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Notes to Accounts of Mahindra Lifespace Developers Ltd.

Mar 31, 2015

A) Equity Shares: The Company has issued one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share.

b) Shares reserved for issue under options

The Company has 5,58,430 (Previous Year 6,12,656) equity shares of Rs. 10/- each reserved for issue under options [Refer Note 25(b)].

c) The allotment of 40,851 (Previous Year 40,851) equity shares of the Company has been kept in abeyance in accordance with Section 206A of the Companies Act, 1956 (Section 126 of the Companies Act 2013), till such time as the title of the bonafide owner of the shares is certified by the concerned Stock Exchange or the Special Court (Trial of Offences relating to Transactions in Securities).

The Company has during the year ended 31st March 2014, issued Non Convertible Debentures (NCDs) aggregating Rs. 50,000 lakhs which are redeemable at a premium. The total premium on redemption of Rs. 10,244.65 lakhs has been adjusted against the securities premium during the previous financial year as permitted under section 78 of the Companies Act, 1956.

* Term Loan from Bank was repaid on 10th June 2014. The loan was secured by a pari-passu charge on immovable properties of the Company and were also secured by pari-passu charge on specified movable and current assets of the Company, both present and future.

# Non Convertible Debentures

The above debentures are secured by an exclusive charge over all assets, including Land & building as identified by the Company from time to time.

At present the identified assets are land owned by the Company which is accounted as a part of Construction Work in Progress and land owned by its Subsidiary Mahindra Integrated Township Limited.

* Previous year amount is cash credit from Bank was repaid on 10th June 2014. The loan was secured by a pari-passu charge on immovable properties of the Company and were also secured by pari-passu charge on specified movable and current assets of the Company, both present and future.

Based on the information available with the Company there are no dues outstanding in respect of Micro, Small and Medium Enterprises as of Balance Sheet date.

a) There are no amounts due and outstanding to be credited to the Investor Education and Protection Fund.

a) The Company''s investment in the equity shares of New Tirpur Area Development Corporation Limited ("NTADCL") aggregates Rs. 1,550.63 lakhs comprising Rs. 50.63 lakhs invested directly by the Company and Rs. 1,500 lakhs by its wholly owned subsidiary Mahindra Infrastructure Developers Limited("MIDL"). Other than the investment in NTADCL, MIDL has no other operations. The net worth of NTADCL and MIdL is substantially eroded.

NTADCL was exploring the option of supplying industrial water to a textile park proposed to be set up by the state government of Karnataka which would have contributed substantially to its revenues. Consequent, to the finalization of the financial statements for the year ended 31st March, 2014 it is expected that there are likely to be delays in setting up the same including the probability of the whole project being set up is significantly lower as compared to the previous year. As a result MIDL has made provision for diminution of its investment in NTADCL of Rs. 1,500 lakhs. The Company has also made a provision for diminution of its investment in MIDL of Rs. 1,800 lakhs and Rs. 50.63 lakhs of its investment in NtaDcL.

Construction Work in Progress represents materials at site and unbilled costs on the projects. Based on projections and estimates by the Company of the expected revenues and costs to completion, provision for losses to completion and/ or write off of costs carried to inventory are made on projects where the expected revenues are lower than the estimated costs to completion. In the opinion of the management, the net realisable value of the construction work in progress will not be lower than the costs so included therein.

# The Company has during the year entered into mutually agreed consent terms with a land-owner in respect of this project, commencement of which had been delayed and in accordance with the consent terms, the Company during the year has completed the sale of land in relation thereto. Accordingly, the provision for losses to project completion for Rs. 1023.00 lakhs in respect is no longer required and has been reversed during the year. Further, revenue from operations for the year ended 31st March 2015 includes Rs. 25,262.65 lakhs on sale thereof, net of the advances given and interest thereon. Operating expenses include Rs. 2,262.65 lakhs of costs incurred in relation thereto. Other income includes Rs. 1,550.15 lakhs pertaining to write back of the provision for the interest on the aforesaid advance no longer required.

Consequent to the above, construction work-in-progress of Rs. 765.87 lakhs and short term loans and advances and interest accrued on project advances included in other current assets of Rs. 4,205.26 lakhs and Rs. 2,174.98 lakhs, respectively, at 31st March 2014 have been realised during the year.

Specified land owned by the Company is given as security for debentures.(Refer Note 4).

