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Notes to Accounts of D B Realty Ltd.

Mar 31, 2014

1 The said loan was received for General Corporate purpose & it is secured by pledge of shares of DB Realty Ltd and carries fixed interest rate of 9.75% p.a on monthly rest. The tenure of the loan is of 36 months. The loan amount is repayable at the end of the tenure of the loan and interest cost is payable on a monthly basis. Redemption premium is payable at the end of the tenure so as to yield a nominal IRR of 14.75% p.a. on monthly rests.)

2 The said loan was received for the purpose of financing the costs of construction of the Company, investment or advances to subsidiaries and other group companies and for general corporate purposes and carries floating interest rate of 18.5% p.a. linked to IBMR, payable monthly. The loan is repayable at the end of 18 Months from the date of 1st disbursement of the loan. The loan is secured by pledge of 38,38,382 equity shares of Marine Drive Hospitality & Realty Private Limited (Formerly DB Hospitality Private Limited) held by the Company and mortgage and hypothication of two TDR certificates with cummulative TDR of 85,287sq. mt. along with escrow of receivables emanating from sale of this TDR certificates to be created by a partnership firm, in which the Company is the partner. The loan is guaranteed by personal guarantees of managing directors of the Company.

3 The said loan was received for the purpose of financing the cost of constructions of the project DB Skypark. Sahar, Andheri East of a joint venture in which the Company is a venturer and carries floating interest rate of 14.5% p.a. linked to I-Base, payable monthly. The loan is repayable in 12 quarterly instalments commencing from April 1st 2016. The loan is secured by

4. Exclusive charge on the land situated at project DB Skypark, Sahar, Andheri East which is a property of co-venturer (Eversmile Construction Company Private Limited) including all the structures thereon both present and future,

5. First pari-passu charge over Bacchuwadi property, Mumbai Central,

6. Corporate guarantee from YJ Realty & Aviation Pvt Ltd backed by first pari-passu charge over Dynamix Mall, Juhu,

7. Corporate guarantee from Milan Theatres Pvt Ltd backed by first pari-passu charge over Milan Mall, Santacruz, Mumbai.

8. Personal guarantee of one of the Managing Directors of the Company.

9. The said loan was received for the purpose of financing the costs of construction and other project implementation costs within its subsidiary companies and jointly controlled companies and carries floating interest rate of 13.5% p.a. linked to LHPLR, payable monthly. The loan was repayable in six structured quarterly installments ending on August, 2013 and the outstanding balance was due in August, 2013. The said loan has been restructured on November 23, 2013. The loan tenure has been extended by 18 months and hence the outstanding balance is due on January 31, 2015 and will carry floating interest rate of 16% p.a. linked to LHPLR. The Loan is guaranteed by personal guarantees of Managing Directors of the Company. Further, Esteem Properties Private Limited, a wholly owned subsidiary Company, has mortgaged its land at Sahar, Andheri in this regard. (The said loan has been classifi ed as Current Maturities of long term debt.)

10. Terms of Loan

The said loan was received as Loan against Residential Property and carries floating interest rate of 20% p.a subject to BPLR being constant. The tenure of the loan was of 6 months from the date of disbursement. The loan amount was repayable at the end of the tenure of the loan and interest cost was payable on a monthly basis.The said loan has been restructured on March 25, 2014. It is revolving and reviewed every year and carries floating interest rate of 20.75% p.a subject to BPLR being constant. The loan is guaranteed by personal guarantees of Managing Directors of the Company. Further, registered mortgage has been created on plot 2 & 3(A C) at Yerwada Pune which is a part of Inventories of the Company.

11. The said loans carry interest rates ranging from 10% to 15.25% and are repayable on demand.

12. The said ICD is interest free and is repayable on demand.

Notes:

1. The Company has pledged its investment of 986,613 Class A equity shares (PY NIL) of Neelkamal Realtors Tower Private Limited, it''s associate Company, in favour of Yes Bank which provided term loan of Rs. 350 crores, to the said associate.

2. The Company has pledged 88.79% (PY 88.79%) of its investment in equity & 54.53% (PY 54.53%) of its investment in ROCCPS of DB (BKC) Realtors Private Limited (Formerly known as M K Malls & Developers Private Limited) joint venture, in favour of banks which sanctioned term loans of Rs. 75 crores (PY NIL), to the said joint venture.

3. The Company has pledged its investment of 3,838,382 equity shares of Marine Drive Hospitality & Realty Pvt. Ltd., in favour of IL & FS Financials Services Ltd which provided term loan of Rs. 21.50 crores (PY NIL), to the Company

4 There is no return on investments in preference shares of Marine Drive Hospitality & Realty Private Limited ("DBH") during the year. Further, even though there is a huge investment in these preference shares, there is no control or significant infIuence on DBH. In view of the management, investments in these entities are considered strategic and long term in nature and the current market values and future prospects of these investments are signifi cantly in excess of company''s investment in DBH.

13 Security deposits include Rs. 3,575,000,000 given to various related parties for acquisition of development rights. The Company is in process of obtaining necessary approvals with regard to said properties and the said properties have current market values significantly in excess of carrying values and are expected to achieve adequate profitability on substantial completion of their projects.

12.3 Refer Note 29 for advance for share purchase amounting to Rs. 40,00,00,000/-.

12.4 In respect of project advances of Rs. 78,19,45,000 forming a part of long term loans and advances provided by the Company to its two Associate Companies, the required documents are under execution.

Particulars As at As at March 31, 2014 March 31, 2013 Rs. Rs.

14. Contingent Liabilities:

A. Guarantees and Securities provided to banks and financial institutions (in India and overseas) against credit facilities extended to:

a) Subsidiaries

- Real gem Buildtech Pvt. Ltd. (Guarantee provided) 3,000,000,000 3,000,000,000

- DB View Infracon Pvt. Ltd. (Security provided) (Refer note 27 (i)) 300,000,000 -

Sub Total (a) 3,300,000,000 3,000,000,000

b) Associates

- Neelkamal Realtors Tower Private Limited 3,500,000,000 4,125,000 (Guarantee provided) (Refer note 27 (ii)

Sub Total (b) 3,500,000,000 4,125,000

c) Jointly Controlled Entities (Guarantees given)

- Dynamix Realty (Towards vehicle loan) - 4,125,000

- DB (BKC) Realtors Private Limited (earlier known as M K Malls & Developers Private Limited) 750,000,000 750,000,000 (Refer note 27(iii) below)

Sub Total (c) 750,000,000 754,125,000

d) Companies under the same management

- Majestic Infracon Private Limited (earlier known as DBI Infracon Private 8,530,000,000 8,530,000,000 Limited / Tiger Trustees Private Limited) (Refer Note 27 (iv) below)

- Heaven Star Hotels (Delhi) Private Limited (earlier known as DB Hotels 1,700,000,000 1,700,000,000

(India) Private Ltd) (Guarantees given and Security provided) (Refer Note 27 (v) below)

- Pune Buildtech Private Ltd (Refer Note 27 (vi) below) 2,250,000,000

- BD&P Hotels (India) Private Ltd (Refer Note 27 (vi) below) 650,000,000 -

- Neelkamal Realtors and Builders Private Limited - 4,125,000 (Towards vehicle loan)

Sub Total (d) 13,130,000,000 10,234,125,000

e) Others

- Delux Hospitality Limited, Mauritius (earlier known as D B Hospitality 8,293,772,400 7,505,723,400 Limited) (Term Loan of USD 138 Million) & YJ Realty Ltd (Stand by Letter of Credit of USD 65 Million) (Overall Guarantee of the Company in USD 138 million) (Refer 27 (vii) below)

Sub Total (e) 8,293,772,400 7,505,723,400 Grand Total (a b c d e) 28,973,772,400 24,148,098,400

B. Other money for which the Company is contingently liable:-

i) Contingent payments to the holders of Redeemable Optionally Convertible Amount Amount Cumulative Amount Amount Preference Shares (ROCCPS), unascertainable unascertainable Compulsory Convertible unascertainable unascertainable Preference Shares (CCPS) and equity shares subscribed by other shareholders of an entity (in which the Company has joint control) - representing the amount payable or adjustable by the Company on exercise of various exit options by _such other holders based on agreement entered with them.

ii) Provisional attachment of Amount Amount assets under Prevention of Money unascertainable unascertainable Laundering Act, Amount Amount 2002 for: unascertainable unascertainable

DB Realty Limited (Refer Note 40) Dynamix Realty (Refer Note (iii) of A of 28)

The Company is a party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings (which is not quantifi able) to have any adverse effect on its financial conditions, results of operations or cash flows.

