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Notes to Accounts of Orbit Corporation Ltd.

Mar 31, 2015

1. Contingent Liabilities and Commitments

1 Corporate Guarantee

The Company had provided corporate guarantee on behalf of Bhagyodaya Infrastructure Development Limited, the principal contractor for few projects undertaken by the Company, for availing credit facility to the extent of Rs. 99.00 million from State Bank of India. Loan Outstanding as on 31st March 2015 is Rs.111.20 million including interest.

2 Other money for which the company is contingently liable

a) -In respect of the matter described in Note 32(b), the Company has received Appeal orders for Assessment year 2004-05 to 2010-11 passed by CIT (Appeals) 38, Mumbai and also received demand notice U/s 156 of the Income Tax Act, 1961. As per the said demand notice, the Income Tax department has raised demand for Income Tax and interest thereon for an amount of Rs.1719.91 millions. However, the company has contested the said order and the demand raised thereon by fling appeal before Income Tax Appellate Tribunal.

-The Company has received Assessment orders for Assessment year 2011-12 passed by Dy. Commissioner of Income Tax, Centre Circle-47, Mumbai U/s 143(3) of Income Tax Act 1961 and also received demand notice U/s 156 of the Income Tax Act 1961. As per said demand notice, the Income Tax department has raised demand for Income Tax & Interest thereon for an amount of Rs.113.60 millions. However the company has contested the said order and the demand raised thereon by filling appeal before Commissioner of Income Tax (Appeals).

The Company has received Assessment orders for Assessment year 2012-13 passed by Dy. Commissioner of Income Tax, Centre Circle-47, Mumbai U/s 143(3) o f Income Tax Act 1961 and also received demand notice U/s 156 of the Income Tax Act 1961. As per said demand notice, the Income Tax department has raised demand for Income Tax and Interest thereon for an amount of Rs.50.80 millions. However the company has contested the said order and the demand raised thereon by filling appeal before Commissioner of Income Tax (Appeals).

The Company is confident that it will succeed in the appeals filed based on the available documents & evidence and the liability will not materialize.

b) On account of dispute with a customer where matter is sub-judice -66.48 mn

c) Suits filed against the Company under section 138 read with Section 141 of the Negotiable Instrument Act, 1881 Rs.1001.40 mn.

d) Suit filed challenging the environmental clearance granted to a project of the company (Amount not ascertainable)

e) Complaint against the Company for contravention of Environmental Protection Act, 1986. (Amount not ascertainable)

f) Complaint with State Consumer dispute Redressed Commission, Maharashtra and National Consumer Dispute Redressed Commission, New Delhi. (Amount not ascertainable)

g) Complaint under section 3 read with section 13 of Maharashtra Ownership Flats (Regulation of production, of construction ,sale, Management & transfer) Act, 1963. (Amount not ascertainable)

h) LIC Housing Finance Ltd. has initiated action under Section 13(2) and 13(4) of the SARFAESI Act, 2002 by taking physical possession of the property (including land) belonging to the subsidiary company Ahinsa Buildtech Private Limited viz., ORP (excluding 155 apartments).. The Company has filed an application with the Debts Recovery Tribunal, seeking an order to restrain from taking further steps. The Humble tribunal has granted an interim relief vide its order dated 29.04.2014, allowing the company to access the property for development with certain conditions.

i) IFCI limited has initiated action under Section 13(2) and 13(4) of the SARFAESI Act, 2002 for recovery of their dues. We are in continuous discussion with them for settlement and other avenues for repayment of the balance term loan.

j) A lender Bank has initiated actions under the provisions of the SARFAESI Act, 2002 for recovery of their dues. 3. Claims made against company not acknowledged as obligation Rs.43.19 millions

3. Segment Reporting

The Company's business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 'Segment Reporting', is not applicable.

4. Trade Receivables, Trade payable and loans and advances are subject to confirmation and reconciliation, if any

5. Borrowing cost

Borrowing cost specific to Project is capitalized as project cost and are charged to revenue based on percentage completion. Other Borrowing costs are charged to revenue.

Borrowing costs amounting to Rs.971.48 millions (Previous Year Rs.1,384.52 millions) has been charged to revenue during the year.(including portion of accumulated interest).

6. Related Parties

1 List of related parties

a Subsidiary company

1 Orbit Highcity Private Limited 52.57 % Subsidiary company

2 Ahinsa Buildtech Private Limited 85 % Subsidiary company

3 Orbit Habitat Private Limited 100 % Subsidiary company

4 Orbit Residency Private Limited 100 % Subsidiary company

5 Mazda Construction Company Private Limited - Upto 08.12.2014 75.19% Subsidiary company Step Subsidiary

6 Karmik Designs Private Limited - Upto 08.12.2014 Wholly owned subsidiary of Mazda Construction Company Private Limited

b Key Management Personnel

1 Mr. Ravi Kiran Aggarwal Chairman & Executive Director

2 Mr. Pujit Aggarwal Managing Director & CEO

3 Mr. Manoj Raichandani - (w.e.f. 07.07.2014 upto 24.02.2015) Chief Financial Officer

4 Ms.Smita Pramanik - (w.e.f. 24.02.2015 upto 30.05.2015) Chief Accounting Officer

5 Mr. Shivratan R.Soni - (Upto 31.12.2014) Company Secretary

6 Mr. Manoj Jain - (w.e.f. 09.03.2015 upto 08.05.2015) Company Secretary c Others

Enterprises over which Key Managerial Personnel are able to exercise Significant influence