# Other Loans and advances include project advances of Rs. 10,000 lakhs pending for over 3 years relating to a project whose commencement has been delayed due to non performance with respect to the agreed condition precedents by Vendors. The Company has taken legal action against the vendors to protect the interest of the Company where in the H''ble High Court at Mumbai has given order restraining the vendors from creating any third party rights in respect of the suit property or part with possession thereof.

a) Gratuity

The components of the net benefit expense recognized in the statement of profit and loss, the funded status and the amounts recognized in the balance sheet in respect of the Company''s gratuity plan is summarized below

(1) Description of the Plan:

The Company has covered its gratuity liability by a Group Gratuity Policy named ''Employee Group Gratuity Assurance Scheme'' issued by Life Insurance Corporation of India (''LIC''). Employee at retirement are eligible for benefit, which will be equal to 15 days salary for each completed year of service. The balance in the Employee Group Gratuity Assurance Scheme is the plan asset.

(2) Principal actuarial assumptions:

(3) Amount expected to be contributed to fund in coming year is Rs. 3724 lakh.

(4) The gratuity fund is entirely invested in a group gratuity policy with the Life Insurance Corporation of India. The information or the allocation of the fund into major asset classes and the expected return on major class is not readily available.

The details of the Employee Stock Option Scheme are:

The company has adopted intrinsic value method for computing the compensation cost for the Options granted. The exercise price of the shares is based on the average of the daily high and low of the prices for the Company''s Equity Shares quoted on the Bombay Stock Exchange Limited, during the 15 days preceding the grant of the Options. The Intrinsic value i.e. the difference between the market price of the share and the exercise price is being amortised as employee compensation cost over the vesting period. The details of the same are given here under:

During the year, the Company modified the exercise period of the options granted under ESOS 2006 whereby the exercise period of the options granted was extended from 5 years from the date of vesting of the respective tranche of the option to the last date of the exercise period for the last tranche of the option granted under the said scheme.

b) The Company had granted 10,000 Equity shares on 4th August, 2012 to the eligible employee under the Employee Stock Option Scheme 2006 (ESOS 2006) of the company.

The company has adopted intrinsic value method for computing the compensation cost for the Options granted. The exercise price of the shares is based on the average of the daily high and low of the prices for the Company''s Equity Shares quoted on the Bombay Stock Exchange Limited, during the 15 days preceding the grant of the Options. The Intrinsic value i.e. the difference between the market price of the share and the exercise price is being amortised as employee compensation cost over the vesting period. The details of the same are given here under:

The Fair Value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

c) The Company had granted 101,000 Equity shares on 4th August,2012 to the eligible employees under the Employee Stock Option Scheme (ESOS 2012) of the company.

The details of the Employee Stock Option Scheme are:

The company has adopted intrinsic value method for computing the compensation cost for the Options granted. The exercise price of the shares is Rs. 10/- per stock option. The Intrinsic value i.e. the difference between the market price of the share and the exercise price is being amortised as employee compensation cost over the vesting period. The details of the same are given here under:

The details of the Employee Stock Option Scheme are:

The company has adopted intrinsic value method for computing the compensation cost for the Options granted. The exercise price of the shares is Rs. 10/- per stock option. The Intrinsic value i.e. the difference between the market price of the share and the exercise price is being amortised as employee compensation cost over the vesting period. The details of the same are given here under:

The Fair Value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

e) The Company had granted 27000 Equity shares on 17th October, 2014 to the eligible employees under the Employee Stock Option Scheme (ESOS 2012) of the company.

The company has adopted intrinsic value method for computing the compensation cost for the Options granted. The exercise price of the shares is Rs. 10/- per stock option. The Intrinsic value i.e. the difference between the market price of the share and the exercise price is being amortised as employee compensation cost over the vesting period. The details of the same are given here under:

The Fair Value has been calculated using the Black Scholes Options Pricing Model and the significant assumptions made in this regard are as follows:

Earnings Per Share as required by Accounting Standard 20 read with the Guidance Note on ''Accounting for Employee share-based Payments" is as follows.

The compensation costs of stock options granted to employees are accounted by the Company using the intrinsic value method.

During the year vesting period of ESOS 2006 was extended by one year hence the number of options cancelled during the year indicates the number of option cancelled netted of with the options revived as the result of such extension.

Information in respect of options outstanding as at 31st March, 2015:

5) Forwards Contracts

The Company enters into foreign currency exposure contract for the purpose of hedging its currency risk. These contracts are not intended for trading or speculation.

The disclosure of commitment is given only to the extent of capital commitment and other disclosure relating to commitment has not been given in order to avoid providing excessive details that may not assist users of Financial Statements.

6) In respect of real estate projects under long term contracts, determination of profits/ losses and realisability of the construction work in progress & project advances necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion and the projections of revenues expected from projects / activity and the foreseeable losses to completion. Profit from these contracts and valuation of construction work in progress is based on such estimates.