Notes:

(i) The Company has provided security of the company''s properties admeasuring 80,934 sq meters at Malad (East), Mumbai and Resham Bhavan located at Churchgate, Mumbai. The Company is confident that the subsidiary Company would fulfill the obligations under the credit facilities and does not expect any outflow of resources.

(ii) During the year, the Company has given Corporate Guarantee on behalf of Neelkamal Realtors Tower Private Limited, an associate. The said facilities are secured by (i) Exculsive charge by in respect of all that pieces and parcels of land of Byculla Division CS no.1906 admeasuring 19434.10 Square Meters and structure constructed or to be constructed thereon. (ii) All moveable fixed and current assets including recieveables (present and future) of the project "ORCHID HEIGHT".(iii) Escrow Account of project receivables (Orchid Heights). Exculsive charge by way of 30% of total shareholding of the Company which are held by D B Realty Limited (986,613 class A equity share). (iv) Personal Guarantee of Mr Shahid Balwa and Mr Vinod Goenka

(iii) No loan has been borrowed by DB (BKC) Realtors Private Limited towards a total corporate guarantee provided of Rs. 750,000,000 (Previous year: RS. 750,000,000).

(iv) In a earlier years, the Company had given corporate guarantee on behalf of Majestic Infracon Private Limited in which some of the directors of the Company are interested for facility availed from Punjab National Bank, Mumbai and Bank of India, Mumbai, for an amount aggregating Rs. 8,530,000,000 (Previous Year Rs. 8,530,000,000) The Company has also provided collateral securities of the company''s property admeasuring 80,934 sq meters at Malad (East), Mumbai (forming part of Inventory) with all including all development rights, unutilized Floor Space Index (FSI) / or such other FSI that may be granted in future.

The said facility is also secured by (a) pledge of investment of Majestic Infracon Private Limited consisting of 45,934,000 equity shares in Etisalat DB Telecom Private Limited; (b) a pari passu charge on its property consisting of Hotel Hilton, Mumbai. (c) Together with collateral securities of the company''s property admeasuring 80,934 sq meters at Malad (East), Mumbai with all including all development rights, unutilized Floor Space Index (FSI) / or such other FSI that may be granted in future.

The Company is confident that this Company would fulfill the obligations under the credit facilities and does not expect any outfiow of resources.

(v) During the year, the Company has given Corporate Guarantee and has pledged its entire shareholding of Marine Drive Hospitality & Realty Private Limited for loan availed by Heaven Star Hotels (Delhi) Private Limited (formerly known as DB Hotels (India) Private Limited), from IL & FS Financial Services Limited.

The said facility is also secured by (i) charge on Fixed Assets both present and future of the project other than project land

(ii) charge on all current assets including receipt of all the receivables related to the project (iii) charge on all bank accounts, insurance contracts (iv) Goan Hotels & Clubs Private Limited in Heaven Star Hotels (Delhi) Private Limited. The Company is confident that this Company would fulfill the obligations under the credit facilities and does not expect any outflow of resources.

(vi) During the year, the Company has given corporate guarantees and has given collateral securities of the company''s property DB Hill Park admeasuring 80,934 sq meters at Malad (East), Mumbai and Resham Bhavan located at Churchgate, Mumbai (forming part of Inventory), on behalf of BD&P Hotels (India) Private Limited and Pune Buildtech Pvt. Ltd.

The said facilities are also secured by (i) charge on Fixed Assets both present and future of the respective projects other than project land (ii) charge on all current assets including receipt of all the receivables related to the respective project (iii) charge on all bank accounts, insurance contracts of respective Company alongwith the following common securities (iv) a pari passu charge on its property consisting of Hotel Hilton, Mumbai.

The Company is confident that this company would fulfill the obligations under the credit facilities and does not expect any outfiow of resources.

(vii) In a earlier years, the Company had given corporate guarantee in respect of facilities availed by Delux Hospitality Limited, Mauritius (''DBH, Mauritius'') & YJ Realty Ltd from ICICI Bank - United Kingdom PLC of USD 138 millions - Rs. 8,293,772,400 as at the year end March 31, 2014 (Previous Year Rs. 7,505,723,400). For the purpose of the said corporate guarantee, the Company has received in its favour irrevocable and unconditional personal guarantees from the two interested directors covering the entire amount of such guarantees issued by the Company. (Conversion rate used Rs. 60.0998/- USD as per RBI conversion rate as on 28th March 2014 (PY Rs. 54.3893/- USD)

The said facilities are secured by (a) mortgage of its property consisting of Milan Mall in Milan Theatres Private Limited, Dynamix Mall in YJ Realty Private Limited, Orchid Garden in Conwood DB JV and Orchid Park in DB Realty Limited (against stand by letter of credit issued by ICICI Bank Limited as an integral part of the arrangement); (b) pledge of its entire shareholding of DB Hospitality Private Limited (''DBHPL'') in DBH, Mauritius (being the wholly owned subsidiary of DBHPL).

The Company is confident that these companies would fulfill their obligations under the credit facilities and does not expect any outfiow of resources.

B. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of Advances) amounting to Rs. Nil/- (Previous Year Rs. Nil) and estimated amount of contracts remaining to be executed other than capital account and not provided for amounting to Rs. NIL/- (Previous Year Rs. Nil).

15. Share of loss (net) from investments in partnership firms ("the fi rms") and investments in the firms is based on fi nancial statements of the firms as audited by other auditors except in case of a partnership firm i.e. DBS Realty (Refer Note 21.1). The audited financial statements/the auditors'' report on the financial statements of the partnership firms viz. Dynamix Realty ("Dynamix"), DBS Realty and Mira Real Estate Developers (formerly known as Mira Salt Works Company) in which the Company is a partner has reported certain signifcant matters as under:

A. Dynamix Realty:

i. Notes to financial statements and reference in Auditors'' report regarding the following matters.

1. The Firm had granted unsecured loan with interest to Kusegaon Realty Private Limited of Rs. 2,092,500,000/- and recovered principal amount in the year ended 31st March, 2011. The outstanding amount of Rs. 91,501,379/- (Previous year Rs. 91,501,379/-) represents interest receivable and is considered good for recovery, as in the opinion of the Partners they do not expect any shortfall in recovery thereof.

2. The Firm had granted unsecured loan to Nihar Construction Private Limited without interest and repayable on demand with no other terms for which the Partners had given their consent. The outstanding amount as of year-end is Rs. 87,150,000/- (Previous year Rs. 244,500,000/-) which is considered as good for recovery.

3. Trade Receivables outstanding more than 6 months of Rs. 944,656,340 which Includes dues of Rs. 838,154,114/- (Previous year Rs. 838,154,114/-) attached under the PML Act, for which the parties have given their acknowledgement. As regards balance receivable of Rs. 106,688,887/- (Previous year Rs. 44,990,913/-), the Partners of the Firm have taken effective steps for recovery and do not expect any short realisation. Therefore, the Partners of the Firm have framed their opinion that the same are good for recovery.

ii. Notes to financial statements and reference in Auditors'' report regarding a matter which is sub-judice:

The Firm had granted Loan to Kusegaon aggregating to Rs. 2,092,500,000/-, (the said loans) as upto 31.03.2010. As of 31.03.2014, the outstanding balance due from Kusegaon is Rs. 91,501,379/- (Previous year Rs. 91,501,379/-), being part of interest charged. Central Bureau of Investigation Anti-corruption Branch, New Delhi (CBI)) in the Supplementary (First) charge sheet RC.DAI.2009.A.0045 (2G Spectrum Case) has alleged that out of the said loans, through the Firm, Rs. 2,000,000,000/- is paid as illegal gratification to M/s Kalaignar TV Private Limited (Kalaignar) through Kusegaon and M/s Cineyug Films Pvt. Ltd., in lieu of the undue favours by accused public servants to Swan Telecom Private Limited (SWAN) in 2G Spectrum Case. The CBI have alternatively alleged in the said charge sheet that even if the said transaction of Rs. 2,000,000,000/- is accepted as genuine business transaction, the said loans obtained by Kalaignar for a consideration which being known as inadequate, constitutes commission of offence. The Firm is not an accused in the 2G Spectrum Case. In the opinion of the Partners of the Firm, these are preliminary charges based on investigation carried out by the CBI Team and the personnel named in the charge sheet are presumed to be innocent till their alleged offence is established after a fair trail. These preliminary charges have no impact on the business/operations of the Firm.