1 Apex Hotel Enterprises Private Limited

2 Emgee Foils Private Limited

3 Orbit Compel Infra-Build Private Limited

4 Orbit Entertainment Private Limited

5 Orbit Exquisites Housing Private Limited

6 Orbit Infraserve Private Limited

7 Orbit Socio Foundation

8 Revati Academic & Infrastructure Private Limited

9 Ambuj Infrastructure Private Limited

10 Brio Academic Infrastructure and Resource Management Private Limited

11 Nitika Multitrading Private Limited

12 Orbit Abode Private Limited

13 Orbit Dwelling Private Limited

14 Orbit Edward Private Limited

15 Orbit Evolve Developers Private Limited

16 Orbit Lifestyle City Developers Private Limited

17 Orbit Parkcity Private Limited

18 Orbit Parkland Developers Private Limited

32. Note on Taxes

a "The Company considering interlaid, the legislative intent of the provisions of the Section 80-IB (10) of the Income Tax

Act, 1961, particularly with respect to the deduction of the profits derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profits derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profit computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim u/s. 80-IB (10).

"The company has applied for admission at settlement commission for various issues inter alia under section 80-IB(10) claim made by the Company, to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verification of facts, the same is subjudice for deduction u/s 80 - IB(10). Submission of facts & justification of the said claim is in process through various hearing from time to time at the Humble Income Tax Settlement Commission.

There is no change in the cumulative provision for tax in view of loss during the financial year ended 2015 (A.Y 2015-16) In addition to the amount of Rs. 971.43 millions provided cumulative for previous years for tax, Rs. 776.79 millions may be an additional amount for the same in case the deduction U/s 80 IB (10) is not available for such previous years.

b The Company inter alia had received notice U/s 153A of the Income Tax Act, 1961 in respect of search carried out by the relevant authority in February 2010. The Company has filed return for the same and also for the cases pending with Humble Income Tax Settlement Commission. The Income Tax department has passed orders assessment year wise in response to the said returns filed by the Company. However the company has contested the said orders and the demand raised thereon by filing appeal before Income Tax Appellate Tribunal. [Refer note 26 2(a) for details]

7. Employee Stock Options

a ESOP Scheme 2012

1 At an Annual General Meeting held on 24th September, 2012 resolution to grant up to 1,200,000 options to employees was approved which entitles the option holders to subscribe to one equity shares of the company of face value of Rs.10 per option granted at grant price on such terms and conditions as may be fixed or determined by the board.

2 At Annual General Meeting held on 24th September, 2013 total options which may be granted were further modified to 2,400,000.

3 Compensation Committee had granted 12,00,000 fresh options under Orbit ESOS 2012 at an exercise price of Rs.10/- per option on 1st July 2013, as Grant 1.

4 The Options have been granted at exercise price of Rs. 10 per option as against the market price of Rs.16.40 per share at the time of grant and have a vesting period of one year from the date of grant.

5 During the year, 1,25,000 options were granted at Exercise price of Rs.10/- Per Option as against the Market Price of Rs.21.05 per share at the Time of Grant , as Grant 2. The vesting period is spread over 5 Years in equal proportion.

6 During the year 1,39,980 Options have lapsed out of Grant 1 due to separations and 9,81,820 Options of grant 1 were outstanding as on 31st March 2015

Note: The difference in basic and diluted EPS is insignificant under both the methods.

8. Staff benefits cost in accordance with Accounting Standard 15 (Revised 2005) Retirement Benefits: Payments under defined contribution plans like Provident Fund and Family Pension have been charged to Profit & Loss Account as and when made.

Disclosure for defined benefit plan - Gratuity (non funded):

"The Company provides for gratuity benefit under a defined benefit retirement scheme (the "Gratuity Scheme") as laid out by the Payment of Gratuity Act, 1972 of India covering eligible employees. The Gratuity Scheme provides for a lump sum payment to employees who have completed at least five years of service with the Company, based on salary and tenure of employment. Liabilities with regard to the Gratuity Scheme are determined by actuarial valuation carried out using the Projected Unit Credit Method by an independent actuary. The Gratuity Scheme is a non-funded scheme and the Company intends to discharge this liability through its internal resources.

9. Remuneration paid to the Executive Chairman and Managing Director & CEO amounting to Rs.9.60 millions is subject to Central Government approval.

10. Corporate Social Responsibility Expenditure

In view of the losses being incurred ,no amount is required to be spent on corporate social responsibility expenditure in terms of section 135 of companies Act,2013.

