INTERNAL CONTROLS AND PROCEDURES MANUAL RE aa ae Transcon DEVELOPER S let's create a green world Sales Procedure Transcon Developers Private Limited September 2016 ° ’ > , 4 4 > , » > 2 . ® . > > » » 2Chartered Accountants A IYER JAIN K' DE co. As) HANDELWAL «. co. , 1102/03, 11th Floor, Lodha Supremus, Dr. E. Moses Road, Worli Nake, Worl, Mumbai - 400018. Tel. : 24938500 / 501/502 * Fax : 24938503 * Email : nareshain@jk.co.in 16" December, 2016 » Mr. Rajesh Hodge, ’ ‘Transcon Developers Private Li Transcon Triumph, ‘ Next to Oberoi Springs, » Off New Link Road, Andheri West, ; Mumbai - 400 053. ’ > Re: - Operations Manual — Sales Management > Dear Sir, > We enclose herewith a copy of Operations Manual ~ Sales Management ‘The Company on the key issues discussed in this manual should initiate necessary a remedial measures. lyer Jain Khandelwal & Co. Chartered Accountants > We are delighted at this opportunity to be of service to you. We were pleased to > discuss the contents of this manual with you in greater detail and we will provide any additional information/clarifications that you may require in future, > We thank the management and staff for the co-operation and support extended to us > during the course of this assignment. 2 Thanking you and with compliments, > tho Cordially, * ¥ ~ Khan = wn * > a 7 » » >ae CF Oe aI ow uetuw's » u err e ery & » > - = = Operations Manual: Sales | A ‘Tse 1.1 Maintenance of the Manual ‘This Manual should be reviewed for any changes that may be necessary & updated periodically once a year, preferably during the last quarter of each calendar year, to reflec: the latest developments that have a bearing on this manual. Such updation shall ensure that the Manual is relevant at all times and continues to serve its objectives efficiently. The principal responsibility for the review and maintenance of the Manual lies with the Internal Audit department. They shall ensure that: «The procedures are regularly reviewe «The Manual is amended for all changes in procedures and regulatory requirements (if at all any) ‘= all'User departments are informed about changes to the Manual; and The responsibility for accurate and complete adherence of the procedures lies with the respective individuals. 1.2. Amendment of the Manual The need for amendment of the Manual may arise due to: © Changes in applicable laws and regulations; © Need for improved processes to increase efficiency; Changes in functions and business activities; » Changes in organization structure and authority structures; » Changes in process owners ‘roles and responsibilities; and © Anyother reason. If any employee proposes amendments to the contents of this Manual, the employee (initiator) should initiate the request through ‘Request for Amendment Form (refer Annexure 1). The request for amendment will be processed as follows: ‘+ The initiator fills out a Request for Amendment Form (RAF) and forwards it to the Head Of Department (HOD); * The HOD, if he finds the request appropriate, proposes and forwards to the internal Aucit Head for review, if required after amendments; After appropriate approval, the Head — Internal Audit forwards it to the Director through Senior Vice President - Finance for authorization to Issue; = If proposed amendments are not accepted at any stage, notification to that effect together with reasons for rejection should be sent to the initiator by the personnel not accepting the amendment and through the proper channel; + If proposed amendments are accepted, the Internal Audit Head should ensure that suitable revisions are made to relevant sections of the Manual and the revised sections are distributed to the User departments. It is the responsibilty of each custodian of the Manual to ensure that they have properly received and documented the latest version and amended section(s) of the Manual. All proposals for revision whether approved or not, should be allotted a serial number and separately filed in serial order sequence in a file titled "Request for amendment”. In case of this Manual, on authorisation of the new or changed procedure, the Internal Audit Head will update the Manval and either distribute the revised Manual or relevant portions to all relevant User departments, Private & confidential Page 2ues SUUCTHU Ss FTF HSU THY Ve UT Urey Operations Manual: Sales Annexure 1 Serial No, Request for Amendment Form Name of initiator requesting amendments: Date of initiator requesting amendments: Amendment for procedure: Procedure no. / Section ref: Why is proposed amendment necessary (r2ason); Description of amendments needed (procedure where problem exists): Proposed amendments (solution after amendment to procedure): Reasons of rejection: Proposed by & dat (Head of Department) Reviewed by & date: (Head - Internal Audit) Authorized by & date: (Director) een nen See Private & confidential Page 3Operations Manual: Sales INDEX - F lacon PARTS Page > I _ 5 11 __| introduction 6 1.2__| Schedule Of Authority - 5 > 13 Planning and Budgeting - - 6 [14 Monitoring the performance of sales exceutive and understanding the 6 > __market needs and demands 5 + a » 1.5 | Income Accounting 7 v > * « > weuwwe -— a Private & confidential Page 4 wwuouvuvJoeewvu”vuae 2 ve SuUeoe fe > ~ } ) o 5 Operations —_— Introduction b Designations: anual: Sales | Objective: > This document details the procedure to be followed with regard to company's activities relating to sales and accounting and ensure consistency and controls to mitigate associated risks. > Reliable and timely information is essential f ‘on the performance of company, > ‘The Accounts and Finance function acts as the custodian of company’s fund and assets. The objective of this manual Is to assist the personnel in executing tasks as efficiently 25 possible with minimal time requirement and maximum accuracy. > The manual lays laid down = appropriate and informed judgment © The policies + Procedures * Controls = Authority levels The exposure levels for each day to day accounting of various transactions * Funds Management = Monthly closure + Finalization of accounts * Statutory Payments, etc, Abbreviation: Abbreviation Term oT Central Sales Tax FAM Financial Authority Matrix GRN Goods Received Note PO. Purchase Order VAT Value Added Tax Designation Abbreviation Director ‘Authorised Person Associate Vice President - Sales ‘AVP ‘Assistant General Manager AGM Based on software capabilities, incorporate the Authority Matrix duly approved by the Management in the form of security settings into the various softwares / programmes, in, ERP software, and payroll software, etc. ee Private & confidential Page S= weewwwewwewu i Eat CEES Vv wy Operations Manual: Sales 2) Standard Operating Procedura (SOP) Value for money Finance scheme offered Reason for not buying (if any) SARK K Private & confidential See. No, Systems & Procedures 1.3 __| Planning and Budgeting | Define guidelines for preparation of budgets along with timeliness for 1.3.1 | submissions of budgets to Accounts HO Planning and Budgeting | Sales team department. Present the annual budget to Directors. Provide 1.3.2 | clarfications/exolanations to queries raised. Modify and finalize is/Finance the budget based on recommendations of the Director Circulate the approved annual budget to all concerned personnal with 13.3 | aninstruction to treat it in a confidential manner. - MisFoanes aa | Retin one hard copy of the approved budge inthe Accounts ‘Accounts " Department a department BUDGET REVIEW AND MONITORING _ Obtain the details of budgeted performance vis vis actual 135 | performance at the end of every month from the site [_MisiFinance Review the budgeted performance vis-Svis actual performance, at 1.3.6 _| the end of every month to identify deviations, if any and to initiate | Mis/Finance necessary cemedial measures. Review the trend of actual performance against budget for quarter | 33-7 _| and analyses the variations for want of revision in budget. Mis/finance: | 1.3.8 | Obtain clarification / justification of not achieving the budget ‘Mis/Finance 1.3.9 | Finalize the revised budgets/forecast in consultation with the Director | MIS/Finance Present to the Directors revised budget along with justifications for 1.3.10 | major deviations of actual from the original budget for the financial | MiS/Finance year qq | MONITORING THE PERFORMANCE OF SALES EXCEUTIVE AND UNDERSTANDING THE MARKET NEEDS AND DEMANDS Ensure sales executive has knowledge of the following: tag |% Current market trend sales +1 | ¥ Current rate per square foot Executive Likes and wants of customer Th order to ensure that market trend are understood and customer's needs are fulfilled, understand from customer's following; Design of construction Design of flat 142 Amenities offeredOperations Manual: Sales See.No. Systems & Procedures Responsibility j LS | GENERAL GUIDELINES FOR INCOME ACCOUNTING Ensure adherence to the followin ) ¥ Revenue Recognition 15.2 |v Asper project completion ieonran ) Y Any other international Financial Reporting Standards and o is | ¥_ International Accounting Standards, if and as applicable. _ : ‘Obtain practical guidance an preparation and presentation of financial : statements from the above and determine the timing of recognition . 