Further, consequent to above, a complaint was fi led under the Prevention of Money Laundering Act, 2002 (the PML Act) (Money Laundering Case) and the Adjudicating Authority vide Order dated 10.01.2012 has confi rmed the Provisional Attachment Order (the Order). The Firm being included as one of the defendant, properties in the form of bank balances and sundry debtors aggregating to Rs. 1,338,900,000/- (Previous Year Rs. 1,338,900,000/-) were provisionally attached, out of which, sundry debtors of Rs. 497,100,000/- (Previous year Rs. 497,100,000/-) stands realised after furnishing the information for which the requisite intimation has been made to the Prescribed Authority. An appeal has been preferred against the Order before the Appellate Tribunal under the PML Act. During the year, the Directorate of Enforcement has taken physical possession of bank balance of Rs. 3,599,925/-, against which the Firm has written a letter to convert the amount so recovered into Fixed Deposits which is pending. In view of the same, the said balance is continued to be shown as part of bank balance held in current account. Post Balance sheet date, the Directorate of Enforcement has filed a complaint before the Hon'' Court in connection with Money Laundering Case relating 2G Spectrum Case. In response thereto, the Firm, the Partners of the Firm and persons named in the said complaint have been issued summons for attendance. The parties hereto are yet to be provided a copy of the complaint.

As upto the date of signing of the financial statement the outcome of 2G Spectrum case/Money Laundering Case are sub judies.

iii. Notes to Financial statements relating to procedures pertaining to direct confirmations:

Balances of trade payables and trade receivables are subject to confirmation wherever applicable from respective parties & reconciliation, if any.

B. DBS Realty:

i. Notes to Financial statements relating to procedures pertaining to direct confirmations:

Trade Payables, Contractors'' Retention money and mobilization advance in the financial statements are subject to confirmation. As per the contention of the management the same are good for payable/ receivable.

C. Mira Real Estate Developers:

i. Notes to financial statements regarding a matter which is sub-judice:

The Salt Department, Union of India has filed a petition and the partnership firm has filed cross petitions towards their respective claim for exclusive title over the salt pan land. Though the matter is sub-judice, the firm is of opinion that it has a rightful claim over the ownership of the salt pan land and will be in a position to defend its title.

ii. Notes to Financial statements relating to procedures pertaining to direct confirmations:

Trade Payables, other current liabilities, other current assets and other non-current assets are subject to confirmation.

16. During an earlier year, the Company acquired 1/3rd stake in Mahal Pictures Private Limited by paying Rs. 892,225,001. By and under a Share Purchase Agreement dated December 2, 2010, the Company agreed to purchase additional 1/3rd stake from another shareholder vide a Share Purchase Agreement and paid advance of Rs. 400,000,000. However, as per the said agreement, such purchase is subject to settlement of a suit which is pending at the High Court of Judicature at H''ble Bombay High Court. The Company has became a party to the said suit on account of demise of that Shareholder The Company, based on legal advice is conf ident of a favorable resolution in getting the matter resolved favourably so as to be able to develop the underlying land parcel; and accordingly the said advance paid is considered to be good of recovery.

17. One of the company''s wholly owned subsidiary (i.e. Esteem properties private Limited) has plans to construct/ develop/ market project/s on its land, which are delayed due to title dispute concerning the previous landlords. The Company has filed a special leave petition before the Supreme Court of India which is pending and a status quo order has been passed by the Supreme Court of India. The Company considers its investment in the said subsidiary as long term and strategic in nature. As of March 31, 2014, the company''s investment in and Loan to this subsidiary aggregate Rs. 312,018,720 (previous year Rs. 312,018,720) and Rs. 1,124,970,130 (previous year Rs. 1,120,577,945) respectively. The Company has been legally advised that the outcome of the petition before the High Court of Bombay against the reversed order & that of the Supreme Court of India against the order of the Bombay High Court in PIL could be in favor & accordingly the management is confi dent about the positive outcome and does not believe that there is any diminution in the value of its investments and considers the loan given as good of recovery.

18. The Company has incurred a sum of Rs. 132,931,001 (previous year Rs. 155,772,388) towards acquisition of development rights pertaining to a SRA redevelopment project, which is the subject matter of litigation. There are five litigations pending regarding the same. Based on legal advice, the Company believes that it has a good chance of getting the project and is confident of commencement of redevelopment activities shortly and accordingly the said amount is considered as good of recovery.

32. a. The Company has not made any provision for tax for the current financial year (previous year Rs. 31,500,000) as the Company has incurred tax losses and no book profit as per Section 115JB for the purpose of MAT.

b. MAT Credit Entitlement of Rs. 37,500,000 (Previous Year Rs. 37,500,000) is based on future performance of the Company as projected by the Management and it has been relied upon by the Auditors.

c. The Company has also recognized deferred tax asset in accordance with Accounting Standard - 22 "Accounting for taxes on income" The components of the deferred tax asset recognized for the period are as follows:

19. The Company has investments in certain subsidiaries, jointly controlled entities and associates aggregating Rs. 408,054,120 (Previous year Rs. 2,046,339,120) and loans and advances outstanding aggregating Rs. 2,625,383,640 (Previous year Rs. 3,043,702,747) as at March 31, 2014. While such entities have incurred losses during the year and have negative net worth as at the year end, the underlying projects in such entities are in the early stages of real estate development and are expected to achieve adequate prof tability on substantial completion and/ or have current market values of certain properties which are in excess of the carrying values. The Company considers its investments in such entities as long term and strategic in nature. Accordingly, no provision is considered necessary towards diminution in the value of the company''s investments in such entities or in respect of loans and advances advanced to such entities, which are considered good and fully recoverable.

20. Managerial remuneration:

a) In view of inadequate profit during the year, the Company has not paid a managerial remuneration (previous year Rs. 6,000,000) to any managing directors. Further, during the previous year, Managerial Remuneration paid of Rs. 2,400,000 by the Company had exceeded the limits specified under Schedule XIII read with Sec 349, 350 & 198 of the Companies Act, 1956,. The Company has recovered such excess remuneration of Rs. 2,400,000 from the directors during the current year.

a) Contributions to provident and other funds are not made as per declarations of non deduction received from the respective directors. Further, provision for gratuity and leave encashment (amount unascertained) payable to the managing directors is waived by them. Such waivers have been approved by the Board of Directors.

b) During the year, one of the subsidiary company appointed one of the managing directors of the Company as its managing director for overall responsibilities and functions of the said subsidiary company but it has not paid any remuneration (Previous Year Rs. 13,500,000), in the absence of adequate prof it. Excess remuneration paid by the said subsidiary company in previous year of Rs. 18,692,700 has been recovered during the current year.

c) Sitting fees amounting to Rs. 800,000 (Previous Year Rs. 980,000) have been paid to the directors.

21. Dynamix Realty ("Partnership Firm") in which DB Realty Limited ("Company") is a partner, had granted Loans to Kusegaon aggregating to Rs. 2,092,425,485, (the said loans) as upto 31st March 2010. As of 31st March, 2014, the outstanding balance due from Kusegaon is Rs. 91,501,379, being part of interest charged. Central Bureau of Investigation Anti-corruption Branch, New Delhi) in the Supplementary (First) charge sheet RC.DAI.2009.A.0045 (2G Spectrum Case) has alleged that out of the said loans granted, Rs. 2,000,000,000 is paid as illegal gratification to M/s Kalaignar TV Private Limited through Kusegaon and M/s Cineyug Films Pvt. Ltd., in lieu of the undue favours by accused public servants to Swan Telecom Private Limited in 2G Spectrum Case. The Central Bureau of Investigation has alternatively alleged in the said charge sheet that even if the said transaction of Rs. 2,000,000,000 is accepted as genuine business transaction, the interest charged being inadequate is a favor to a government servant, hence constitutes commission of offence. In the opinion of the Partners of the firm and the Management of the Company, these are preliminary charges based on investigation carried out by the Central Bureau of Investigation Team and the personnel named in the charge sheet is presumed to be innocent till their alleged offence is established after a fair trial. These preliminary charges have no impact on the business/operations of the firm.

