Pranav Constructions Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

i) Certain financial assets and liabilities
measured at fair value (refer accounting
policy on financial instruments)

ii) Net Defined Benefit Obligations

The Standalone Financial Statements have been

prepared on a going concern basis.

2.3 Use of estimates

The preparation of Standalone Financial
Statements in conformity with Ind AS requires
the management to make estimates and
assumptions that affect the reported amount
of assets and liabilities as at the Balance
Sheet date, reported amount of revenue
and expenses for the year and disclosures of
contingent liabilities as at the Balance Sheet
date. The estimates and assumptions used in
the accompanying financial statements are
based upon the management''s evaluation
of the relevant facts and circumstances
as at the date of the Standalone Financial
Statements. Actual results could differ from
these estimates. Estimates and underlying
assumptions are reviewed on a periodic
basis. Revisions to accounting estimates, if
any, are recognized in the period in which the
estimates are revised and in any future years
affected. Refer Note 3 for detailed discussion
on estimates and judgments.

2.4 Current and non-current classification

All assets and liabilities have been classified as
current and non-current as per the Company''s
normal operating cycle. The normal
operating cycle in respect of operations
relating to under construction real estate
project depends on signing of agreement,
size of the project, phasing of the project,
type of development, project complexities,
approvals needed and realisation of projects
into cash and cash equivalents. Accordingly,
project related assets and liabilities have
been classified into current and non-current
based on operating cycle of respective
projects. All other assets and liabilities have
been classified into current and non-current
based on a period of twelve months.

Summary of Material Accounting Policy2.5 Property, plant and equipment

Property, plant and equipment are stated
at historical cost less depreciation and

impairment loss (if any). Historical cost
includes expenditure that is directly
attributable to the acquisition of the items.

Cost comprises the purchase price and any
attributable/allocable cost of bringing the
asset to its working condition for its intended
use. The cost also includes direct cost and
other related incidental expenses. Revenue
earned, if any, during trial run of assets is
adjusted against cost of the assets. Cost also
includes the cost of replacing part of the
plant and equipment.

Subsequent costs are included in the
asset''s carrying amount or recognized as a
separate asset, as appropriate, only when
it is probable that future economic benefits
associated with the item will flow to the
Company and the cost of the item can be
measured reliably. The carrying amount of
any component accounted for as a separate
asset is derecognized when replaced. All
other repairs and maintenance are charged
to Statement of Profit and Loss during the
year in which they are incurred.

Depreciation methods, estimated useful
lives

The Company depreciates property, plant
and equipment over their estimated useful
lives using the written down value method.
The estimated useful lives of assets are
as follows:

Leasehold improvements are amortized over
the period of lease or estimated useful life,
whichever is lower.

Based on the technical experts assessment of
useful life, certain items of property plant and
equipment are being depreciated over useful
lives different from the prescribed useful
lives under Schedule II to the Companies
Act, 2013. Management believes that such
estimated useful lives are realistic and reflect
fair approximation of the period over which
the assets are likely to be used.

Depreciation on addition to property plant
and equipment is provided on pro-rata basis
from the date of acquisition. Depreciation
on sale/deduction from property plant
and equipment is provided up to the date
preceding the date of sale, deduction as the
case may be. Gains and losses on disposals
are determined by comparing proceeds
with carrying amount. These are included in
Statement of Profit and Loss under ''Other
Income''.

Depreciation methods, useful lives and
residual values are reviewed periodically
at each financial year end and adjusted
prospectively, as appropriate.

The carrying amount of property plant
and equipment is reviewed periodically
for impairment based on internal/external
factors. An impairment loss is recognised
wherever the carrying amount of assets
exceeds its recoverable amount. The
recoverable amount is the greater of the
asset''s net selling price and value in use.

Property plant and equipment are
derecognised either when they have been
disposed of or when they are permanently
withdrawn from use and no future economic
benefit is expected from their disposal.
The difference between the net disposal
proceeds and the carrying amount of the
asset is recognised in the Statement of Profit
and Loss in the year of de-recognition.

2.6 Other Intangible assets

Other Intangible assets are stated at
acquisition cost, net of accumulated
amortization and impairment loss (if any).