7) Leases:

The Company''s significant leasing arrangements are in respect of operating leases for Commercial & Residential premises.

a) Lease income from operating leases is recognised on a straight-line basis over the period of lease. The particulars of the premises given under operating leases are as under:

8) Contingent Liabilities

Current Year Previous Year Rsin lakhs Rsin lakhs

a) Claims against the Company not acknowledged as debts represent :

i) Claims awarded by the Arbitrator to a civil contractor in respect of a project at Mumbai and the Company''s appeal against the award has been admitted by the Mumbai High Court 93.89 93.89

ii) Demand from local authorities for transfer fees on transfer ofproperty, disputed by the Company 123.99 123.99

iii) Demand from a local authority for energy dues disputed by the Company 2,164.04 2,164.04

iv) Claim from welfare association in connection with project work, disputed by theCompany 4,500.00 4,500.00

b) Income tax matters under appeal

In respect of certain business incomes re-classified by the Income tax Department as income from house property and other disallowances, the Company has partially succeeded in appeal and is pursuing the matterfurther with the higher appellate authorities 584.53 360.43

The liability net of Deferred Tax Asset/Deferred Tax Liability would be Rs 584.53 lakhs (previous year Rs. 360.43 lakhs)

Note:

The segment result for Projects, Project Management and Development activity is arrived at after considering an interest expense of Rs. 375.88 lakhs (Previous year Rs. 1,381.03 lakhs), as it formed part of the cost of projects according to the method of accounting followed by the Company.

9) Related Party Transactions

List of related parties Enterprises Controlling the Company Mahindra & Mahindra Limited: Holding Company

Enterprises under the control of the Company

Mahindra Infrastructure Developers Limited Mahindra Integrated Township Limited.

Mahindra World City Developers Limited Mahindra Residential Developers Limited

Mahindra World City (Jaipur) Limited Industrial Township(Maharashtra) Limited

Knowledge Township Limited Mahindra Bebanco Developers Limited

Mahindra World City (Maharashtra) Limited Raigad Industrial & Business Park Limited

Anthurium Developers Limited

Industrial Cluster Private Limited (Earlier Known as Mahindra Housing Private Limited)

Mahindra Industrial Park Chennai Limited (w.e.f. 22nd December 2014)

Fellow Subsidiaries

Bristlecone India Limited Mahindra Holidays & Resorts India Limited Mahindra Consulting Engineers Limited Mahindra Integrated Business Solutions Private Limited NBS International Private Limited

Associates

Kismat Developers Private Limited Topical Builders Private Limited

Joint Ventures

Mahindra Inframan Water Utilities Private Limited Mahindra Water Utilities Private Limited Mahindra Homes Private Limited (earlier known as Watsonia Developers Private Limited and before that Watsonia Developers Limited )

Key Managerial Personnel

Managing Director & Chief Executive Officer of the Company- Ms. Anita Arjundas Chief Financial Officer - Mr. Jayantt Manmadkar Company Secretary - Mr. Suhas Kulkarni

Directors

Mr. Arun Nanda, Non-executive Non-Independent Chairman Mr. Uday Y Phadke, Non-executive Non-Independent Director Mr. Sanjiv Kapoor,Non-executive Independent Director Mr. Shailesh Haribhakti,Non-executive Independent Director Mr. Anil Harish, Non-executive Independent Director Dr. Prakash Hebalkar, Non-executive Independent Director

Enterprises over which Key Managerial Personnel are able to exercise significant influence: Nil

10) Information in respect of Jointly Controlled Operations and Joint Venture

a) Jointly Controlled operations

i) Development of the following residential projects:

G. E. Gardens, Mumbai

Kukattpally, Hyderabad

ii) Project for providing potable drinking water and sewerage facilities at Tirupur, Tamil Nadu.

b) Joint Venture

Sector 59, Gurgaon Bannerghatta Road, Bangalore


Mar 31, 2014

1) In respect of real estate projects under long term contracts, determination of Profits/ losses and reliability of the construction work in progress & project advances necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion and the projections of revenues expected from projects / activity and the foreseeable losses to completion. Profit from these contracts and valuation of construction work in progress is based on such estimates.

2) Leases:

The Company''s Significant leasing arrangements are in respect of operating leases for Commercial & Residential premises.