Further, The Deputy Director Enforcement vide his attachment order No: 01/2011 dt. 30th August, 2011 has provisionally attached company''s bank account number 05211011001053 maintained with Oriental Bank of Commerce, Goregaon (East), having Bank Balance of Rs. 6,892,967/-. Further the Enforcement Directorate has also attached two fiats belonging to the Company situated at Goregaon (East). The combined value of these two flats as shown in company''s financial statement of Rs. 10,765,400/- at the time of attachment (WDV as on 31st March, 2014 is Rs. 8,663,544 (PY. 9,119,520). Also, a loan amounting to Rs. 503,963,329/- (at the time of attachment) advanced to Goan Hotels & Clubs Pvt. Ltd. has also been provisionally attached. However, the above loan was converted into the ROCCPS of DB Hospitality Limited (holding Company of Goan Hotels & Clubs Private Limited) before the provisional attachment Order via tripartite confirmation. This fact has been brought to the notice of Enforcement Directorate vide this Office Letter dated 20th September, 2011.

This provisional attachment order has been upheld by adjudicating authority vide order number 116/2011 dt. 10th Jan''2012. Appeal has been filed on 19th March, 2012 with Appellate Tribunal under prevention of money laundering act (PML Act). The appeal is pending before appellate tribunal for PML.

During the year, the Directorate of Enforcement has taken physical possession of bank balance of Rs. 6,892,967/-, against which the Firm has written a letter to convert the amount so recovered into Fixed Deposits, till date ED has not entertained this request. In view of the same, the said balance is shown as part of advances recoverable in cash or in kind. Post Balance sheet date, the Directorate of Enforcement has filed a complaint before the Hon''ble Court in connection with Money Laundering Case relating 2G Spectrum Case. In response thereto, the Firm, the Partners of the Firm and certain Personnel''s / certain Directors of the Company have been issued summons for attendance. The requisite proceedings are in progress.

22. The disclosures under the Accounting Standard 15

A) Defined Contribution Plan:

* Further, the Company has inventorised contribution to Provident Fund of Rs. 23,535 (Previous Year NIL) during the year.

# Further, the Company has inventorised contribution to ESIC of Rs. 14,228 (Previous Year NIL) during the year.

C) Other Long Term Employee Benefit:

The compensated absences charged for the year ended March 31, 2014, based on actuarial valuation carried out using the Projected Unit Credit Method, amounting Rs. 1,560,534 (Previous Year Rs. 14,292,279) has been recognized in the statement of Profit and Loss. Further, the Company has inventorised compensated expenses of Rs. 66,787 (Previous Year Rs. NIL) during the year.

23. Segment Reporting:

The Company is mainly engaged in the business of real estate development viz. construction of residential buildings/ commercial complexes and activities connected and incidental thereto. The Company has also placed its bid for certain infrastructure projects for the outcome of which is awaited. On that basis, the Company has only one reportable business segment - real estate development, the results of which are embodied in the financial statements. The Company operates in only one geographical segment - within India.

24. In respect of company''s investment in Association of Person (AOP), each executing a single project, the company''s share in the expenses of such project are shown as accumulated losses, is recognized only when such loss will be debited to members account in the books of such AOPs. As per the projections of the management, each of such projects is expected to make a good profit on completion.


Mar 31, 2013

1. COMPANY BACKGROUND:

DB Realty Limited (the "Company") is public company domiciled in India. The company was initially incorporated in 2007 as a private limited company and thereafter listed with National Stock Exchange and Bombay Stock Exchange on February 24, 2010. The Company is a Real Estate Development Company that is focused on residential, commercial, retail and other projects, such as mass housing and cluster redevelopment. The company is jointly promoted by Mr. Vinod K. Goenka and Mr. Shahid Balwa.

2. In a previous year, the Company had given Corporate Guarantees on behalf of two companies in which some of the directors of the Company are interested. The said companies are however, not a part of DB consolidated group. Such guarantees are:

(i) In respect of facilities availed by Majestic Infracon Private Limited, from Punjab National Bank, Mumbai and Bank of India, Mumbai, for an amount aggregating Rs. 8,530,000,000 (Previous Year Rs. 8,530,000,000).

(ii) In respect of facilities availed by DB Hospitality Limited, Mauritius (‘DBH, Mauritius'') & YJ Realty Ltd from ICICI Bank - United Kingdom PLC of USD 138 millions – Rs. 7,505,723,400 as at the year end March 31, 2013 (Previous Year Rs. 7,059,597,000) .

The outstanding balances as at March 31, 2013 in respect of aforesaid guarantees are aggregating Rs. 16,035,723,400 (Previous Year Rs. 15,589,597,000). For the purpose of the said corporate guarantees, the Company has received in its favour irrevocable and unconditional personal guarantees from the two interested directors covering the entire amount of such guarantees issued by the Company.

The aforesaid facilities are secured as under:

(iii) Majestic Infracon Private Limited: by (a) pledge of its shareholding consisting of 45,934,000 equity shares in Etisalat DB Telecom Private Limited; (b) a pari passu charge on its property consisting of Hotel Hilton, Mumbai. (c) Together with collateral securities of the Company''s property admeasuring 80,934 sq meters at Malad (East), Mumbai with all including all development rights, unutilized Floor Space Index (FSI) / or such other FSI that may be granted in future.

(iv) DBH Mauritius: by (a) mortgage of its property consisting of Milan Mall in Milan Theatres Private Limited, Dynamix Mall in YJ Realty Private Limited, Orchid Garden in Conwood DB JV and Orchid Park in DB Realty Limited (against stand by letter of credit issued by ICICI Bank Limited as an integral part of the arrangement); (b) pledge of its entire shareholding of DB Hospitality Private Limited (‘DBHPL'') in DBH, Mauritius (being the wholly owned subsidiary of DBHPL).

The Company is confi dent that these companies would fulfi ll their obligations under the credit facilities and does not expect any outfl ow of resources.

3. During the year, the Company has given Corporate Guarantee on behalf of DB Hotels (India) Private Limited which is not a part of DB consolidated group. The said facility is secured by (i) charge on Fixed Assets both present and future of the project other than project land (ii) charge on all current assets including receipt of all the receivables related to the project (iii) charge on all bank accounts, insurance contracts (iv) pledge of its entire shareholding of DB Hospitality Private Limited (‘DBHPL'') and Goan Hotels & Clubs Private Limited in DB Hotels (India) Private Limited. The Company is confi dent that this company would fulfi ll the obligations under the credit facilities and does not expect any outfl ow of resources.

4. Share of loss (net) from investments in partnership fi rms ("the fi rms") and investments in the fi rms is based on fi nancial statements of the fi rms as audited by other auditors. The audited fi nancial statements/the auditors'' report on the fi nancial statements of the partnership fi rms viz. Dynamix Realty ("Dynamix"), DBS Realty and Mira Real Estate Developers (formerly known as Mira Salt Works Company) in which the Company is a partner has reported certain signifi cant matters as under:

A. Dynamix Realty:

i. Notes to Financial statements relating to loans and advances :

1. As at the balance sheet date, the other partner (being an entity in which a director of the Company is interested) viz. Eversmile Construction Company Private Limited (ECC) is having a debit balance of Rs. 492,920,341 (Previous Year Rs. 423,844,175). As represented by partners of the Firm, the said balance shall be recovered in due course of time and hence, the same is considered good of recovery.

2. Dynamix has granted unsecured loans with or without interest as applicable and repayable on demand with no other terms, for which the Partners have given their consent. In the opinion of the Firm, the outstanding amount as of year-end of loan and interest thereon of Rs. 374,547,577 (Previous year Rs. 387,925,377) is considered good for recovery.

ii. Notes to Financial statements relating to Trade receivables :

Trade receivable includes outstanding for more than 1 year of Rs. 860,145,027 (Previous year Rs. 860,466,407) which are inclusive of debtors amounting to Rs. 838,154,114 (Previous year Rs. 838,154,114) attached under the PML Act. In the opinion of the partners of the fi rm, they do not expect any shortfall in recovery.

iii. Notes to fi nancial statements and reference in Auditors'' report regarding a matter which is sub-judice:

Dynamix had granted Loan to Kusegaon aggregating to Rs. 2,092,500,000, (the said loans) as upto 31.03.2010. As of 31.03.2013, the outstanding balance due from Kusegaon is Rs. 91,501,379 (Previous year Rs. 91,501,379) being part of interest charged. C entral Bureau of Investigation Anti-corruption (Branch, New Delhi CBI) in the Supplementary (First) charge sheet RC.DAI.2009.A.0045 (2G Spectrum Case) has alleged that the Key Management Personnel of D B Group of Companies have out of the said loans granted, paid

Rs. 2 ,000,000,000 as illegal gratifi cation to M/s Kalaignar TV Private Limited (Kalainagar) through Kusegaon and M/s Cineyug Films Pvt. Ltd., in lieu of the undue favours by accused public servants to Swan Telecom Private Limited (Swan) in 2G Spectrum Case. The Central Bureau of Investigation have alternatively alleged in the said charge sheet that even if the said transaction of Rs. 2,000,000,000 is accepted as genuine business transaction, the said loans obtained by Kalaignar for a consideration which being known as inadequate, constitutes commission of offence. In the opinion of the Partners of the fi rm, these are preliminary charges based on investigation carried out by the Central Bureau of Investigation Team and the key management personnel named in the charge sheet are presumed to be innocent till their alleged offence is established after a fair trial. These preliminary charges have no impact on the business/operations of the fi rm.

