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Notes to Accounts of Nitesh Estates Ltd.

Mar 31, 2015

1. Company overview

Nitesh Estates Limited (the Company or 'NEL') was incorporated on 20 February 2004. NEL is a real estate developer engaged in the business development, sale, management and operation of residential buildings, retail and hotel projects, commercial premises and other related activities.

2. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. Nil (Previous year : Rs.Nil).

In event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. There have been no buy back of shares or issue of shares pursuant to contract without payment being received in cash for the period of five years immediately preceding the balance sheet.

4. Short-Term loans from banks are secured by:

Bank term loan amounting to: Rs 75,000,000 (previous year: Rs 75,000,000)

i. Equitable mortgage of vacant land situated at Mulavukkad Village, Kanaynnur Taluk district registered with Kakanad Enterprises Private Limited, a Subsidiary Company.

ii. Developers share of 13,621 sq ft of commercial area on an undivided basis in the Project Nitesh Ceasers Palace situated at Bangalore South Taluk registered with the Company.

iii. Simple and registered mortgage of a flat in the project Nitesh Camp David situated at Pulakeshi Nagar registered with the Company.

iv. Personal Guarantee of Mr. Nitesh Shetty.

5. Short-Term loans from financial institutions are secured by:

a) Term Loan amounting to: Rs Nil (previous year: Rs 210,000,000)

i. Mortgage of the project Nitesh Logos to the extent of the developers share of units admeasuring 29,695 sq.ft (i.e. 6 apartments) along with the undivided share in land.

ii. Mortgage of the project Nitesh Key Biscayne to the extent of the developers share 12 acres of land of Nitesh Key Biscayne project situated at Chikkasane village, Kasaba Hobli, Devanahalli taluk, Bangalore District.

iii. Personal Guarantee of Mr. Nitesh Shetty.

(iii) Debentures

a) 18.5% Non-Convertible, Redeemable debentures from financial institution amounting to Rs.Nil (previous year: 560,000,000) are secured by:

i. First and exclusive charge by way of a mortgage by deposit of title deeds over the Hunter Valley Property, Caesar's Palace Property, Long Island Mortgage Property, Nitesh Park Avenue.

ii. Escrow account in respect of the receivables from the projects Nitesh Hunter Valley, Nitesh Caesar's Palace, Nitesh Long Island Project, Nitesh Park Avenue.

iii. First and exclusive charge by way of hypothecation on the receivables in the projects Nitesh Hunter Valley, Nitesh Caesar's Palace, Nitesh Long Island and Nitesh Park Avenue.

iv. Guarantee in favour of the Debenture Trustee.

v. Creation of a fixed deposit for an amount equivalent to Rs. 9,250,000 required for maintaining the minimum debt service amount of one months interest with a lien marked in favour of the Debenture Trustee and Security Cheques in respect of the entire value of the Debentures.

6. Commitments and contingent liabilities Rs.

As at As at Particulars 31 March 2015 31 March 2014

Contingent liabilities

Claims against the company not acknowledged as debts in respect of

- Income-tax 27,185,945 18,040,389

- Service tax 31,156,450 31,156,450

Corporate guarantee for loans taken by - 3,400,000,000 group companies

Commitments

Estimated amount of contracts remaining 575,905,220 1,631,001,600 to be executed on projects (net of advances) and not provided for

Notes :

a During the previous year, Nitesh Urban Development Private Limited, a subsidiary Company, issued compulsorily convertible debentures to an investor amounting to Rs 350,000,000. Pursuant to this, the Company and the investor have entered into a share sale right agreement whereby the investor has a right (but not obligation) to sell all the debentures to the Company on or after the end of 48 months from the closing date and the Company will be obliged to purchase these debentures at Rs 787,500,000 if such option is exercised by the investor.

b The Company has entered into various joint development agreements wherein, on completion of all obligations of the land owner and possession of land to the Company, the Company is required to construct and develop the entire property and hand over an agreed proportion of the built up area to the land owner as a consideration for the undivided share in land transferred to the Company.

c The Company has provided support letters to subsidiary companies wherein it has accepted to provide the necessary level of financial support to enable the company to operate as a going concern and meet its obligations as and when they fall due.

d Commitment towards purchase of equity shares of a subsidiary company

The Company has provided a put option to the investor of Nitesh Housing Developers Private Limited (subsidiary company) whereby the investor has the right to sell the shares held in the subsidiary company at a price which will yield a post-tax internal rate of return of 26% p.a. on their cost of investment, either to the principal promoter (Mr. Nitesh Shetty) or the Company in the following events :

(a) In the event where the investor exercises the right to sell, the Principal Promoter shall have the obligation to purchase and/or buy-back the share put securities at the share put price, on a spot delivery basis.

(b) However, in the event where the Principal Promoter does not perform his obligation and/or paying the amount to the investor of the Subsidiary Company, the Company shall have the obligation to perform and/or pay to the investor the amounts payable by the Principal Promoter as if it were the primary obligor.

7. Related parties

(i) Names of related parties and description of relationship:

Enterprises where control exists

Nitesh Indiranagar Retail Private Limited Subsidiary company

Nitesh Housing Developers Private Limited Subsidiary company

Nitesh Urban Development Private Limited Subsidiary company

Kakanad Enterprises Private Limited Subsidiary company

Nitesh Property Management Private Limited Subsidiary company

Related parties where significant influence exists and with whom transactions have taken place during the year

Individuals, Associates and Companies under common control

Associate company Nitesh Residency Hotels Private Limited

Enterprises owned or significantly Nisco Ventures Private Limited

influenced by Key Managerial Person Southern Hills Developers Private Limited

Serve & Volley Signages Private Limited

Nitesh Infrastructure and Construction

Serve & Volley Media Private Limited

Serve & Volley Outdoor Advertising Private Limited

Grass Outdoor Media Private Limited

Nitesh Industries Private Limited

Pushrock Environment Private Limited

Partnership firm in which the Company is a Nitesh Estates - Whitefield partner

Key management personnel Nitesh Shetty [Chairman and Managing Director]

L.S.Vaidyanathan [Executive Director]

Ashwini Kumar [Executive Director and Chief Operating Officer]

8. The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006' ('the Act'). The Company has no dues to Micro and Small Enterprises as at 31 March 2015 and 31 March 2014 in the financial statements based on information received and available with the Company.

9. The Company primarily operates only in three business segments - Residential, Retail and Hospitality. All the operations are carried out in India and hence there is no geographical segment.

Accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Assets, liabilities, revenues and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as unallocated.

10. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the equity shares (99.9%) of Nitesh Housing Developers Private Limited ('NHDPL'), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL sold 10.1% of its investment in NHDPL to another party ('the Buyer1). As at 31 March 2013, NEL holds 89.9% of the equity share capital of NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh Shetty have entered into an agreement whereby NHDPL would issue and allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to Rs.620,000,000. The Debentures and interest thereon are secured by way of pledge of the entire shareholding of NEL in NHDPL and a part of shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project specific properties and hypothecation of receivables of such projects and further secured by corporate guarantee of NEL and personal guarantee of Mr. Nitesh Shetty. During the previous year, NHDPL has partially redeemed principal amounting to Rs 399,129,000. During the current year, NHDPL has redeemed the balance principal due and accordingly, the pledge of shares of NHDPL will be released on exercising the buy-back option by the Company.