3) Contingent Liabilities

Matter Current Year Previous Year Rs. in lakhs Rs. in lakhs

a) Claims against the Company not acknowledged as debts represent:

i) Claims awarded by the Arbitrator to a civil contractor in respect of a project at Mumbai and the Company''s appeal against the award has been admitted by the Mumbai High Court 93.89 182.33

ii) Demand from local authorities for transfer fees on transfer of property, disputed by the Company 123.99 123.99

iii) Demand from a local authority for energy dues disputed by the Company 2,164.04 2,164.04

iv) Claim from welfare association in connection with project work, disputed by the Company 4,500.00 -

b) Income tax matters under appeal

In respect of certain business incomes re-classifed by the Income tax Department as income from house property and other disallowances, the Company has partially succeeded in appeal and is pursuing the matter further with the higher appellate authorities 360.43 935.60

The liability net of Deferred Tax Asset/Deferred Tax Liability would be Rs. 360.43 lakhs (previous year Rs. 524.17 lakhs)

4) Related Party Transactions

List of related parties

Enterprises Controlling the Company

Mahindra & Mahindra Limited: Holding Company

Enterprises under the control of the Company

Mahindra Infrastructure Developers Limited Mahindra Integrated Township Limited.

Mahindra World City Developers Limited Mahindra Residential Developers Limited

Mahindra World City (Jaipur) Limited Industrial Township (Maharashtra) Limited

Knowledge Township Limited Mahindra Bebanco Developers Limited

Mahindra World City (Maharashtra) Limited Raigad Industrial & Business Park Limited

Anthurium Developers Limited Mahindra Housing Private Limited

Mahindra Homes Private Limited (earlier known as Watsonia Developers Private Limited and before that Watsonia Developers Limited)*

*With effect from 20th July 2013 Mahindra Homes Private Limited has been ceased to be subsidiary and has become joint venture.

Fellow Subsidiaries

Bristlecone India Limited

Mahindra Holidays & Resorts India Limited

Mahindra Consulting Engineers Limited

Mahindra Integrated Business Solutions Private Limited

Associates

Kismat Developers Private Limited

Topical Builders Private Limited

Joint Ventures

Mahindra Inframan Water Utilities Private Limited

Mahindra Water Utilities Private Limited

Mahindra Homes Private Limited (earlier known as Watsonia Developers Private Limited and before that Watsonia Developers Limited)*

*With effect from 20th July 2013 Mahindra Homes Private Limited has been ceased to be subsidiary and has become joint venture.

5) Information in respect of Jointly Controlled Operations

i) Development of the following residential projects:

G.E. Gardens, Mumbai

Kukattpally, Hyderabad

ii) Project for providing potable drinking water and sewerage facilities at Tirupur, Tamil Nadu.

6) The figures for previous year have been regrouped wherever necessary to conform to current year''s classification


Mar 31, 2013

1) In respect of real estate projects under long term contracts, determination of profits/ losses and realisability of the construction work in progress & project advances necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion and the projections of revenues expected from projects / activity and the foreseeable losses to completion. Profit from these contracts and valuation of construction work in progress is based on such estimates.

2) Leases:

The Company''s significant leasing arrangements are in respect of operating leases for Commercial & Residential premises.

3) Information in respect of Jointly Controlled Operations

i) Development of the following residential projects:

G.E. Gardens, Mumbai

Kukattpally, Hyderabad

ii) Project for providing potable drinking water and sewerage facilities at Tirupur, Tamil Nadu.

4) The figures for previous year have been regrouped wherever necessary to conform to current year''s classification


Mar 31, 2012

A) Shares reserved for issue under options

Refer note 22(#) for details of shares to be issued under the Employee Stock Option Plan

b) The allotment of 45,351 (Previous Year 45,351) Equity shares of the Company has been kept in abeyance in accordance with Section 206A of the Companies Act, 1956, till such time as the title of the bonfire owner of the shares is certified by the concerned Stock Exchange or the Special Court (Trial of Offences relating to Transactions in Securities).

* Nature of Security

Secured borrowings are secured by a pari-passu charge on immovable properties of the company and are also secured by pari-passu charge on specified movable and current assets of the company, both present and future.

# Terms of Repayment

The said loan amount is repayable quarterly on prorated basis after one year starting from June 30, 2013. Interest is payable on monthly basis.

* The Company has, in case of certain projects, provided for Rs 1,023.00 lakh (previous year Rs 1,023.00 lakh) as provision for losses to project completion. The amount has been determined using best estimates with regard to percentage of completion, foreseeable costs to completion and revenues from the project activity. However, considering future business scenario, inflation in construction costs and market movement causing changes in realizations, which cannot be presently quantified, the final outcome may differ from that presently estimated. The probability and the timing of the outflow with regard to this matter depends on the completion of the project and conclusion of the arbitration proceedings.

In the opinion of the Management, no loss is expected to arise in respect of other long term investments for which an additional provision is required to be made in the accounts.