Further, consequent to above, a complaint was fi led under the Prevention of Money Laundering Act, 2002 (the PML Act) and the Adjudicating Authority vide Order dated 10.01.2012 has confi rmed the Provisional Attachment Order (the Order). The Firm being included as one of the defendant, properties in the form of bank balances and sundry debtors aggregating to Rs. 1,338,900,000 (previous year Rs. 1,338,900,000) were provisionally attached, out of which, sundry debtors of Rs. 497,100,000 (Previous year Rs. 497,100,000) stands realized after furnishing the information for which the requisite intimation has been made to the Prescribed Authority. Upon reaching fi nality in the 2G Spectrum Case, the outcome of the Order shall become fi nal. Further, an appeal has been preferred against the Order before the Appellate Tribunal under the PML Act.

iv. Notes to Financial statements relating to procedures pertaining to direct confi rmations: Balances of unsecured loans, trade payables, trade receivables, loans granted & trade advances are subject to confi rmation wherever applicable from respective parties & reconciliation, if any.

B. DBS Realty:

i. Notes to Financial statements relating to procedures pertaining to direct confi rmations:

Trade Payables, Contractors'' Retention money and mobilization advance in the fi nancial statements are subject to confi rmation. As per the contention of the management the same are good for payable/ receivable.

C. Mira Real Estate Developers:

i. Notes to fi nancial statements and reference in Auditors'' report regarding a matter which is sub-judice:

The Salt Department, Union of India has fi led a petition and the partnership fi rm has fi led cross petitions towards their respective claim for exclusive title over the salt pan land. Though the matter is sub-judice, the fi rm is of opinion that it has a rightful claim over the ownership of the salt pan land and will be in a position to defend its title.

ii. Notes to Financial statements relating to procedures pertaining to direct confi rmations:

Trade Payables, other current liabilities, other current assets and other non-current assets are subject to confi rmation.

5. During an earlier year, the Company acquired 1/3rd stake in another company by paying Rs. 892,225,001. By and under a Share Purchase Agreement dated December 2, 2010, the Company agreed to purchase additional 1/3rd stake from another shareholder vide a Share Purchase Agreement and paid advance of Rs. 400,000,000. However, as per the said agreement, such purchase is subject to settlement of a suit which is pending at the High Court of Judicature at H''ble Bombay High Court. The Company, based on legal advice is confi dent of a favorable resolution in getting the matter resolved favourably so as to be able to develop the underlying land parcel; and accordingly the said advance paid is considered to be good of recovery.

6. One of the Company''s wholly owned subsidiary (i.e. Esteem properties private Limited) has plans to construct/ develop/ market project/s on its land, which are delayed due to title dispute concerning the previous landlords. The Company has fi led a special leave petition before the Supreme Court of India which is pending and a status quo order has been passed by the Supreme Court of India. The Company considers its investment in the said subsidiary as long term and strategic in nature. As of March 31, 2013, the Company''s investment in and Loan to this subsidiary aggregate Rs. 312,018,720 (previous year Rs. 312,018,720) and Rs. 1,120,577,945 (previous year Rs. 1,120,577,945) respectively. The company has been legally advised that the outcome of the petition before the High Court of Bombay against the reversed order & that of the Supreme Court of India against the order of the Bombay High Court in PIL could be in favor & accordingly the management is confi dent about the positive outcome and does not believe that there is any diminution in the value of its investments and considers the loan given as good of recovery.

7. The Company has incurred a sum of Rs. 155,772,388 (previous year Rs. 134,772,050) towards acquisition of development rights pertaining to a SRA redevelopment project, which is the subject matter of litigation. Based on legal advice, the Company believes that it has a good chance of getting the project and is confi dent of commencement of redevelopment activities shortly and accordingly the said amount is considered as good of recovery.

8. Provision for tax made for the current year pertains to Minimum Alternate Tax (MAT) i.e. Tax on Profi ts made under section 115JB of Income

Tax act, 1961 amounting to Rs. 31,500,000.

The Company has also recognized deferred tax asset in accordance with Accounting Standard - 22 "Accounting for taxes on income''''. The components of the deferred tax asset recognized for the period are as follows:

9. The Company has investments in certain subsidiaries, jointly controlled entities and associates aggregating Rs. 2,046,339,120 (Previous year Rs. 2,044,533,140) and loans and advances outstanding aggregating Rs. 3,043,702,747 (Previous year Rs. 3,172,489,420) as at March 31, 2013. While such entities have incurred losses during the year and have negative net worth as at the year end, the underlying projects in such entities are in the early stages of real estate development and are expected to achieve adequate profi tability on substantial completion and/ or have current market values of certain properties which are in excess of the carrying values. The Company considers its investments in such entities as long term and strategic in nature. Accordingly, no provision is considered necessary towards diminution in the value of the Company''s investments in such entities or in respect of loans and advances advanced to such entities, which are considered good and fully recoverable.

10. Dynamix Realty ("Partnership Firm") in which DB Realty Limited ("Company") is a partner, had granted Loan to Kusegaon aggregating to Rs. 2,092,425,485, (the said loans) as upto 31st March 2010. As of 31st March, 2012, the outstanding balance due from Kusegaon is Rs. 91,501,379, being part of interest charged. Central Bureau of Investigation Anti-corruption Branch, New Delhi) in the Supplementary (First) charge sheet RC.DAI.2009.A.0045 (2G Spectrum Case) has alleged that the Key Management Personnel of D B Group of Companies have out of the said loans granted, paid Rs. 2,000,000,000 as illegal gratifi cation to M/s Kalaignar TV Private Limited through Kusegaon and M/s Cineyug Films Pvt. Ltd., in lieu of the undue favours by accused public servants to Swan Telecom Private Limited in 2G Spectrum Case. The Central Bureau of Investigation has alternatively alleged in the said charge sheet that even if the said transaction of Rs. 2,000,000,000 is accepted as genuine business transaction, the interest charged being inadequate is a favor to a government servant. Hence, constitutes commission of offence. In the opinion of the Partners of the fi rm and the Management of the Company, these are preliminary charges based on investigation carried out by the Central Bureau of Investigation Team and the key management personnel named in the charge sheet are presumed to be innocent till their alleged offence is established after a fair trial. These preliminary charges have no impact on the business/ operations of the fi rm.

Further, The Deputy Director Enforcement vide his attachment order No: 01/2011 dt. 30th August, 2011 has provisionally attached Company''s bank account number 05211011001053 maintained with Oriental Bank of Commerce, Goregaon (East), having Bank Balance of Rs. 68,92,967/-. Further the Enforcement Directorate has also attached two fl ats belonging to the Company situated at Goregaon (East). The Combined value of these two fl ats as shown in Company''s fi nancial statement of Rs. 10,765,400/- at the time of attachment (WDV as on 31st March, 2013 is Rs. 9,119,520). Also, a loan amounting to Rs. 503,963,329/- (at the time of attachment) advanced to Goan Hotels & Clubs

Pvt. Ltd. Has also been provisionally attached. However, the above loan was converted into the ROCCPS of DB Hospitality Limited (holding Company of Goan Hotels & Clubs Private Limited) before the provisional attachment Order via tripartite confi rmation. This fact has been brought to the notice of Enforcement Directorate vide this Offi ce Letter dated 20th September, 2011.

This provisional attachment order has been upheld by adjudicating authority vide order number 116/2011 dt. 10th Jan''2012. Appeal has been fi led on 19th March, 2012 with Appellate Tribunal under prevention of money laundering act (PML Act). The appeal is pending before appellate tribunal for PML.

11. Segment Reporting:

The Company is mainly engaged in the business of real estate development viz. construction of residential buildings/ commercial complexes and activities connected and incidental thereto. The Company has also placed its bid for certain infrastructure projects the outcome of which is awaited. On that basis, the Company has only one reportable business segment – real estate development, the results of which are embodied in the fi nancial statements. The Company operates in only one geographical segment – within India.