Further, HDFC AMC has a put a option to require Mr.Nitesh Shetty to buy the 505,000 shares purchased from NEL under the terms of the agreement. NEL has given corporate guarantee in Sep 2013 in respect of the put option. The guarantee given by NEL in respect of put option is outstanding as on 31 March 2015.

11. Unsecured advance includes advance aggregating to Rs. 157,000,000 to a party for facilitating acquisition of land from number of land owners for the purpose of construction of project and joint development. This involves negotiation with multiple agencies under different authorities and statutes and as such the specific time limit has been set for 7 years for the completion of transfer of title and conveyancing.

12. During the year under review, the Company had revised its estimates of useful life of its fixed assets as prescribed in Part C of Schedule II of the Companies Act, 2013.

The carrying amount less residual value of the assets whose remaining useful life has become nil at the beginning of the period amounting to Rs 5,558,854/- has been adjusted in opening retained earnings as on 1st April, 2014.

13. In respect of debentures outstanding of Rs. 125 Crores, the transfer to Debenture Redemption Reserve to the tune of Rs. 31.25 Crores could not be made due to absence of adequate profit.

14. Previous years' figures have been regrouped/reclassified wherever necessary to conform to current years' presentation.


Mar 31, 2014

1. Earnings/(loss) per share

The basic earnings / (loss) per share is computed by dividing the net profit / (loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings/ (loss) per share comprises the weighted average shares considered for deriving basic earnings/ (loss) per share and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. In computing diluted earnings per share, only potential equity shares that are dilutive and which either reduces earnings per share or increase loss per share are included.

2. Employee benefits

Defined benefit plans

The Company''s gratuity plan is a Defined benefit plan. The present value of gratuity obligation under such Defined benefit plans is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under Defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the profit and loss account. Gains or losses on the curtailment or settlement of any Defined benefit plan are recognised when the curtailment or settlement occurs.

The gratuity scheme is administered through a trust with the Life Insurance Corporation of India and the provision for the same is determined on the basis of actuarial valuation carried out as at the year end. Provision is made for the shortfall, if any, between the amounts required to be contributed to meet the accrued liability for gratuity as determined by actuarial valuation and the available corpus of funds.

Other long term benefit

Cost of long term benefits by way of accumulating compensated absences arising during the tenure of service is calculated taking into account the pattern of availment of leave. The present value of obligations towards availment under such long term benefit is determined based on actuarial valuation carried out by an independent actuary using Projected Unit Credit Method as at the year end. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under Defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the profit and loss account. Gains or losses on the curtailment or settlement of any Defined benefit plan are recognised when the curtailment or settlement occurs.

Defined contribution plan

Contributions to the recognized provident fund which is a Defined contribution scheme, is charged to the Statement of profit and loss.

3. Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classifed as finance leases. Such assets acquired are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.

For operating leases, lease payments (excluding cost for services, such as insurance and maintenance) are recognised as an expense in the statement of profit and loss on a straight line basis over the lease term. The lease term is the non- cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.

4. Segment reporting

The Company''s operating businesses are organized and managed separately according to the nature of business and services provided, with each segment representing a strategic business unit that ofers diferent products and serves diferent markets. Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. General corporate income and expense items are not allocated to any business segment.

5. Recognition and measurement of advances paid

a) Advance against property

These advances represent several intended purchases of parcels of land, which are in various stages of the acquisition process, which is typically long drawn and requires several regulatory compliances. The Company considers the purchase as complete only when all compliances are complete and the ownership right to the land is unfettered. Such advances, depending on the stage of the land acquisition process, are measured with reference to the value of the underlying, at the lower of cost or net realisable value, having regard to the protracted underlying process.

b) Advances paid towards jointly developable properties

These advances represent monies paid to land owners and intermediaries, where the company proposes to jointly develop the property. Subsequent to a defnitive agreement and on actual commencement of development activity, the Company acquires a right in the underlying land at which point, such advances are transferred to inventory work in progress. Advances towards joint development rights are valued at cost. On transfer to inventory work in progress, measurement is on the basis of cost, less impairment, if any, determined with reference to the discounted values of future anticipated cash flows.

6. Cash and cash equivalents

Cash and cash equivalents comprise cash and balances with banks. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

7. Cash fow statement

Cash flows are reported using indirect method, whereby net profits/ (losses) before tax is adjusted for the efects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular operating, investing and fnancing activities of the Company are segregated.

Equity shares were allotted during the year ended 31 March 2010 as fully paid bonus shares by capitalisation of securities premium of Rs. 567,020,724 and balance in profit and loss account of Rs. 61,027,176 in the ratio of nine equity shares for every one equity share held.

(d) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2014, the amount of per share dividend recognized as distributions to equity shareholders was Rs. Nil (Previous year : Rs.Nil).

In event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(e) There have been no buy back of shares or issue of shares pursuant to contract without payment being received in cash for the period of five years immediately preceding the balance sheet.

Vehicle loan from a bank [amounting to: Rs 1,097,572 (previous year: Rs 1,749,325) - including amounts disclosed as current maturities of long-term debts]

Vehicle loans from banks are secured by hypothecation of vehicles.

Repayment and interest terms

Nature of Loan Repayment and interest terms

Vehicle loans The loans are repayable in 60 equal monthly instalments starting from

[amounting to: Rs 1,097,573 September 2010 and to be settled by September 2015 with an interest

(previous year: Rs 1,749,325) rate of 9.3% per annum.

Details of security and terms of loans and debentures

(i) Short-term loans from banks are secured by :

Bank term loan amounting to: Rs 75,000,000 (previous year: Rs Nil)

i. Equitable mortgage of vacant land situated at Mulavukkad Village, Kanaynnur Taluk district registered with Kakanad Enterprises Private Limited, a Subsidiary Company.

ii. Developers share of 13,621 sq ft of commercial area on an undivided basis in the Project Nitesh Ceasers Palace situated at Bangalore South Taluk registered with the Company.

iii. Simple and registered mortgage of a fat in the project Nitesh Camp David situated at Pulakeshi Nagar registered with the Company.

iv. Personal Guarantee of Mr. Nitesh Shetty.

v. Guarantee of Subsidiary Company - Kakanad Enterprises Private Limited.