Cost comprises the acquisition price,
development cost and any attributable/
allocable incidental cost of bringing the asset
to its working condition for its intended use.

Other Intangible assets v.i.z. Computer
Software are amortized on written down
value method over a period of three years.

The amortization period and the amortization
method for an intangible asset with a finite
useful life are reviewed at least at each
financial year end.

The carrying amount of other intangible assets
is reviewed periodically for impairment based
on internal/external factors. An impairment
loss is recognised wherever the carrying
amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater
of the asset''s net selling price and value in
use. Gain or losses arising from derecognition
of an intangible asset are measured as the
difference between the net disposal proceeds
and the carrying amount of the asset and are
recognised in the Statement of Profit and Loss
when the asset is derecognised.

2.7 Development Rights

The Company executes projects through
Development Agreements (DA), wherein the
cooperative housing societies provides land
and the Company undertakes to develop
properties on such land (i.e. development
rights) and in lieu of cooperative housing
societies providing land, the Company
has agreed to transfer certain percentage
of constructed area. Transfer of such
constructed area in exchange of such
development rights is being estimated at fair
value and accounted for on the project being
awarded as the cost of development rights.
Subsequent to initial recognition, such liability
is remeasured on each reporting period
depending on the type of the arrangement,
to reflect the changes in the estimate, if any.
Cost of development rights is charged to
statement of profit and loss based on the
revenue recognised as explained in policy
under revenue recognition in consonance
with concept of matching cost and revenue.

2.8 Revenue Recognition

The Company has applied five step model as
set out in Ind AS 115 to recognise revenue in
these Standalone Financial Statements. The
Company satisfies a performance obligation
and recognises revenue over time, if one of
the following criteria is met:

a. The customer simultaneously receives
and consumes the benefits provided
by the Company''s performance as the
company performs; or

b. The Company''s performance creates
or enhances an asset that the customer

controls as the asset is created or
enhanced; or

c. The Company''s performance does not
create an asset with an alternative use
to the Company and the entity has
an enforceable right to payment for
performance completed to date.

For performance obligations where any of
the above conditions are not met, revenue
is recognised at the point in time at which
the performance obligation is satisfied. The
specific revenue recognition criteria are
described below:

I Revenue from sale of real estate
units

The Company recognises revenue,
on execution of agreement and when
control of the goods or services are
transferred to the customer, at an
amount that reflects the consideration
(i.e. the transaction price) to which the
Company is expected to be entitled in
exchange for those goods or services
excluding any amount received on behalf
of third party (such as indirect taxes).

The Company on its assessment
recognizes revenue over the period of
time based on the condition mentioned in
the para 35 (c) of Ind AS 115, as the asset
created does not have an alternative use
to the company and as per the terms
of the contract with the customer, the
Company has an enforceable right to
payment for performance completed till
date. Therefore, the company transfers
control of the goods and services over
the period of time and satisfies the
performance obligation over the period
of time, resulting in revenue being
recognized over the period of time.

Revenue is recognized at the transaction
price (net off transaction cost) as per the
sales agreement and/or agreement for
sale entered into with the customer. The
transaction price reflects the amount
which the company is expected to be
entitled in the exchange for the goods
and services excluding any amount
received on behalf of the third party
(such as indirect taxes).

The Company uses the cost based
input method for measuring progress
of performance obligation satisfied
over the period of time. Hence, revenue
is recognized in the proportion of the
actual project cost incurred over the total
estimated project cost. The project cost
excludes land costs and finance costs.
The management reviews and revises its
measure of progress periodically and are
considered as change in estimates and
accordingly, the effect of such changes
in estimates is recognised prospectively
in the period in which such changes
are determined.

Further, for development agreement,
wherein the land owner/cooperative
housing society provides land and
the Company undertakes to develop
properties on such land and in lieu
of land owner/ cooperative housing
societies providing land, the Company
has agreed to transfer certain
percentage of constructed area, the
revenue from the development and
transfer of constructed area in exchange
of such development rights is being
accounted on gross basis on the project
being awarded. Revenue is recognised
over time using input method, on the
basis of the inputs to the satisfaction of
a performance obligation relative to the
total expected inputs to the satisfaction
of that performance obligation.