12. In respect of company''s investment in Association Of Person (AOP), each executing a single project, the Company''s share in the expenses of such projects not inventorised in the books of such AOPs and shown as accumulated losses is recognised only when such loss will be debited to members account in the books of such AOPs. As per the projections of the management, each of such projects is expected to make a good profi t on completion.

13. Related Party Disclosure:

(i) Disclosures as required by the Accounting Standard 18 (AS-18) "Related Party Disclosures" are given below:

Name of the Related Party Subsidiaries:

Gokuldham Real Estate Development Company Private Limited

Neelkamal Realtors Suburban Private Limited

Neelkamal Shanti Nagar Properties Private Limited

Neelkamal Realtors Tower Private Limited (Upto 24th October 2012)

Esteem Properties Private Limited

D B Man Realty Limited

Priya Constructions Private Limited

Real Gem Buildtech Private Limited

Saifee Bucket Factory Private Limited

ECC-DB Joint Venture

Conwood-DB Joint Venture

Mira Real Estate Developers ( Formerly Mira Salts Works Company)

N.A Estate Private Limited

Royal Netra Constructions Private Limited.

Nine Paradise Erectors Private Limited

DB MIG Realtors and Builders Private Limited

Spacecon Realty Private Limited (Formerly DB Spacecon Private Limited )

Vanita Infrastructure Private Limited

DB View Infracon Private Limited

DB Contractors & Builders Private Limited

Associates:

Sangam City Township Private Limited

D.B. Hi-Sky Constructions Private Limited

Neelkamal Realtors Tower Private Limited (W.E.F 25th October 2012)

Mahal Pictures Private Limited

Jointly Controlled Entities:

Dynamix Realty

DBS Realty

Turf-Estate Joint Venture

Lokhandwala-Dynamix Balwas Joint Venture

DB (BKC) Realtors Pvt Ltd

DB Realty and Shreepati Infrastructure LLP

Daund Warehousing Developers & Builders LLP

Saswad Warehousing Developers & Builders LLP

Ahmednagar Warehousing Developers & Builders LLP

Solapur Warehousing Developers & Builders LLP

Latur Warehousing Developers & Builders LLP

Aurangabad Warehousing Developers & Builders LLP

Shree Shantinagar Ventures (Jointly controlled entity of NeelKamal Shantinagar Properties Private Limited)

Suraksha DB Realty (Jointly controlled entity of DB View Infracon Private Limited)

Evergreen Industrial Estate (Jointly controlled entity of Priya Constructions Private Limited)

Sneh Developers (Jointly Control entity of DB View Infracon Pvt Ltd)

Entity in respect of which the Company is an Associate

Neelkamal Tower Construction LLP

Key Management Personnel (KMP)

Mr. Shahid Balwa, Vice Chairman &Managing Director Mr. Vinod Goenka, ,Chairman & Managing Director

Relatives of KMP

Mr.Usman Balwa Mrs Sakina U Balwa Mrs.Shabana Balwa Mr.Arshad S.Balwa Ms.Aaliya S.Balwa Mr.Salim Balwa Mrs.Aseela V.Goenka Mr.Krishna Murari Goenka Mr.Jayvardhan V.Goenka Ms.Sanjana Goenka Mr.Pramod Goenka Mrs.Sunita Goenka Mrs.Shanita Jain

Enterprise where individuals i.e. KMP and their relatives have signifi cant infl uence

Balwas Charitable Trust Conwood Agencies Private Limited. Conwood Associates (partnership fi rm) Conwood Construction & Developers Private Limited Conwood Pre-fab Limited DB Hospitality Private Limited

Dynamix Contractors & Builders Pvt Ltd (Formerly Known as DB Modern Build tech Pvt Ltd) Pony Infrastructure and Contractors Limited Dynamix Developers Private Limited Dynamix Balwas Resorts Private Limited Dynamix Club and Resorts Private Limited Dynamix Man Pre-fab Limited Eversmile Properties Private Limited Eversmile Construction Company Private Limited. Face Inn Hotels Private Limited Goan Hotels & Clubs Private Limited Goan Real Estate and Construction Private Limited Goenka & Associates Educational Trust Goenka & Associates Medical Research Centre Goenka & Associates Social Welfare Trust K G Enterprises Milan Theatres Private Limited Modren Hi-Tech Developers Private Limited

Neelkamal Central Appartment Private Limited /Neelkamal Central Apartment LLP Neelkamal Realtors and Builders Private Limited

Nihar Construction Private Limited

Oceanmint Buildcon Pvt Ltd (w.e.f. 9th March 2013)

Neelkamal Realtors and Erectors India Private Limited

Span Construction Company Private Limited

Majestic Infracon Private Limited (formely known as Tiger Trustees Private Limited and DBI Infracon Private Limited )

Trident Estate Private Limited

Vinod Goenka-HUF

Chocklate Developers Pvt Ltd

Y. J. Realty Private Limited

Eon Aviation Pvt Ltd

BD&P Hotels (India) Pvt Ltd

Hotel Balwas Private Limited


Mar 31, 2011

1) Contingent Liabilities and commitments:

As at March 31, As at March 31,

2011 2010

(Rupees) (Rupees)

A. Estimated amount of contracts remaining to be executed on the capital account - 4,270,666 (net of advances) and not provided for

B. The Company and DB Hospitality Private Limited (together"sponsor"), acompany Not ascertainable - under the same management, have entered into a sponsorship agreement dated September 18, 2010 with DB Hotels (India) Private Limited (earlier known as Heaven Star Private Limited) (DBHPL) for providing sponsor support for project/ capital overrun (as determined in the future) and Non Disposal undertaking in respect of 70% of their paid up share capital in DBHPL to Yes Bank who have agreed to lend Rs. 10,820,000,000 to DBHPL for its project.

C. Guarantees to banks and financial institutions (in India and overseas) against credit facilities extended to:

a) Subsidiaries

Neelkamal Realtors Suburban Private Limited - 1,000,000,000

Gokuldham Real Estate Development Company Private Limited 1,300,000,000 960,000,000

Neelkamal Realtors Tower Private Limited 2,004,125,000 2,004,125,000

Sub Total (A) 3,304,125,000 3,964,125,000

b) Partnership firm

Dynamix Realty Sub Total (B) 4,125,000 1,084,125,000

c) Jointly Controlled Entity

DB (BKC) Realtors Private Limited (earlier known as M K Malls & Developers Private Limited) Sub Total (C) (Refer note i below)

d) Companies under the same management

Allianze Infratech Private Limited (erstwhile wholly owned subsidiary - 420,000,000 of Etisalat DB Telecom Private Limited)

D B Hospitality Limited, Mauritius (wholly owned subsidiary of DB 6,161,700,000 6,229,320,000 Hospitality Private Limited) (USD 138 Million) (Refer note 2 below)

Sub Total (D) 6,161,700,000 6,649,320,000

e) Others

Neelkamal Realtors and Builders Private Limited

(Refer note iii below) 4,125,000 4,125,000

Majestic Infracon Private Limited (earlier known as DBI Infracon 8,530,000,000 8,530,000,000

Private Limited / Tiger Trustees Private Limited) (Refer note ii and Note 2 below)

Sub Total (E) 8,534,125,000 8,534,125,000

Grand Total (A B C D E) 18,004,075,000 20,231,695,000

Notes:

(i) No amount has been utilized towards a total corporate guarantee provided of Rs. 2,448,000,000 (Previous year: Rs. 2,448,000,000).

(ii) Together with collateral securities of the Company's property admeasuring 80,934 sq meters at Malad (East), Mumbai with all including all development rights, unutilized Floor Space Index (FSI) / or such other FSI that may be granted in future.

(iii) Towards vehicle loan.

As at March 31, As at March 31,

2011 2010

(Rupees) (Rupees)

D. Claim made against the Company not acknowledged as debt relating to 2,448,609 858,991 service tax on lease rentals in respect of an office premises

E. Arrears of Dividend on 0.001 % compulsorily Convertible Cumulative 185 185 Preference shares (CCPS), during the previous year converted in to equity shares.