(ii) Short-Term loans from financial institutions are secured by:

a) Term Loan amounting to: Rs Nil (previous year: Rs 119,000,000)

i. Mortgage of the projects Nitesh Forest Hills and Nitesh Flushing Meadows to the extent of developers share of 200,021 sq.ft. (i.e. 134 apartments) and common area along with proportionate share of land and along with present and future construction thereon.

ii. Mortgage of the project Nitesh Forest Hills to the extent of unsold area of 10,019 sq.ft. (i.e. 7 apartments ) and common areas along with proportionate share of land and with present and future unsold construction thereon.

iii. Charge on all the future receivables from the booked, sold and to be sold apartments in the above projects.

iv. Irrevocable personal guarantee of Mr. Nitesh Shetty.

b) Term Loan amounting to: Rs 210,000,000 (previous year: Rs 205,000,000)

i. Mortgage of the project Nitesh Logos to the extent of the developers share of units admeasuring 29,695 sq.ft (i.e. 6 apartments) along with the undivided share in land.

ii. Mortgage of the project Nitesh Key Biscayne to the extent of the developers share 12 acres of land in the project situated at Chikkasane village, Kasaba Hobli, Devanahalli taluk, Bangalore District.

iii. Personal Guarantee of Mr. Nitesh Shetty.

c) Term Loan amounting to: Rs Nil (previous year: Rs 57,167,772)

i. Mortgage of the projects Nitesh Central Park and Nitesh Camp David to the extent of developers share of 20 apartments and 1 apartment respectively.

ii. All future receivables of the project Nitesh Central Park and Nitesh Camp David will be credited to Escrow account.

iii. Personal guarantee of Mr. Nitesh Shetty.

d) Term Loan amounting to: Rs Nil (previous year: Rs 5,321,256)

i. Mortgage of the projects Nitesh Central Park and Nitesh Camp David to the extent of developers share of 20 apartments and 1 apartment respectively.

ii. All future receivables of the project Nitesh Central Park and Nitesh Camp David will be credited to Escrow account.

iiI. Personal guarantee of Mr. Nitesh Shetty.

e) Term Loan amounting to: Rs 88,162,442 (previous year: Rs Nil)

i. Mortgage of the project Nitesh Flushing Meadows situated at to the extent of developers share of 19 apartments. ii. Escrow of receivables of the project Nitesh Flushing Meadows. iii. Personal guarantee of Mr. Nitesh Shetty.

(iii) 18.5% Non-Convertible, Redeemable Debentures from financial institution [amounting to Rs. 560,000,000 (previous year: Rs 600,000,000)] are secured by:

i. First and exclusive charge by way of a mortgage by deposit of title deeds over the Hunter Valley Property, Caesar''s Palace Property, Long Island Mortgage Property and Nitesh Park Avenue.

ii. Escrow account in respect of the receivables from the projects Nitesh Hunter Valley, Nitesh Caesar''s Palace, Nitesh Long Island Project, Nitesh Park Avenue.

iii. First and exclusive charge by way of hypothecation on the receivables in the projects Nitesh Hunter Valley, Nitesh Caesar''s Palace, Nitesh Long Island and Nitesh Park Avenue.

iv. Personal Guarantee of Mr. Nitesh Shetty in favour of the Debenture Trustee.

v. Creation of a fixed deposit for an amount equivalent to Rs. 92,50,000 required for maintaining the minimum debt service amount of one months interest with a lien marked in favour of the Debenture Trustee and Security Cheques in respect of the entire value of the Debentures.

(iv) Cash credit from banks are secured by :

a) Cash credit amounting to: Rs 99,949,218 (previous year: Rs 97,917,924)

i. Lien on refundable deposits paid to land owners and which are not hypothecated to any Banks/ Institutions in respect of projects which are under pipeline and for which approvals have not yet been received.

ii. Hypothecation of Receivables/ other current assets.

iii. Personal Guarantee of Mr. Nitesh Shetty.

b) Cash credit amounting to: Rs 149,817,460 (previous year: Rs Nil)

i. Exclusive charge on the Property admeasuring 21,000 Sq ft situated at Sampangi Ramaswamy Temple Road registered with Courtyard Constructions Private Limited.

ii. Personal Guarantee of Mr. Nitesh Shetty.

iii. Corporate Guarantee of a Joint Venture with Courtyard Construction Private Limited (50% shareholding by Nitesh Urban Development Private Limited).

The Company has entered into a joint development agreement with the land owner whereby the Company, at its cost, will construct apartments/buildings on the land owned by the land owner, and the portion of building constructed will be exchanged for ownership in the land. Such portion of land to be acquired by the Company as per joint development agreement is initially recorded at the estimated cost of construction for the portion of the building to be transferred to the land owner on completion of construction. Changes in the estimate/ actual cost of construction from the originally estimated cost are adjusted in the cost of land in the year of such change/ occurrence.

Note :

i The Company has made further investments in its subsidiaries based on the independent valuation reports obtained by the Company and as approved by the Board. As at the balance sheet date, the subsidiary companies are in various stages of development/ project set-up and hence, the management believes that there is no diminution other than temporary in the value of its investments.

ii Non-cumulative redeemable preference shares (NCRPS) carries non-cumulative dividend of 9% p.a. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Each NCRPS holder is entitled to one vote per share only on resolutions placed before the Company which directly afects the rights attached to NCRPS. These shares may be redeemed, in whole or in part, at the option of the company at any time on or after 12 December 2012 subject to satisfaction of certain conditions, at the stipulated redemption amount. If not redeemed earlier, these shares will be redeemed on 11 December 2032.

Note:

Deferred tax asset on carried forward business loss and unabsorbed depreciation in tax has been recognized only to the extent there is virtual certainty as enunciated in AS 22 ''Accounting for Taxes on Income''.

Of the above, Rs 9,250,000 (previous year: Rs 9,250,000) has been provided as collateral security to 6,000, 18.5% Non-Convertible, Reedeemable Debentures having a face value of Rs. 100,000 each amounting to Rs.600,000,000.

* Includes an amount of Rs 134,292,416 (previous year: Rs 123,676,497) receivable from Companies/ firms where directors of the Company are also directors/ members in such other companies.

Note :

The above amount in escrow accounts with banks are in lien towards repayment of project loans.

8. Commitments and contingent liabilities

As at As at Particulars 31 March 2014 31 March 2013

Contingent liabilities

Claims against the company not acknowledged as debts in respect of

- Income-tax 18,040,389 22,440,182

- Service tax 31,156,450 31,156,450

Corporate guarantee for loans taken by group companies 3,400,000,000 1,020,000,000

Commitments

Estimated amount of contracts remaining to be executed on projects 1,631,001,600 658,464,627 (net of advances) and not provided for

Notes :

a During the previous year, Nitesh Urban Developments Private Limited, a subsidiary Company, issued compulsorily convertible debentures to an investor amounting to Rs 350,000,000. Pursuant to this, the Company and the investor have entered into a share sale right agreement whereby the investor has a right (but not obligation) to sell all the debentures to the Company on or after the end of 48 months from the closing date and the Company will be obliged to purchase these debentures at Rs 787,500,000 if such option is exercised by the investor.

b The Company has entered into various joint development agreements wherein, on completion of all obligations of the land owner and possession of land to the Company, the Company is required to construct and develop the entire property and hand over an agreed proportion of the built up area to the land owner as a consideration for the undivided share in land transferred to the Company.

c The Company has provided support letters to subsidiary companies wherein it has accepted to provide the necessary level of financial support to enable the company to operate as a going concern and meet its obligations as and when they fall due.

d Commitment towards purchase of equity shares of a subsidiary company

The Company has provided a put option to the investor of Nitesh Housing Developers Private Limited (subsidiary company) whereby the investor has the right to sell the shares held in the subsidiary company at a price which will yield a post-tax internal rate of return of 26% p.a. on their cost of investment, either to the principal promoter (Mr. Nitesh Shetty) or the Company in the following events :

(a) In the event where the investor exercises the right to sell, the Principal Promoter shall have the obligation to purchase and/ or buy-back the share put securities at the share put price, on a spot delivery basis.