152 [of contract revenve/costs, as the project commencement, | yarcrnes ; implementation and completion may spread over to multiple accounting periods. Method used to determine the stage of completion of the Project. | ons 153 | ¥ Amountof advances received. | deo Amount of cost recognized and profit recognized | einen Refer annexure 2 [ ) PROCESS OF SALES/COLLECTION Obtain information on Stage of Projects finished by the Projects | Accounts ) 15.4 | department and cross verify with the data received from the Sales | department/ L department — mis , Obtain details of utilisation of the units from the Sales department 5 | along with justification for the same (overall profitability and other considerations), such as | Accounts ass | 5 Leave/License arrangement department ¥ Outright sale > ¥_ Self-use yee | Obtain copy of appropriate documentation ensuring control | Accounts | » procedures are being met for each of the above options department > DIRECT INCOME: i OUTRIGHT SALE ~Residential/Commercial other than mall > Receive original cheque along with handover copy having details of | 4 ite . 15.7 | name of customer, cheque number, amount, purpose from Sales and | 2°o TE Marketing dept. | ‘Accounts 5 1.5.8 | Maintain in excel details of cheques deposited into bank. aesarement 9 ‘After depositing into bank, ensure following before epproving cheque fi in Tally sales module: 5 Y Customer name and Flat No. on cheque Axeouris 159 | ¥ Ledger of recording income > ¥ Amount of cheque AeetTOe 4 ¥- Sevice Tax (i the construction is under process) | ¥_1% MVAT cheque at the time of registration 5 Ensure in case of booking after receipt of completion certificate, no Service Taxis chargeable, 3 isao | Resord in Tally breakup of receipts into various receipts head based | Accounts con type of payment received viz. token money, EMD, plinth, ete department 5 Ensure raraton is cleary wrttn based on payment received, rf We rT Private & confidential Page 7 eeuOperations Manual: Sales (Beene: Systems & Procedures Responsibility Receive/follow-up for en outstanding report on monthly basis along with target date for collection and other comments from the Sales 9 ous 15.1 | department, Cross verily the data with the status as per the Soles | Report recelved from the Sales department. Highlight variances, if | SePartment , any, to the Sales department. Prepare Bank Receipt Voucher and deposit the cheques in the bank | » | immediately in one of the following accounts as per instruction on the | sheet attached to the cheque. accounts » 1.5.12 | ¥ Normal bank account d . | Escrow account (if and where applicable) Spartmen 2 | Y Maintenance account , LL Others - - ? | Obtain interest statement from the Sales department for validation |. , | 15.3 | and approval. Validate and approve it and send it back to the Sales ) | " department | department for recovery (rom customers. __ i } e _ TRANSFER AND CANCELLATION Wes ) ~ Receive Inter-Office Correspondence from the Sales department slong 1.5.14 | with the approval for re-assignment/canecellation (Exhibit 1 for format 2 ene , cof approval for Transfer/ Cancellation Form). Ls Note the amount refundable to the customer. Verify if any brokerage 2 has been paid with respect to the sale in question. Ensure deduction fof brokerage fees paid [if any) from the amount refundable. ENSUE ying , 15.18 | approval according to the Authority Matrix before any such) deductions are made. Also ensure reversal of TDS. il > Ensure Service Tax amount Is deducted from the refund given to | Customer. | » Ensure if any transfer fees/Interest received are to be deducted as per > sis. | information from the Sales department, especially ifthe agreament | Accounts i has not been executed/registered for the sale being cancelled. Refer | department > ‘Transfer/Cancellation Policy for details. Prepare payment voucher and obtain approval according to the |. 3 | 15.27 | authority Matrix. Prepare cheque and obtain signatures as per the | accrue bank mandate. 5 | Recounts 1.5.18 | Arrange to handover cheque to customer. | decree 5 Refer Annexure 3 I ACCOUNTING/ INCOME BOOKING (%AGE COMPLETIONMETHOD) | > qs.a9 | Obtain budgeted total project cost for the project as per the budget | Accounts 5-18 | approved by the Directors |_ department 2 Ensure that the costs comprise of the following: | Y Costs that are directly related to the project (site labour costs, | cost of materials used, etc.) | 5.20 |% ©osts that are attributable to the contract activity in general and | Accounts | ea can be allocated to the project (insurance, cost of design and | department | technical assistance, and other construction overheads) Y Such other costs as are directly chargeable to the customers under the terms of the agreement. — a Private & confidential Page 8 rt UP Oe Le ae or”> 2 o > ” a 8 weuuwvev > » a o > 2 Operations Manual: Sales See. No. Systems & Procedures | Responsibility 15.21 Obtain the total sales revenue (received + receivable) for the projec from the Sales department along with the following documents: ¥ Copy of Agreement for Sale ¥ Details of installments payable linked to the %age completion ¥/_Details of advances received | Ensure exclusion of the following from the budgeted project cost: ¥ General administration costs for which reimbursement is not specified in the agreement ¥ Selling costs ¥ Research and Development costs for which reimbursement is not specified in