F. (a) The Company has filed a writ petition (1230 of 2010) in the High Court Amount - of Judicature at Bombay (the 'High Court'), contesting the constitutional unascertainable validity of Section 65 (30) read with Section 65(105)(zzp) and Section 65(105)(zzh) read with Section 66 of the Finance Act, 1994, as amended by the Finance Act, 2010 and the matter is pending final hearing. Further, the Company has also applied for membership of Maharashtra Chambers of Housing Industry (MCHI). MCHI, on behest of its Members, has filed a writ petition in the High Court of Bombay challenging the levy of service tax by them on Sale of Residential Flats, which has not reached its finality. Meanwhile, the High Court of Bombay has passed a Notice of Motion dated 18th February, 2011, whereby the Members are permitted to deposit the service tax with the Prothonotary & Senior Master/ Registrar (O.S.) of the Court, with a direction that the same will be refunded with interest in the event Members succeed in the said writ petition. In view of the same, the Company has demanded the amount of service tax from each of the purchasers after 31st March 2011 and the amount of such service tax as upto 31 st March 2011 is Rs. 656,012. The Company is of the view that the same is required to be deposited as and when collected from the purchasers. The Management of the Company has taken adequate steps for the recovery of such service tax dues and are of the opinion that the same shall be collected and deposited in due course of time and does not believe it is unreasonable to expect of ultimate collection.

and

(b) service tax matter as above in case of joint ventures (amount of service Amount - tax of Company's share as up to 31 st March 2011 Rs. 2,618,769) unascertainable

G. Contingent payments to the holders of Redeemable Optionally Convertible Amount Amount Cumulative Preference Shares (ROCCPS), Compulsory Convertible unascertainable unascertain -able Preference Shares (CCPS) and equity shares subscribed by other shareholders of an entity (in which the Company has joint control) - representing the amount payable or adjustable by the Company on exercise of various exit options by such other holders based on agreement entered with them.

The company is a party to various legal proceedings in the normal course of business and does not expect the outcome of these proceedings to have any adverse effect on its financial conditions, results of operations or cash flows.

2) In a previous year, the Company had given Corporate Guarantees on behalf of two companies in which some of the directors of the Company are interested. The said companies are however, not a part of DB consolidated group. Such guarantees are:

(i) In respect of facilities availed by Majestic Infracon Private Limited, from Punjab National Bank, Mumbai and Bank of India, Mumbai, for an amount aggregating Rs. 8,530,000,000 (Previous Year Rs. 8,530,000,000).

(ii) In respect of facilities availed by DB Hospitality Limited, Mauritius ('DBH, Mauritius') from ICICI Bank - United Kingdom PLC of USD 138 millions- Rs. 6,161,700,000 as at the year end March 31, 2011 (Previous Year Rs. 6,229,320,000) .

The outstanding balances as at March 31,2011 in respect of aforesaid guarantees aggregate Rs. 14,691,700,000. For the purpose of the said corporate guarantees, the Company has received in its favour irrevocable and unconditional personal guarantees from the two interested directors (one being Managing Director until February 9, 2011 and the other, Managing Director) covering the entire amount of such guarantees issued by the Company.

The aforesaid facilities are secured as under:

(i) Majestic Infracon Private Limited: by (a) pledge of its shareholding consisting of 45,934,000 equity shares in Etisalat DB Telecom Private Limited; (b) a pari passu charge on its property consisting of Hotel Hilton, Mumbai.

(ii) DBH Mauritius: by (a) mortgage of its property consisting of Milan Mall in Milan Theatres Private Limited and Dynamix Mall in YJ Realty Private Limited (against stand by letter of credit issued by ICICI Bank Limited as an integral part of the arrangement); (b) pledge of its entire shareholding of DB Hospitality Private Limited ('DBHPL) in DBH, Mauritius (being the wholly owned subsidiary of DBHPL).

The Company is confident that these companies would fulfill their obligations under the credit facilities and does not expect any outflow of resources.

3) Share of profit (net) from investments in partnership firms ("the firms") and investments in the firms is based on financial statements of the firms as audited by other auditors. The audited financial statements/the auditors' report on the financial statements of one of the partnership firms viz. Dynamix Realty ("Dynamix") in which the Company is a partner has reported certain significant matters as under:

a) Notes to financial statements relating to outstanding receivables of Rs. 5,798,640,429 (including dues aggregating Rs. 4,476,974,912 as at March 31, 2011 from companies in which directors of the Company are interested) as at March 31, 2011 as follows:

i) the other partner (being an entity in which a director of the Company is interested) viz. Eversmile Construction Company Private Limited (ECC) has a debit balance of Rs. 3,428,974,912 which includes Rs. 1,500,000,000 placed as interest free deposit. The said deposit as per the deed of partnership was to be adjusted against ECC's share of profit which remains unadjusted. The balance is confirmed by ECC and as represented by both partners of Dynamix, the said balance after considering the share of profit of ECC shall be recovered in due course of time. In view of the same, debit balance of ECC is considered good of recovery;

ii) Dynamix has granted unsecured loans, with / without interest as applicable and repayable on demand with no other terms, for which the Partners have given their consent. In the opinion of Dynamix, the outstanding amount as of the year end of loans and interest there on of Rs. 1,218,431,620 (including Rs. 1,048,000,000 from a Company in which a director of the Company is interested) is considered good of recovery;

iii) sundry debtors include Rs. 1,151,233,897 inclusive of overdue of Rs. 307,055,381 out of which Rs. 51,233,897 is outstanding for more than six months. In the opinion of the partners of Dynamix, the said outstanding is good for recovery.

b) Notes to financial statements relating to treatment of income tax:

No provision for income tax has been recognized in respect of profits of Dynamix from the project being executed as per agreement with the Slum Rehabilitation Authority, accounted as per percentage of completion method amounting Rs. 2,921,254,886 (Previous year Rs. 2,541,011,748). The profits are eligible for 100% deduction u/s 80 IB (10) of the Income Tax Act, 1961 read with the clarification issued by the CBDT that deduction can be claimed on a year to year basis. In the event Dynamix does not satisfy the enumerated conditions - more particularly of completing the project within the specified time limit of 5 years i.e. by March 31, 2012, the deduction shall stand withdrawn for all the years and Dynamix would be called upon to pay income tax and interest.

c) Notes to financial statements and reference in Auditors' report regarding a matter which is sub-judice:

Dynamix had granted loans to Kusegaon Realty Pvt Ltd. ('Kusegaon') aggregating Rs. 2,092,425,485 (the said loans) as upto March 31, 2010. As of March 31, 2011, the outstanding balance due from Kusegaon is Rs. 91,501,379 being part of interest charged. Central Bureau of Investigation Anti Corruption Branch, New Delhi (CBI) in the Supplementary (First) charge sheet RC.DAI.2009.A.0045 (2G Spectrum Case) has alleged that the Key Management Personnel of DB Group of Companies have, out of the said loans granted, paid Rs. 2,000,000,000 as illegal gratification to M/s Kalaignar TV Private Limited ('Kalaignar') through Kusegaon and M/s Cineyug Films Pvt. Ltd, in lieu of the undue favours by accused public servants to Swan Telecom Private Limited in the 2G Spectrum Case. The CBI has alternatively alleged in the said chargesheet that even if the said transaction of Rs. 2,000,000,000 is accepted as genuine business transaction, the said loans obtained by Kalaignar for a consideration which being known as inadequate, constitutes commission of offence. In the opinion of the partners of Dynamix, these are preliminary charges based on the investigation carried out by the CBI Team and the key management personnel named in the charge sheet are presumed to be innocent till their alleged offence is established after a fair trial. These preliminary charges have no impact on the business / operations of Dynamix.

4) During the year, the Company acquired 1/3rd stake in another company by paying Rs. 892,225,001 (Refer Schedule 6). By and under a Share Purchase Agreement dated December 2, 2010, the Company agreed to purchase additional 1/3rd stake from another shareholder vide a Share Purchase Agreement and paid advance of Rs. 400,000,000. However, as per the said agreement, such purchase is subject to settlement of a suit which is pending at the High Court of Judicature at H'ble Bombay High Court. The Company, based on legal advice is confident of a favourable resolution in getting the matter resolved favourably so as to be able to develop the underlying land parcel; and accordingly the said advance paid is considered to be good of recovery.

5) One of the Company's wholly owned subsidiaries has plans to construct / develop/market project/s on its land, which are delayed due to title dispute concerning the previous landlords. The Company has filed a special leave petition before the Supreme Court of India. The Company considers its investment in the said subsidiary as long term and strategic in nature. As of March 31, 2011, the Company's investment in and Loans to this subsidiary aggregate Rs. 312,018,720 and Rs. 1,351,977,945 respectively. The management, based on in-house legal advice, about the outcome of the matter does not believe that there is any diminution in the value of its investments and considers the loan given as good of recovery.