(b) However, in the event where the Principal Promoter does not perform his obligation and/ or paying the amount to the investor of the Subsidiary Company, the Company shall have the obligation to perform and/ or pay to the investor the amounts payable by the Principal Promoter as if it were the primary obligor.

9. Employee benefits

The Company has a Defined benefit gratuity plan. The gratuity plan entitles an employee, who has rendered atleast five years of continuous service, to receive one-half months'' salary for each year of completed service at the time of retirement/ exit. The Company provides the gratuity benefit through annual contributions to a fund managed by the insurer (Life Insurance Corporation of India). Under this plan, the settlement obligation remains with the Company, although the Employees Gratuity Trust administers the plan and determines the contribution premium required to be paid by the Company.

During the previous year, the scheme was unfunded and hence, the disclosures with respect to plan assets as per Accounting Standard - 15 (Revised) - Employee benefits were not applicable to the Company.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for gratuity benefit.

The estimates of future salary increases, considered in actuarial valuation, takes into account infation, seniority, promotion and other relevant factors such as supply and demand factors in employment market.

10. Related parties

(i) Names of related parties and description of relationship:

Enterprises where control exists

Nitesh Indiranagar Retail Private Limited Subsidiary company

Nitesh Housing Developers Private Limited Subsidiary company

Nitesh Urban Development Private Limited Subsidiary company

Kakanad Enterprises Private Limited Subsidiary company

Nitesh Property Management Private Ltd Subsidiary company

Related parties where significant infuence exists and with whom transactions have taken place during the year

Individuals, Associates and Companies under common control

Associate company Nitesh Residency Hotels Private Ltd

Enterprises owned or significantly Nisco Ventures Private Limited

infuenced by Key Managerial Person :

Southern Hills Developers Private Limited

Serve & Volley Signages Private Limited

Nitesh Infrastructure and Construction

Serve & Volley Media Private Limited

Serve & Volley Outdoor Advertising Private Limited

Grass Outdoor Media Private Limited

Nitesh Industries Private Limited

Nitstone Environment Private Limited

Partnership firm in which the Company is a partner :

Nitesh Estates – Whitefeld

Key management personnel :

Nitesh Shetty [Chairman and Managing Director]

L.S.Vaidyanathan [Executive Director]

Ashwini Kumar [Executive Director and Chief Operating Ofcer]

Notes :

The Company has invested a sum of Rs. 1,472,405,790 (Previous year: Rs.800,805,790) towards 117,340,579 (Previous year: 50,180,579) Class A equity shares of Nitesh Residency Hotels Private Limited (''NRHPL''). The aforesaid investment has certain transfer restrictions (including consent of another investor) under the Shareholders'' Agreement entered into with the other investors in NRHPL. As part of the loan arrangement entered into by NRHPL for funding the hotel project, the Company has provided an undertaking to lenders not to divest its shares in NRHPL. The aforesaid Class A shares have similar voting rights to the Class B shares held by another investor but have diferent dividend rights in terms of the shareholders agreement. Efective 30 October 2009, NRHPL became an associate of the Company.

11. Interest in Joint Venture

The Company has a 24% share in the profits and losses of Nitesh Estates - Whitefeld (Association of Persons), formed in India, a jointly controlled entity, which is engaged in real estate development. The Company''s proportionate share of the assets, liabilities, income and expenses of the jointly controlled entity are as follows :

Note: The capital expenditure and contingent liability as at and for the year ended 31 March 2014 is Rs. Nil (Previous year: Rs. Nil).

12. The Ministry of Micro, Small and Medium Enterprises has issued an ofce memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006'' (''the Act''). The Company has no dues to Micro and Small Enterprises as at 31 March 2014 and 31 March 2013 in the financial statements based on information received and available with the Company.

13. The Company primarily operates only in three business segments - Residential, Retail and Hospitality. All the operations are carried out in India and hence there is no geographical segment.

Accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Assets, liabilities, revenues and direct expenses in relation to segments are categorized based on items that are individually identifable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not Specifically allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as unallocated.

14. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the equity shares (99.9%) of Nitesh Housing Developers Private Limited (''NHDPL''), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL sold 10.1% of its investment in NHDPL to another party (''the Buyer''). As at 31 March 2013, NEL holds 89.9% of the equity share capital of NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh Shetty have entered into an agreement whereby NHDPL would issue and allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to Rs.620,000,000. The Debentures and interest thereon are secured by way of pledge of the entire shareholding of NEL in NHDPL and a part of shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project Specific properties and hypothecation of receivables of such projects and further secured by corporate guarantee of NEL and personal guarantee of Mr. Nitesh Shetty. During the previous year, NHDPL has partially redeemed principal amounting to Rs 399,129,000. During the current year, NHDPL has redeemed the balance principal due and accordingly, the pledge of shares of NHDPL will be released on exercising the buy-back option by the Company.

Further, HDFC AMC has a put a option to require Mr.Nitesh Shetty to buy the 505,000 shares purchased from NEL under the terms of the agreement. NEL has given corporate guarantee in Sep 2013 in respect of the put option. The guarantee given by NEL in respect of put option is outstanding as on 31 March 2014.

15. The Company has advanced an amount aggregating Rs 157,000,000 as at 31 March 2014, to various parties for purchase/ joint development of land/ properties. Considering the timeline of these advances, the same should have been converted into acquired land/ joint development agreements or these amounts should have been recovered. While these advances are unsecured, Management continues to believe that these advances have been made to parties for which a joint development agreements/ acquisition of land will be consummated and in the event that it does not consummate, these advances can be recovered.

16. Previous years'' figures have been regrouped/ reclassified wherever necessary to conform to current years'' presentation.