the agreement Y Depreciation of idle plant and equipment not utilized for 3 particular contract. Accounts department Accounts lepartment 1.5.23 Ensure that all costs from the date of commencement to final completion of the project are considered, at appropriate stage during execution. Accounts department 15.24 Consider revision of the total sales revenue (if applicable) in view of | factors (based on Agreement for Sale) such as: | ¥ Escalation Clause (if applicable) Y Liquidated Damages, Penalties (if applicable) Increase in number of Units or are ina sq. ft. Y_ Variation Orders (details of change in the scope of work) Accounts department 15.25 Prepare an Excel sheet for Revenue Recognition details (Exhibit 2 for format of: Project-wise details of Revenue Recognition). ‘Accounts: department 1.5.26 Prepare journal voucher to book Realty Sales and Cost of Realy Sales. | Obtain approval ofthe JV according to the Authority Matrix and pass | ‘the entry into the finance module in respective business unit. Transfer all WIP sub-ledger balances to cost of project account, Book ‘the Realty Sales as Income and debit Sundry Debtors for the same. With regard to Cost of Realty Sales, credit Work: in- Progress. Accounts. department Sale of Assets 15.27 Receive request/documentation from the Administration department (or user dept. who identifies sale of asset) to raise 2 Tax Invoice for sale of an asset. Verity the following Approval from Director for the sale Year of purchase or construction Acquisition/Construction cost Details of major repairs/overhauling carried out Present condition ofthe equipment Details of defects and approximate cost of repairs thereto Estimated scrap value (if applicable). SARS 888 Accounts department 15.28 Prepare necessary Sales Invoice and delete the asset from the Fixed Assets Register. Pass necessary accounting entries for sale of Fixed Assets/disposal/write off, depreciation till date of sale/write off, and galn/loss on sale of asset in the accounting software. ‘Accounts department Private & confidentialeR Bere ee ete eC wweevuvowvrwv”v Le ov GG eeu ns Manual: Sales [SeeaNe, Symone & Procedures Responsibility Print the Journal Vouchers, initial them and forward them with the | 1.5.29 | supporting to Head Accounts for approval. Initial the Tax PacoUms 0 department : invoice as evidence of the accounting s “ago | Review the Journal Voucher and supporting and sign them offFfound | Assounts _— proper. |_ department 1531 ‘Submit the voucher and supporting to the Director for further Accounts approval. “department Verify the amount of cheque received from the party for the sal proceeds with the amount recorded in the party sub ledger account in| ee 5.32 | Tally, Reconcile differences, if ny, ore Forward the cheque to Officer Accounts to deposit in the designated 7 bank account. - Tass | Review insurance cover and ensure removal of s6l/sposed asets | Accounts from the coverage, to save on the premium. partment, Interest on Deposits (if any) Maintain an Investment Register (Tracker) with the following details: Y Name of Bank/Company ¥ Amount of Deposit ¥ Date of Deposit Aoounite 15.35 | ¥ Date of Maturity ; | ¥ Due Date of interest Segsriaet Rate of Interest Y Deposit Certificate Number _Lean of fixed deposit Nature of lean of encumbrance qase | Review the Register periodically. On the due date, follow-up with | Accounts bankers/company for the receipt of interest warrants/bank advice. _|_ department Receive the interest warrant/bank advice, validate the same and say _| Prepare Bank Receipt Voucher (BRV) debiting Bank | Accounts ‘Account and T.D.S Account and crediting the amount to other income | department Account. , ‘Accounts 15.38 _ | Ensure collecting T0S certificate from the bank copsnsment eT Private & confidential Page 10‘0 ‘9 VrUnem os uD » 3 4 a a > ° e ° =) > > REVENUE RECOGNITION Wame oF The customer ‘consideration a Private & confidential|ANNEXURE 3- APPROVAL FOR TRANSFER/CANCELLATION FORMAT ‘APPROVAL FORM FOR TRANSFER/CANCELLATION | CUSTOMER DETATS a IName of the Customer ib [Contact number Ti, BOOKING DETAILS fa Date of book D [Source of booking Name of Broker [i any) Tl APARTMENT DETAILS, [area HTower/Wing [Apartment no) Floor [Apartment Tyee: TAmenities within the apartment iV, CONSIDERATION DETAILS, a [Rate per sa ft Floor rise [Total rate No. of Car Parks [Total considerations inclusive of car parks, ic PAYMENT DETAILS. [Amount Received til date [RSI [Balance due & outstanding [Balance outstanding Interest due Brokerage Fee: A (Amount Received Less: Amounts to be recovered from the interest payable Brokerage fee [cancellation charges [Maintenance charges to be recovered Electricity charges to be recovered (Modification charges payable [Any other charges payable ie [fe-b) Amount to be refunded ‘A _|Coan taken B_|Name of the Loan Institution (C_ NOC to Mortgage Dated [NOC from Institution received