6) The Company has incurred a sum of Rs. 123,779,659 towards acquisition of tenancy rights pertaining to a redevelopment project, which is the subject matter of litigation. Based on legal advice and certain judicial precedents, the Company believes that it has better chances of getting the project awarded to itself and is confident of commencement of start redevelopment activities shortly in near future and accordingly the said amount is considered as good of recovery (Refer Schedule 9).

7) The Company has incurred losses during the year excluding share of profit / (loss) of investment in partnership firms (net) and hence no provision for current tax has been made. It has not recognized any deferred tax asset and will account for the same when there is a reasonable/virtual certainty as regards availability of taxable income in accordance with Accounting Standard-22 "Accounting for taxes on income".

8) The Company has equity investments in certain subsidiaries, jointly controlled entities and associates aggregating Rs. 148,933,200 (Previous year Rs. 385,188,120) and loans and advances outstanding aggregating Rs. 5,843,995,961 (Previous year Rs. 4,650,180,925) as at March 31, 2011. The Company considers its investments in such entities as long term and strategic in nature. While such entities have incurred losses during the year and have negative net worth as at the year end, the underlying projects in such entities are in the early stages of real estate development and are expected to achieve adequate profitability on substantial completion and/ or have current market values of certain properties which are in excess of the carrying values. Accordingly, no provision is considered necessary towards diminution in the value of the Company's investments in such entities or in respect of loans and advances advanced to such entities, which are considered good and fully recoverable.

9) Additional information pursuant to the paragraphs 3(ii) and 4C of Part II of Schedule VI to the Companies Act, 1956 are not applicable.

10) During the previous year, a loan from LIC Housing Finance Limited of Rs. 1,880,000,000 was received for the purpose of financing the cost of constructions and other project implementation cost within its subsidiary companies and jointly controlled companies. The Company has not given any security in respect of the said loan except personal guarantees of the Managing Directors of the Company. Further, Esteem Properties Private Limited, a wholly owned subsidiary company has mortgaged its land at Sahar, Andheri in this regard.

C) Other Long Term Employee Benefit:

The compensated absences charge for the year ended March 31, 2011, based on actuarial valuation carried out using the Projected Unit Credit Method, amounting Rs.8,142,820 (for Previous Year Rs. 2,694,831) has been recognized in the Profit and Loss Account.

11) Segment Reporting:

The Company is mainly engaged in the business of real estate development viz. construction of residential buildings/ commercial complexes and activities connected and incidental thereto. The Company has also placed its bid for certain infrastructure projects for which the outcome of which are awaited. On that basis, the Company has only one reportable business segment - real estate development, the results of which are embodied in the financial statements. The Company operates in only one geographical segment-within India.

12) Related Party Disclosure:

(i) Disclosures as required by the Accounting Standard 18 (AS-18) "Related Party Disclosures" are given below:

Name of the Related Party (all parties where control exists and others based on transactions with them)

Subsidiaries: (where control exisits)

Gokuldham Real Estate Development Company Private Limited

Neelkamal Realtors Suburban Private Limited

Neelkamal Shanti Nagar Properties Private Limited

Neelkamal Realtors Tower Private Limited

Esteem Properties Private Limited

D. B. Properties Private Limited

D B Man Realty Limited

Priya Constructions Private Limited

Real Gem Buildtech Private Limited

Saifee Bucket Factory Private Limited

ECC-DB Joint Venture

Conwood-DB Joint Venture

Mira Salts Works Company

DB Chandak Realtors Private Limited

N.A Estate Private Limited (w.e.f April 20, 2010)

Royal Netra Constructions Private Limited.( w.e.f May 18, 2010)

Nine Paradise Erectors Private Limited (formerly known as Nine Paradise Hotels Private Limited) (w.e.f April 8, 2010)

DB MIG Realtors and Builders Private Limited (formerly known as L &T Bombay Developers Private Limited)

(w.e.f. September 13, 2010)

DB Spacecon Private Limited (formerly known as DB Airport Infra Private Limited) (w.e.f. September 30, 2010)

Vanita Infrastructure Private Limited (w.e.f. October 1, 2010)

DB View Infracon Private Limited (subsidiary w.e.f. January 31, 2011)

DB Contractors & Builders Private Limited (w.e.f. March 7, 2011)

A G Infraconstructions Private Limited (100% subsidiary of Royal Netra constructions Private Limited w.e.f February 24, 2011)

Associates:

Sangam City Township Private Limited

Dynamix Building Materials Private Limited

Crossway Realtors Private Limited

D.B. Hi-Sky Constructions Private Limited

DB Hotels (India) Private Limited (formerly known as Heaven Star Realty Private Limited )

Mahal Pictures Private Limited (w.e.f. August 11, 2010)

DB View Infracon Private Limited(Associate till January 30, 2011)

Nine Paradise Erectors Private Limited (Formerly known as Nine Paradise Hotels Private Limited

(Associate till April 7, 2010)

Jointly Controlled Entities:

Dynamix Realty

DBS Realty

Turf-Estate Joint Venture

Lokhandwala-Dynamix Balwas Joint Venture

DB (BKC) Realtors Private Limited (formerly known as M K Malls and Developers Private Limited)

DB Realty and Shreepati Infrastructure LLP (w.e.f. September 9, 2010)

DB Realtors & Builders LLP (w.e.f December 15, 2010)

Daund Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Baramati Warehousing Developers & Builders LLP (w.e.f. October 22, 2010)

Saswad Warehousing Developers & Builders LLP (w.e.f. October 22, 2010)

Ahmednagar Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Ratnagiri Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Solapur Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Sawantwadi Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Satara Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Kolhapur Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Latur Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Parli Vaijnath Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Osmanabad Warehousing Developers & Builders LLP (w.e.f. October 22, 2010)

Nandurbar Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Jalgaon Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Jalna Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Parbhani Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Hingoli Warehousing Developers & Builders LLP (w.e.f. October 22, 2010)

Umri Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Aurangabad Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Malkapur Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Badnera Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Washim Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Bhandara Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Chandrapur Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Wadsa Warehousing Developers & Builders LLP(w.e.f. October 22, 2010)

Shree Shantinagar Ventures (Jointly controlled entity of NeelKamal Shantinagar Properties Private Limited)

Suraksha DB Realty (Jointly controlled entity of DB Properties Private Limited)

Evergreen Industrial Estate (Jointly controlled entity of Priya Constructions Private Limited)

Entity in respect of which the Company is an Associate

Neelkamal Tower Construction Private Limited now known as Neelkamal Tower Construction LLP

Key Management Personnel (KMP)

Mr. Shahid Balwa, Managing Director (upto February 9, 2011)

Mr. Vinod Goenka, Managing Director

Relatives of KMP

Mr.Usman Balwa (upto February 9, 2011)

Mrs.Shabana Balwa (upto February 9, 2011)

Mr.Salim Balwa (upto February 9, 2011)

Mrs.Aseela V.Goenka

Mr.Pramod Goenka

Mrs.Sunita Bali

Mrs.Shanita Jain

Enterprise where individuals i.e. KMP and their relatives have significant influence

Associated Hotels Private Limited

Consort Hotels Private Limited

Conwood Construction & Developers Private Limited

Conwood Pre-fab Limited

DB Hospitality Private Limited

Pony Infrastructure and Contractors Limited (formerly known as Dynamix Balwas Infrastructure Limited )

Dynamix Club and Resorts Private Limited

Eversmile Construction Company Private Limited.

Goan Hotels & Clubs Private Limited

Goan Real Estate and Construction Private Limited

K G Enterprises

Khairun Developers Private Limited

Milan Theatres Private Limited

Neelkamal Realtors and Builders Private Limited

Nihar Construction Private Limited

Neelkamal Realtors and Erectors India Private Limited (upto February 9, 2011)

Span Construction Company Private Limited

Majestic Infracon Private Limited (formely known as Tiger Trustees

Private Limited and DBI Infracon Private Limited )

Y. J. Realty Private Limited

Eon Aviation Private Limited

BD and P Hotels Private Limited

DB Spacecon Private Limited (formerly known as DB Airport Infra Private Limited)

DB Contractors & Builders Private Limited

Hotel Balwas Private Limited (Formerly known as IT Square Software Solutions Private Limited) (upto February 9, 2011)

Figures of the previous year have been regrouped / reclassified wherever necessary to conform to the presentation of current year.

 
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