The Company has made investment in equity shares of Rs 180,000,000 in the wholly owned subsidiary Mahindra Infrastructure Developers Limited("MIDL"). MIDL has further invested Rs 150,000,000 in the equity shares of New Tirupur Area Development Corporation Limited (NTADCL). Due to adverse business conditions, NTADCL has been making losses and there has been an erosion in the net worth of NTADCL. The various steps taken by the stakeholders such as infusion of equity capital, debt restructuring, increase in tariff rates of water etc and various other concessions from Tamil Nadu Government will lead to a turnaround in the operations of NTADCL and improve its financial position. Thus in view of the management there is no permanent diminution in the value of the investments in NTADCL and in the value of the investments in MIDL.

* Construction Work in Progress represents materials at site and unbilled costs on the projects. Based on projections and estimates by the Company of the expected revenues and costs to completion, provision for losses to completion and/ or write off of costs carried to inventory are made on projects where the expected revenues are lower than the estimated costs to completion. In the opinion of the management, the net realizable value of the construction work in progress will not be lower than the costs so included therein.

# Construction Work-in-Progress include Rs 765.87 lakh (previous year Rs 765.87 lakh) on account of a project, where commencement of construction has been delayed on account of a dispute between the land-owner and the Company. The dispute has been referred to arbitration.

* Other Loans & Advances include Rs 4,205.26 lakh (previous year Rs 4,205.26 lakh) on account of a project, where commencement of construction has been delayed on account of a dispute between the land-owner and the Company. The dispute has been referred to arbitration.

* Interest accrued thereon represents the amounts recoverable from the proceeds of projects undertaken/financed by the Company as per the contracted terms. The advances as well as the interest thereon are considered good and fully recoverable based on inter-alia estimates and projections by the Company of the project costs and revenues.

# Interest accrued include Rs 2,174.98 lakh (previous year Rs 2,174.98 lakh) on account of a project, where commencement of construction has been delayed on account of a dispute between the land-owner and the Company. The dispute has been referred to arbitration.

* Gratuity

(1) Description of the Plan:

The Company has covered its gratuity liability by a Group Gratuity Policy named 'Employee Group Gratuity Assurance Scheme' issued by LIC of India. Under the plan, employee at retirement is eligible for benefit, which will be equal to 15 days salary for each completed year of service. Thus, it is a defined benefit plan and the aforesaid insurance policy is the plan asset.

The disclosure of commitment is given only to the extent of capital commitment and other disclosure relating to commitment has not been given in order to avoid providing excessive details that may not assist users of Financial Statements.

1) In respect of real estate projects under long term contracts, determination of profits/ losses and reliability of the construction work in progress & project advances necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion and the projections of revenues expected from projects / activity and the foreseeable losses to completion. Profit from these contracts and valuation of construction work in progress is based on such estimates.

2) Leases:

The Company's significant leasing arrangements are in respect of operating leases for Commercial & Residential premises.

3) Conttngsm

Matter Current Year Previous Year

Rs.in lakh Rs.in lakh

a) Claims against the Company not acknowledged as debts represent:

i) A suit filed by a party in the Delhi High Court, and disputed by the Company, for recovery of brokerage in respect of a transaction relating to operating of commercial complexes. In the opinion of the management the above claim is not sustainable 42.67 42.67

ii) Claims awarded by the Arbitrator to a civil contractor in respect of a project at Mumbai and the Company's appeal against the award has been admitted by the Mumbai High Court 88.44 88.44

iii) Demand from local authorities for transfer fees on transfer of property, disputed by the Company 123.99 123.99

iv) Demand from a local authority for energy dues disputed by the company 2,164.04 2,164.04

b) Income tax matters under appeal

In respect of certain business incomes reclassified by the Income tax Department as income from house property and other disallowances, the Company has partially succeeded in appeal and is pursuing the matter further with the higher appellate authorities 1,321.80 1,218.65

The liability net of Deferred Tax Asset/Deferred Tax Liability would be Rs 846.49 lakh (previous year t 743.34 lakh)

Notes:

1. The segment result for Projects, Project Management and Development activity is arrived at after considering an interest expense ofRs 1,381.03 lakh (Previous year Rs 187.36 lakh), as it formed part of the cost of projects according to the method of accounting followed by the Company.

2. The Company has discontinued the Operations of its segment - Business Centre during the quarter ended 31st December, 2010.

4) Information in respect of Jointly Controlled Operations

i) Development of the following residential projects:

G.E. Gardens, Mumbai

Kukattpally, Hyderabad

ii) Project for providing potable drinking water and sewerage facilities at Tirupur, Tamil Nadu.

 
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