Mar 31, 2013

1. Commitments and contingent liabilities

Rs. For the year For the year Particulars ended ended 31 March 2013 31 March 2012

Contingent liabilities

Claims against the company not acknowledged as debts in respect of

- Income-tax 22,440,182 35,416,412

- Service tax 31,156,450

Corporate guarantee for loans taken by group companies 1,020,000,000 1,020,000,000

Commitments

Estimated amount of contracts remaining to be executed on projects (net of 658,464,627 280,921,873 advances) and not provided for

Notes :

a During the year, Nitesh Urban Development Private Limited, a subsidiary Company, issued compulsorily convertible debentures to an investor amounting to Rs. 350,000,000. Pursuant to this, the Company and the investor have entered into a share sale right agreement whereby the investor has a right (but not obligation) to sell all the debentures to the Company on or after the end of 48 months from the closing date and the Company will be obliged to purchase these debentures at Rs. 787,500,000 if such option is exercised by the investor.

b The Company has entered into various joint development agreements wherein, on completion of all obligations of the landowner and possession of land to the Company, the Company is required to construct and develop the entire property and hand over an agreed proportion of the built up area to the land owner as a consideration for the undivided share in land transferred to the Company.

2. Employee benefts

The Company has a defned beneft gratuity plan. The gratuity plan entitles an employee, who has rendered atleast fve years of continuous service, to receive one-half months'' salary for each year of completed service at the time of retirement/ exit. The scheme is unfunded and hence the disclosures with respect to plan assets as per Accounting Standard-15(Revised)- Employee benefts are not applicable to the Company.

The following tables summarise the components of net beneft expense recognised in the statement of proft and loss and the funded status and amounts recognised in the balance sheet for gratuity beneft.

3. Related parties

(i) Names of related parties and description of relationship:

Enterprises where control exists

Nitesh Indiranagar Retail Private Limited Subsidiary company

Nitesh Housing Developers Private Limited Subsidiary company

Nitesh Urban Development Private Limited Subsidiary company

(formerly Nitesh Boat Club Development Private Limited)

Kakanad Enterprises Private Limited Subsidiary company

Nitesh Property Management Private Limited Subsidiary company

Related parties where signifcant infuence exists and with whom transactions have taken place during the year

Individuals, Associates and Companies under common control

Associate company Nitesh Residency Hotels Private Limited

Enterprises owned or signifcantly Nisco Ventures Private Limited infuenced by Key Managerial Southern Hills Developers Private Limited

Person (formerly Nitesh Estates Projects Private Limited)

Serve & Volley Signages Private Limited

Nitesh Infrastructure and Construction

Serve & Volley Media Private Limited

Serve & Volley Outdoor Advertising Private Limited

Grass Outdoor Media Private Limited

Partnership frm in which the Company Nitesh Estates – Whitefeld is a partner

Key management personnel Nitesh Shetty [Chairman and Managing Director]

L.S.Vaidyanathan [Executive Director] Ashwini Kumar [Executive Director and Chief Operating Ofcer]

4. Interest in Joint Venture

The Company has a 24% share in the profts and losses of Nitesh Estates - Whitefeld (Association of persons), formed in India, a jointly controlled entity, which is engaged in real estate development. The Company''s proportionate share of the assets, liabilities, income and expenses of the jointly controlled entity are as follows:

5. In accordance with section 117C of the Companies Act read along with circular issued by Department of Company Afairs No 9/2002 which states that the section requires the amount to be credited to debenture redemption reserve only out of profts of the Company, the Company has not transferred any amounts to debenture redemption reserve as it has incurred losses during the year.

6. The Ministry of Micro, Small and Medium Enterprises has issued an ofce memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum in accordance with the ‘Micro, Small and Medium Enterprises Development Act, 2006'' (‘the Act''). The Company has no dues to Micro and Small Enterprises as at 31 March 2013 and 31 March 2012 in the fnancial statements based on information received and available with the Company.

7. The Company primarily operates only in three business segments - Residential, Retail and Hospitality. All the operations are carried out in India and hence there is no geographical segment.

Accounting policies consistently used in the preparation of the fnancial statements are also applied to record revenue and expenditure in individual segments.

Assets, liabilities, revenues and direct expenses in relation to segments are categorized based on items that are individually identifable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not specifcally allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as unallocated.

8. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the equity shares (99.9%) of Nitesh Housing Developers Private Limited (‘NHDPL''), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL sold 10.1% of its investment in NHDPL to another party (‘the Buyer''). As at 31 March 2013, NEL holds 89.9% of the equity share capital of NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh Shetty have entered into an agreement whereby NHDPL would issue and allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to Rs.620,000,000. The Debentures and interest thereon are secured by way of pledge of the entire shareholding of NEL in NHDPL and a part of shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project specifc properties and hypothecation of receivables of such projects and further secured by corporate guarantee of NEL and personal guarantee of Mr. Nitesh Shetty. During the year, NHDPL has partially redeemed principal amounting to Rs. 399,129,000. The Buyer has an option to sell and Mr. Nitesh Shetty has an obligation to buy 505,000 shares.

9. Advance against property as at 31 March 2013 includes Rs.215,000,000 (Previous year: Rs.215,000,000) paid to an intermediary party for purchase of a particular parcel of land and consequently, the intermediary party entered into an agreement with the landlord for purchase of the said land. Subsequently, at the request of the Company, the intermediary party assigned its rights and obligations under the agreement with the landlord to the Company. There is no specifc confrmation from the landlord in acceptance of the aforesaid assignment. The Company has obtained an independent legal opinion based on which it is confdent of the enforceability of the assignment agreement and has accordingly initiated the legal proceedings with respect to refund of the aforesaid amount and is confdent that the legal proceedings would be in favour of the Company. Accordingly, the management is of the view that no adjustment is required to be made in respect of the carrying value of the advance against property as at 31 March 2013.

10. Previous years'' fgures have been regrouped/ reclassifed wherever necessary to conform to current years'' presentation.


Mar 31, 2011

1. Background

Nitesh Estates Limited ('the Company' or 'NEL') was incorporated on February 20,2004. NEL is a real estate developer engaged in the business of development, sale, management and operation of all or any part of housing and hotel projects, commercial premises and other related activities.

On April 23,2010, the Company launched its Initial Public Offer (IPO) of 75,000,000 equity shares of Rs 10 each for cash at a price of Rs.54 each and raised capital of Rs.4,050,000,000. Pursuant to the IPO, the Company's shares are listed on The National Stock Exchange and The Bombay Stock Exchange effective May 13,2010.

2. Commitments and Contingent liabilities not provided for

(a) Guarantees given

i. Corporate guarantee in respect of debentures as discussed in Note 16 below.

ii. Other guarantees - Rs 14,075,000 (Previous year: Rs. 225,950,000).

(b) Claims not acknowledged as debts in respect of sales tax - Rs.Nil (Previous year: Rs.928,560) and income tax - Rs.30,275,706 (Previous year: Rs.418,536).

