentismade oncompletionof the applicableproject.ii) Costof landandplotsincludesland(includingdevelopmentrights),acquisitioncost,estimatedinternal developmentcostsandexternal developmentcharges,borrowingcostwhichischargedtothe statementof profitandlossbasedon the percentage of land/plottedareainrespectof whichrevenue isrecognisedasperaccountingpolicy(i)(ii) above tothe saleabletotal land/plottedareaofthe scheme,inconsonance withthe conceptof matchingcostand revenue.Final adjustmentismade on completionof the specificproject.l. Borrowing costsBorrowingcoststhat are attributable tothe acquisitionand/orconstructionof qualifyingassetsarecapitalisedaspartof the cost of such assets,inaccordance withAccountingStandard16 “BorrowingCosts”.A qualifyingassetisone thatnecessarilytakesasubstantial periodof time togetreadyfor itsintendeduse.Capitalisationof borrowingcostsissuspendedinthe periodduringwhichthe activedevelopmentisdelayeddue to,otherthantemporary,interruption.Allotherborrowingcostsarechargedto the statementof profitandlossasincurred.m. TaxationTax expense comprisescurrentincome tax anddeferredtax andisdeterminedandcomputedatthestandalone entitylevel.Currentincome tax ismeasuredat the amountexpectedtobe paidto the tax authoritiesinaccordance withthe IndianIncome Tax Act andin the overseasbranches/companiesaspertherespective tax laws.Deferredincometax reflectsthe impactof current yeartimingdifferencesbetweentaxable incomeandaccountingincome forthe yearandreversal of timingdifferencesofearlieryears.Deferredtax ismeasuredbasedonthe tax ratesand tax lawsenactedorsubstantivelyenactedat the balance sheetdate. Deferredtax assetsanddeferredtax liabilitiesacrossvariouscountriesof operationare notsetoff againsteach otheras the Companydoesnothave a legal rightto do so.Deferredtax assetsare recognisedonlytothe extentthatthere isreasonable certaintythatsufficientfuture taxableincome willbe available againstwhichsuchdeferredtax assetscanberealised.Insituations,where the Groupentityhasunabsorbeddepreciationorcarryforwardtaxlosses,deferredtax assetsare recognisedonly if there isvirtual certaintysupportedbyconvincingevidence thattheycanbe realisedagainstfuture taxable profits.At eachbalance sheetdate,the Groupreassessesunrecogniseddeferredtax assets.Itrecognisesunrecogniseddeferredtax assetstothe extentthatithas become reasonablycertain,asthe case

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