Contract assets is the right to
consideration in the exchange for the
goods and services transferred to
the customer when the residential or
commercial units are sold. A portion of
the contract assets becomes due based
on the construction linked milestones
mentioned in the sales agreement. Such
due amount of the contract assets are
recognized as trade receivables in the
books of the company. Contract assets
balances represents the amount by which
amount of consideration due based on
satisfaction of performance obligation
exceeds the amount of payment due
based on milestones mentioned in the
contract with the customer.

Contract liability is the obligation to
transfer goods or services to a customer
when the residential or commercial
units are sold. A portion of the contract
liability is recognized as revenue based
on the satisfaction of performance
obligation. Contract liability balances
represents the amount by which
the amount of payment due as per
milestones mentioned in the contract
with customer exceeds the amount
of consideration due based on the
satisfaction of performance obligation.

Trade receivable represents the right
to an amount of consideration that is
unconditional and due based on the
demand mentioned in the contract with
the customer.

Advance from customers represents the
amount received from the customer in
excess of amount billed as per contract
with the customer.

II Interest Income

Interest income, including income
arising from other financial instruments,
is recognised using the effective interest
rate method and is included in ''Other
Income''.

III Dividend Income

Dividend Income is recognised when the
Company''s right to receive the payment
is established, which is generally when
shareholders approve the dividend.

IV Other income

Other items of income are accounted
as and when the right to receive such
income arises and it is probable that
the economic benefits will flow to the
Company and the amount of income can
be measured reliably.

2.9 Taxes

Income tax expense comprises current tax
expense and the net change in the deferred
tax asset or liability during the period.
Current and deferred taxes are recognized in
statement of profit and loss, except when they
relate to items that are recognized in other
comprehensive income or directly in equity,

in which case, the current and deferred tax
are also recognized in other comprehensive
income or directly in equity, respectively.

(a) Current income tax

The current income tax expense includes
income taxes payable by the Company. The
current tax payable by the Company in India
is computed as per the provisions of Income
Tax Act, 1961. Advance taxes and provisions
for current income taxes are presented in the
balance sheet after off-setting advance tax
paid and income tax provision arising in the
same tax jurisdiction and where the relevant
tax paying unit intends to settle the asset and
liability on a net basis.

(b) Deferred tax

Deferred income tax is recognised using the
balance sheet approach. Deferred income
tax assets and liabilities are recognised
for deductible and taxable temporary
differences arising between the tax base
of assets and liabilities and their carrying
amount, except when the deferred income
tax arises from the initial recognition of an
asset or liability in a transaction that is not
a business combination, affects neither
accounting nor taxable profit or loss at the
time of the transaction.

Deferred income tax assets are recognised
to the extent that it is probable that taxable
profit will be available against which the
deductible temporary differences and the
carry forward of unused tax credits and
unused tax losses can be utilised.

The carrying amount of deferred income tax
assets is reviewed at each reporting date
and reduced to the extent that it is no longer
probable that sufficient taxable profit will be
available to allow all or part of the deferred
income tax asset to be utilised.

Deferred tax assets and liabilities are
measured using substantively enacted tax
rates expected to apply to taxable income in
the years in which the temporary differences
are expected to be received or settled.

Deferred tax assets and liabilities are offset
when they relate to income taxes levied by
the same taxation authority and the relevant
entity intends to settle its current tax assets
and liabilities on a net basis.

2.10 LeasesThe Company as a lessee

The Company''s lease asset classes primarily
consist of leases for real estate properties.
The Company assesses whether a contract
contains a lease, at inception of a contract.
A contract is, or contains, a lease if the
contract conveys the right to control the
use of an identified asset for a period of
time in exchange for consideration. To
assess whether a contract conveys the right
to control the use of an identified asset, the
Company assesses whether: (i) the contract
involves the use of an identified asset (ii)
the Company has substantially all of the
economic benefits from use of the asset
through the period of the lease and (iii) the
Company has the right to direct the use of
the asset.