(c) The Company has entered into share subscription and shareholders agreement dated October 21, 2007 with Sagar Nitesh Projects Private Limited ('SNPPL') and its promoters. Pursuant to the agreement, the Company had made an initial payment of Rs.50,000,000, towards the Company's obligation to subscribe upto 20% of the paid up capital of SNPPL amounting to Rs.354,125,000 upon fulfillment of certain conditions by the parties to the agreement. The Company, in consultation with its legal counsel is of the opinion that there has been a breach in fulfillment of the aforesaid conditions on the part of the promoters of SNPPL and accordingly, the Company has initiated arbitration proceedings with respect to refund of share application money. Based on the advice of the Company's external legal counsel, the Company is reasonably confident that the arbitration proceedings would be in the favour of the Company and the realisable value will be atleast equal to its carrying value. Accordingly, the management is of the view that no provision is required to be made in respect of the carrying value of the aforesaid share application money as at March 31,2011.

(d) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs.1,790,000 (Previous year: Rs.865,528).

3. Segment reporting

The Company is engaged in the business of real estate development in India. Since, the Company's business activity primarily falls within a single business and geographical segment, no further disclosures are required, other than those already given in the financial statements.

4. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets gratuity on departure at 15 days basic salary (last drawn salary) for each completed year of service subject to maximum of Rs. 1,000,000. The scheme is unfunded and hence the disclosures with respect to plan assets as per AS-15 are not applicable to the Company.

The following tables summaries the components of net benefit expense recognised in the profit and loss account and the funded , status and amounts recognised in the balance sheet for gratuity benefit.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

5. Deferred tax

The Company has tax losses during the year ended March 31,2011 and has deferred tax assets as at March 31,2011, the break-up of which is as below. The management is reasonably confident of realization of deferred tax assets based on the future taxable income and ultimate outcome of ongoing and proposed projects.

6. Quantitative Information

On account of the nature of business carried on by the Company, the management is of the view that it is not practicable to give quantitative information.

7. On September 24, 2009, NEL invested a sum of Rs.49,999,000 in the equity shares (99.9%) of Nitesh Housing Developers Private Limited ('NHDPL'), a subsidiary of NEL Subsequently, on September 25,2009, NEL sold 10.1 % of its investment in NHDPL to another party ('the Buyer'). As at March 31,2011, NEL holds89.9% of the equity share capital of NHDPL

On September 25,2009, NEL, NHDPL, the Buyer and Mr Nitesh Shetty have entered into an agreement whereby NHDPL would issue and allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to Rs.620,000,000.The Debentures and interest thereon are secured by way of pledge of the entire shareholding of NEL in NHDPL and a part of shareholding of Mr Nitesh Shetty in NEL, equitable mortgage of project specific properties and hypothecation of receivables of such projects and further secured by corporate guarantee of NEL and personal guarantee of Mr Nitesh Shetty. Further, the Buyer has a put option to require Mr Nitesh Shetty to buy the 505,000 shares purchased from NEL under the terms of the agreement. The Buyer has the option to exercise conversion of such Debentures into preference shares of NHDPL after August 31,2010 or secure the redemption of the same by NHDPL anytime on or after September 5,2010 and no later than September 20,2012.

Further, NHDPL had the option to redeem the Debentures to the extent of Rs.500,000,000 on or before March 31,2011, which has not been exercised by NHDPL. NHDPL had the obligation to redeem all the Debentures on September 20, 2012. The Debentures are redeemable at a price that shall entitle the Buyer to a pre-tax IRR of 18% p.a. on the subscribed amount if on such date of redemption NEL has not completed its initial public offering ('IPO'), or a post-tax IRR of 25% p.a., if on the date of redemption NEL has completed its IPO. NHDPL has issued Debentures amounting to Rs.620,000,000as at March 31,2011.

On May 15, 2010, certain terms of Debenture agreement have been amended and the Debentures have been converted from 'Redeemable Optionally Convertible Debentures' to 'Compulsorily Convertible Debentures', which will be later converted to 'Redeemable Non-convertible Preference Shares'anytime on or after September 5,2010 and no later than September 20,2012. Such Redeemable Non-convertible Preference Shares are to be redeemed at an IRR to the Buyer as discussed above.

8. Inventory as at March 31,2011 includes Rs.193,090,461 (Previous year: Rs.193,090,461) cost of land held by the Company and other project costs incurred thereto. The land is to be developed under a joint arrangement with another party ('the Other Party') along with the adjoining parcel of land owned by the Other Party. As per the joint arrangement, the Company was required to commence the project by May 18, 2010, failing which the Other Party is entitled to terminate the joint arrangement. The Other Party has not exercised the right to terminate and the Company is in negotiation with the Other Party on various matters relating to structuring the arrangement, including revised timelines for commencement of the project. The Company is reasonably confident of finalizing the arrangement with the Other Party.

9. Advance against property as at March 31, 2011 includes Rs.215,000,000 paid to an intermediary party for purchase of land and consequently, the intermediary party entered into an agreement with the landlord for purchase of land. Subsequently, at the request of the Company, the intermediary party assigned its rights and obligations under the agreement with the landlord to the Company. There is no specific confirmation from the landlord in acceptance of the aforesaid assignment. The Company continues to deal with the intermediary party on another project. Further, based on the advice of the Company's external legal counsel, the Company is reasonably confident of the enforceability of the assignment agreement. The Company is in discussion with the landlord and the intermediary and is reasonably confident of finalizing the arrangement with the landlord. Pending conclusion of the arrangement, the management is of the view that no adjustment is required to be made in respect of the carrying value of the advance against property as at March 31,2011.

10. Initial Public Offer

During the year, the Company launched its Initial Public Offer ('IPO') of 75,000,000 equity shares of Rs 10 each for cash at a price of Rs.54 each and raised capital of Rs.4,050,000,000.The premium of Rs.44 per share, amounting to Rs.3,300,000,000 from the allotment has been credited to Securities Premium Account. The Share issue expenses incurred by the Company amounting to Rs.313,662,446 have been adjusted against Securities Premium Account. The details of utilization of proceeds raised through IPO are as below.

11. Based on the information available with the Company, there are no suppliers who are registered as micro, small and medium enterprises under The Micro, Small and Medium Enterprises Development Act, 2006.

12. During the year ended March 31, 2011, the Company purchased services amounting to Rs.11,676,140 from private limited companies, covered under Section 297 of the Companies Act, 1956 in respect of which no prior approval of Central Government as required under Section 297 of the Companies Act, 1956 was obtained. The Company has applied to the Company Law Board ('CLB') under section 621A of the Companies Act, 1956 for compounding of the above non-compliance, which is under review by the CLB. Pending such approval, no adjustments have been made to the financial statements for the year ended March 31,2011.

13. As at March31, 2011, the Company has an investment of Rs. 1,484,722,764 (Previous year: Rs. 244,920,181 Jin the equity shares / towards share capital of Nitesh Indiranagar Retail Private Limited ('NIRPL'), a wholly owned subsidiary of the Company. Further, the Company has given guarantee of Rs.Nil (Previous year: Rs.632,191,180) for loan (including interest thereon) taken by NIRPL. Capital work in progress of NIRPL includes a non-refundable deposit of Rs.855,000,000 (Previous year: Rs.355,000,000) paid to the landowner under a Joint Development Agreement ('JDA') and other project specific payments amounting to Rs.629,604,666 (Previous year:Rs.528,012,141). As per the aforesaid JDA, NIRPL is required to adhere to all the terms of the JDA including the specified project timelines, failing which the other party is entitled to forfeit the aforesaid nonrefundable deposit and not continue with the joint development arrangement. Management is reasonably confident of NIRPL adhering to all the terms of the aforesaid JDA including - the specified project timelines.

14. Previous year's figures have been regrouped wherever necessary to conform to this year's classification.


Mar 31, 2010

1. Background

Nitesh Estates Limited (formerly Nitesh Estates Private Limited) (the Company or NEL) was incorporated on February 20, 2004. NEL is a real estate developer engaged in the business of development, sale, management and operation of all or any part of housing and hotel projects, commercial premises and other related activities.

At the extra-ordinary general meeting of the shareholders held on October 9, 2009, the shareholders approved the conversion of the company from a private limited company to a public limited company, and approved the change in the name of the Company from Nitesh Estates Private Limited to Nitesh Estates Limited. The Company has received a fresh certificate of incorporation from the Registrar of Companies incorporating the change in the name of the Company effective November 3, 2009.

On April 23, 2010, the Company launched its Initial Public Offer (IPO) of 75,000,000 equity shares of Rs. 10 each for cash at a price of Rs. 54 each and raised capital of Rs..4,050,000,000. Pursuant to the IPO, shares of the Company are listed on The National Stock Exchange and The Bombay Stock Exchange effective May 13, 2010.

2. Related party information

a) List of Related parties

Key managerial personnel (KMP) Mr. Nitesh Shetty [Managing Director and substantial shareholder]

Mr. L.S.Vaidyanathan [Executive Director and Chief Financial Officer]

Subsidiary companies Nitesh Indiranagar Retail Private Limited

Nitesh Housing Developers Private Limited

Associate company Nitesh Residency Hotels Private Limited

Joint venture enterprise Nitesh Estates - Whitefield [Association of persons]

Enterprises owned or significantly Globosport India Private Limited

influenced by KMP Lob Media Private Limited Madison Developers Private Limited Nisco Ventures Private Limited Nitesh Agrico Private Limited Nitesh Airways Private Limited Nitesh Boat Club Development Private Limited Nitesh Devanahalli Township Private Limited Nitesh Energy Private Limited Nitesh Estates Projects Private Limited Nitesh Healthcare Private Limited Nitesh Hospitals Private Limited Nitesh Industries Private Limited Nitesh Infrastructure Private Limited Nitesh Kochi Projects and Developers Private Limited Nitesh Land Holdings Private Limited Nitesh Media Private Limited Nitesh Mylapore Developers Private Limited Nitesh Pharmacy Private Limited Nitesh Publishers Private Limited Nitstone Environment Private Limited Nitstone Wastemanagement Private Limited Nitesh Telecom Private Limited Nitesh Warehousing Private Limited Serve & Volley Holdings Private Limited Grass Outdoor Media Private Limited (formerly Serve & Volley Media Private Limited) Serve & Volley Outdoor Advertising Private Limited Serve & Volley Signages Private Limited Nitesh Healthcare Richmond Trading Enterprises Nitesh Infrastructure and Construction Nitesh Realty Fund GP Limited Shareholder holding substantial interest AMIF I Limited

Notes:

a. During the year ended March 31, 2009, the Company sold 25% of its development rights under a joint venture to Nitesh Estates Projects Private Limited (NEPPL) for a consideration of Rs..270,000,000, The Company had incurred cost (on pro-rata basis) of Rs. 115,862,027 towards land and other development costs as at the date of sale.

b. On September 30, 2009 and October 21, 2009, the Company assigned to Nitesh Housing Developers Private Limited, a subsidiary of the Company (NHDPL), its rights to joint development arrangements with the owners of land parcels. The Company had paid an advance of Rs. 218,606,995 under such arrangements, which has now been recovered from NHDPL consequent upon the assignment of rights. The Company charged NHDPL an assignment fee of Rs. 76,000,000 in respect of the aforesaid assignment of rights.

c. On November 24, 2009, the Company purchased a developed property (apartment) from NEPPL for a consideration of Rs. 48,000,000 and sold the same to a third party for a consideration of Rs.70,000,000 on December 29, 2009. The Company incurred other incidental costs of Rs. 2,000,000 towards purchase of the said apartment.

d. Pursuant to the Share Subscription Agreement (SSA) entered into between AMIF I Limited (Investors), Pushpalatha V Shetty, Nitesh Shetty, Nitesh Industries Private Limited and the Company, common costs i.e. the salaries, general and administrative and selling overheads incurred by the Company are being shared by NEPPL and the Company in the ratio of their project expenses.

Accordingly, the Company has crossed charged NEPPL expenses amounting to Rs. 41,106,649 for the year ended March 31, 2009 and Rs. 29,575,632 for the year ended March 31, 2010. Although, the SSA has been terminated effective October 9, 2009, the Company and NEPPL continue to share common costs in the ratio of their project expenses.

e. During the year, the Company invested a sum of Rs. 104,000,000 towards additional 10,400,000 Class A equity shares of Nitesh Residency Hotels Private Limited (NRHPL). Further, on October 30, 2009, the 0.01% Optionally Convertible Redeemable Non-cumulative preference shares were converted into 1,591,252 Class A equity shares of Rs. 10 each. Further, NRHPL issued 14,321,268 Class A equity shares as fully paid bonus shares of Rs. 10 each. The aforesaid shares held by the Company in NRHPL have certain transfer restrictions (including consent of another investor) under the Shareholders Agreement entered into with the other investors in NRHPL. As part of the loan arrangement entered into by NRHPL for funding the hotel project, the Company has provided an undertaking to such lenders not to divest its shares in NRHPL. The aforesaid Class A shares have similar voting rights to the Class B shares held by another investor but have different dividend rights in terms of the shareholders agreement. Effective October 30, 2009, NRHPL became an associate of the Company. The Company has a commitment to invest additional share capital in NRHPL alongwith the other investors. The Companys share of such additional investment as at March 31, 2010 is estimated to be Rs. 460 Million.

f. Refer notes to Schedule 3 for loans personally guaranteed by certain directors of the Company. 4. Commitments and Contingent liabilities not provided for

(a) Guarantees given

i. Corporate guarantee in respect of debentures as discussed in Note 16 below ii. Other guarantees - Rs. 225,950,000 (Previous year: Rs. 275,875,000).