At the date of commencement of the lease,
the Company recognizes a right-of-use
asset ("ROU”) and a corresponding lease
liability for all lease arrangements in which
it is a lessee, except for leases with a term
of twelve months or less (short-term leases)
and low value leases. For these short¬
term and low value leases, the Company
recognizes the lease payments as an
operating expense on a straight-line basis
over the term of the lease.

Lease liability and ROU asset have been
separately presented in the Balance Sheet
and lease payments have been classified as
financing cash flows.

The Company applies single recognition
and measurement approach for all leases,
except for short term leases and leases of
low value assets. On the commencement
of the lease, the Company, in its Balance
Sheet, recognises the right of use asset
at cost and lease liability at present value
of lease payments to be made over the
lease term.

Subsequently, the right of use asset
are measured at cost less accumulated
depreciation and any accumulated
impairment loss. Lease liability are measured
at amortised cost using the effective interest
method. The lease payment made, are

apportioned between the finance charge
and the reduction of lease liability, and are
recognised as expense in the Statement
of Profit and Loss. Lease deposits given
are a financial asset and are measured at
amortised cost under Ind AS 109 since it
satisfies Solely Payment of Principal and
Interest (SPPI) condition. The difference
between the present value and the nominal
value of deposit is considered as right of use
asset and recognised over the lease term.
Unwinding of discount is treated as finance
income and recognised in the Statement of
Profit and Loss.

2.11 Inventories

The construction work in progress and
finished goods are valued at lower of cost
or net realisable value. Cost includes cost
of rates and taxes, construction costs, other
direct expenditure, allocated overheads
and other incidental expenses.

Work-in-Progress:

Work-in-progress represents costs incurred
for unsold areas of real estate development
projects or projects where revenue has
not yet been recognized. Unsold units are
valued at the lower of cost and net realizable
value. This includes construction costs,
rates and taxes, other directly attributable
expenses, allocated overheads, and other
incidental expenses.

Finished Goods:

Finished goods, including flats and shops,
are valued at the lower of cost and net
realizable value.

Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and
estimated costs necessary to make the sale.

2.12 Impairment of non-financial assets

The Company assesses at each year end
whether there is any objective evidence
that a non financial asset or a group of
non financial assets is impaired. If any such
indication exists, the Company estimates
the asset''s recoverable amount and the
amount of impairment loss.

An impairment loss is calculated as the
difference between an asset''s carrying

amount and recoverable amount. Losses
are recognized in Statement of Profit and
Loss and reflected in an allowance account.
When the Company considers that there
are no realistic prospects of recovery of the
asset, the relevant amounts are written off.
The recoverable amount of an asset or
cash-generating unit (as defined below) is
the greater of its value in use and its fair
value less costs to sell. In assessing value
in use, the estimated future cash flows are
discounted to their present value using a
pre-tax discount rate that reflects current
market assessments of the time value of
money and the risks specific to the asset.
For the purpose of impairment testing,
assets are grouped together into the
smallest group of assets that generates
cash in flows from continuing use that are
largely independent of the cash inflows of
other assets or groups of assets (the "cash¬
generating unit”).

An assessment is made at each reporting
date as to whether there is any indication
that previously recognised impairment
losses may no longer exist or may have
decreased. If such indication exists,
the Company estimates the asset''s or
CGU''s recoverable amount. A previously
recognised impairment loss is reversed only
if there has been a change in the assumptions
used to determine the asset''s recoverable
amount since the last impairment loss was
recognised. The reversal is limited so that
the carrying amount of the asset does not
exceed its recoverable amount, nor exceed
the carrying amount that would have been
determined, net of depreciation, had no
impairment loss been recognised for the
asset in prior years.

2.13 Cash and cash equivalents

Cash and cash equivalent in the balance
sheet comprise cash at banks, cash on hand
and short-term deposits with an original
maturity of three months or less, which are
subject to an insignificant risk of changes in
value.

For the purposes of the Statement of Cash
Flows, cash and cash equivalents include
cash on hand, cash in banks and short¬
term deposits, as defined above, net of

outstanding bank overdraft as they are
considered an integral part of company''s
cash management.