(b) Claims not acknowledged as debts in respect of sales tax - Rs. 928,560 (Previous year: Rs. 928,560) and income tax - Rs. 418,536 (Previous year: Rs. Nil)

(c) The Company has entered into share subscription and shareholders agreement dated October 21, 2007 with Sagar Nitesh Projects Private Limited (SNPPL) and its promoters. Pursuant to the agreement, the Company had made an initial payment of Rs. 50,000,000, towards the Companys obligation to subscribe upto 20% of the paid up capital of SNPPL amounting to Rs. 354,125,000 upon fulfillment of certain conditions by the parties to the agreement. The Company, in consultation with its legal counsel is of the opinion that there has been a breach in fulfillment of the aforesaid conditions on the part of the promoters of SNPPL and accordingly, the Company has initiated arbitration proceedings with respect to refund of share application money. Based on the advice of the Companys external legal counsel and based on an opinion from an independent lawyer, the Company is confident that the arbitration proceedings would be in the favour of the Company and the realisable value will be atleast equal to its carrying value. Accordingly, the management is of the view that no provision is required to be made in respect of the carrying value of the aforesaid share application money as at March 31, 2010.

(d) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs. 865,528 (Previous year Rs. Nil).

3. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets gratuity on departure at 15 days basic salary (last drawn salary) for each completed year of service subject to maximum of Rs. 1,000,000. The scheme is unfunded and hence the disclosures with respect to plan assets as per AS-15 are not applicable to the Company.

4. Segment reporting

The Company is engaged in the business of real estate development in India. Since, the Companys business activity primarily falls within a single business and geographical segment, no further disclosures are required, other than those already given in the financial statements.

5. Leases

The Company has taken office, vehicles and other facilities under cancelable and non-cancelable operating leases, which are renewable on a periodic basis. The total lease expense for such leases recognised in the Profit and Loss Account is Rs. 12,170,045 (Previous year: Rs. 17,697,030).

6. Quantitative Information

On account of the nature of business carried on by the Company, the management is of the view that it is not practicable to give quantitative information.

Note: At the extra-ordinary general meeting of the shareholders held on October 9, 2009, the Company has issued 62,804,790 equity shares as bonus shares to the existing shareholders by way of capitalization of securities premium and balance in profit and loss account in the ratio of nine equity shares for every one equity share held.

In accordance with the Accounting Standard - 20 Earnings Per Share, notified by Companies (Accounting Standards) Rules, 2006 (as amended), the share data has been adjusted for the aforesaid bonus shares in computation of the earnings per share for the year ended March 31, 2009.

7. On September 24, 2009, NEL invested a sum of Rs. 49,999,000 in the equity shares (99.9%) of Nitesh Housing Developers Private Limited (NHDPL), a subsidiary of NEL. Subsequently, on September 25, 2009, NEL sold 10.1% of its investment in NHDPL to another party (the Buyer). As at March 31, 2010, NEL holds 89.9% of the equity share capital of NHDPL.

On September 25, 2009, NEL, NHDPL, the Buyer and Mr Nitesh Shetty have entered into an agreement whereby NHDPL would issue and allot to the Buyer, 6,200,000 Debentures of Rs. 100 each aggregating to Rs. 620,000,000. The Debentures and interest thereon are secured by way of pledge of the entire shareholding of NEL in NHDPL and a part of shareholding of Mr Nitesh Shetty in NEL, equitable mortgage of project specific properties and hypothecation of receivables of such projects and further secured by corporate guarantee of NEL and personal guarantee of Mr Nitesh Shetty. Further, the Buyer has a put option to require Mr Nitesh Shetty to buy the 505,000 shares purchased from NEL under the terms of the agreement. The Buyer has the option to exercise conversion of such Debentures into preference shares of NHDPL after August 31, 2010 or secure the redemption of the same by NHDPL anytime on or after September 5, 2010 and no later than September 20, 2012.

Further, NHDPL had the option to redeem the Debentures to the extent of Rs. 500,000,000 on or before March 31, 2010, which has not been exercised by NHDPL. NHDPL had the obligation to redeem all the Debentures on September 20, 2012. The Debentures are redeemable at a price that shall entitle the Buyer to a pre-tax IRR of 18% p.a. on the subscribed amount if on such date of redemption NEL has not completed its initial public offering (IPO), or a post-tax IRR of 25% p.a., if on the date of redemption NEL has completed its IPO. NHDPL has issued Debentures amounting to Rs. 620,000,000 as at March 31, 2010.

On May 15, 2010, certain terms of Debenture agreement have been amended and the Debentures have been converted from Redeemable Optionally Convertible Debentures to Compulsorily Convertible Debentures, which will be later converted to Redeemable Non-convertible Preference Shares anytime on or after September 5, 2010 and no later than September 20, 2012. Such Redeemable Non-convertible Preference Shares are to be redeemed at an IRR to the Buyer as discussed above.

8. Inventory as at March 31, 2010 represents cost of land held by the Company and other project costs incurred thereto. The land is to be developed under a joint arrangement with another party (the Other Party) along with the adjoining parcel of land owned by the Other Party. As per the joint arrangement, the Company was required to commence the project by May 18, 2010, failing which the Other Party is entitled to terminate the joint arrangement. The Other Party has not exercised the right to terminate and the Company is in negotiation with the Other Party on various matters relating to structuring the arrangement, including revised timelines for commencement of the project. The Company is confident of finalizing the arrangement with the Other Party shortly. Pending outcome of the joint arrangement, the management is of the view that no adjustment is required to be made in respect of the carrying value of the inventory as at March 31, 2010

9. As at March 31, 2010, the Company has paid a sum of Rs. 88,443,596 towards expenses in connection with the IPO. This amount shall be adjusted against securities premium arising from the proposed issue of equity shares, as permitted under section 78 of the Companies Act, 1956. This amount has been carried forward and disclosed under the head "Advances recoverable in cash or kind or for value to be received" under "Loans and Advances" in the Balance Sheet.

10. Prior period item for the year ended March 31, 2009 represents advertisement related expenses amounting to Rs. 934,028, which was inadvertently not recognized in the preceding previous year.

11. Based on the information available with the Company, there are no suppliers who are registered as micro, small and medium enterprises under The Micro, Small and Medium Enterprises Development Act, 2006.

12. As at March 31, 2010, the Company has an investment of Rs. 244,920,181 in the equity shares/towards share capital of Nitesh Indiranagar Retail Private Limited (NIRPL), a wholly owned subsidiary of the Company. NIRPL has paid a non-refundable deposit of Rs. 355,000,000 paid to the landowner under a Memorandum of Understanding (MOU) and has incurred other project specific expenses amounting to Rs. 242,012,142. Under the terms of the aforesaid MOU, a joint development agreement (JDA) was to be executed by NIRPL on or before June 30, 2010, failing which the other party is entitled to forfeit the aforesaid non-refundable deposit and not continue with the joint development arrangement. However, NIRPL and the other party have been and are in active discussions to finalise the terms of the JDA and the Other Party has not forfeited the aforesaid deposit. Management is reasonably confident of NIRPL executing the JDA at the earliest. Accordingly, Management is of the view that no adjustments are required to be made in this regard to the financial statements of the Company as at March 31, 2010.

13. Previous years figures have been regrouped wherever necessary to conform to this years classification.

 
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