11. Previous Year Figures

The previous year's figures have been recast / regrouped / rearranged wherever considered necessary.

12. The total value of sales for project mentioned in note 36 for which revenue recognition is applicable is Rs.11,600 millions. Out of which Rs.8,684 millions was recognized in previous year and Rs.1158.33 millions is recognized revenue for the year as per percentage completion method. The remaining amount i.e. outstanding book size is Rs. 1,757 millions.


Mar 31, 2014

I Contingent Liabilities and Commitments

1 Corporate Guarantee

The Company had provided corporate guarantee on behalf of Bhagyodaya Infrastructure Development Limited, the principal contractor for few projects undertaken by the Company, for availing credit facility to the extent of Rs. 99.00 million from State Bank of India. Loan Outstanding as on 31st March 2014 is Rs.99.92 million including interest.

2 Other money for which the company is contingently liable

a In continuation of Note 32(b), the Company has received Appeal orders for Assessment year 2004-05 to 2010-11 passed by CIT (Appeals) 38, Mumbai and also received demand notice U/s 156 of the Income Tax Act, 1961. As per the said demand notice, the Income Tax department has raised demand for Income Tax and interest thereon for an amount of Rs. 1719.91 millions. However, the company has contested the said order and the demand raised thereon by fi ling appeal before Income Tax Appellate Tribunal.

The Company has received Assessment orders for Assessment year 2011-12 passed by Dy. Commissioner of Income Tax , Centre Circle-47, Mumbai U/s 143(3) o f Income Tax Act 1961 and also received demand notice U/s 156 of the Income Tax Act 1961. As per said demand notice, the Income Tax department has raised demand for Income Tax & Interest thereon for an amount of Rs.17.86 millions. However the company has contested the said order and the demand raised theron by fi lling appeal before Commissioner of Income Tax (Appeals). The Company is confi dent that it will succeed in both the appeal fi led based on the available documents & evidence and the liability will not get materialize.

b A matter is sub-judice as a reason of certain differences and disputes between Orbit Corporation Limited and one of its clients, Rosy Blue (India) Private Limited . Due to the various claims and counterclaims and the complexcity of the pending litigation it is not practicable for the management to quantify the estimate of its fi nancial effects or liability that may arise in the matter. However for resolving the same Company is in process of entering the consent terms with Rosy Blue (India) Private Limited.

2 Segment Reporting

The Company''s business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 ''Segment Reporting'', is not applicable.

3 Trade Receivables, Trade payable and loans and advances are subject to confirmation and reconciliation, if any

4 Borrowing cost

Borrowing cost specific to Project is capitalised as project cost and are charged to revenue based on percentage completion. Other Borrowing costs are charged to revenue.

Borrowing costs amounting to Rs.1,384.52 millions(Previous Year ^859.56 millions) has been charged to revenue during the year.(including portion of accumulated interest).

5 Note on Taxes

a The Company considering interlia, the legislative intent of the provisions of the Section 80-IB (10) of the Income Tax Act, 1961, particularly with respect to the deduction of the profi ts derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profi ts derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profi t computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim u/s. 80-IB (10).

The company has applied for admission at settlement commission for various issues inter alia under section 80-IB(10) claim made by the Company, to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verifi cation of facts, the same is subjudice for deduction u/s 80 - IB(10). Submission of facts & justifi cation of the said claim is in process through various hearing from time to time at the Hon''ble Income Tax Settlement Commission.

There is no changes in the cumulative provision for tax as in view of loss during the financial year ended 2014 (A.Y 2014-15)

In addition to the amount of Rs. 964.11 millions provided cumulative for previous years for tax, Rs. 776.79 millions may be an additional amount for the same in case the deduction U/s 80 IB (10) is not available for such previous years.

b The Company inter alia had received notice U/s 153A of the Income Tax Act, 1961 in respect of search carried out by the relevant authority in February 2010. The Company has fi led return for the same and also for the cases pending with Hon''ble Income Tax Settlement Commission. The Income Tax department has passed orders assessment yearwise in response to the said returns fi led by the Company. However the company has contested the said orders and the demand raised thereon by fi ling appeal before Income Tax Appellate Tribunal.

6 Employee Stock Options a ESOP Scheme 2012

1 At an Annual General Meeting held on 24th September , 2012 resolution to grant upto 1,200,000 options to employees was approved which entitles the option holders to subscribe to one equity shares of the company of face value of Rs.10 per option granted at grant price on such terms and conditions as may be fi xed or determined by the board.

2 At Annual General Meeting held on 24th September , 2013 total options which may be granted were further modifi ed to 2,400,000

3 Compensation Committee had granted 12,00,000 fresh options under Orbit ESOS 2012 at an exercise price of Rs.10/- per option on 1st July 2013

4 The Options have been granted at exercise price of Rs.10 per option as against the market price of Rs.16.40 per share at the time of grant and have a vesting period of one year from the date of grant.

5 During the year 78,200 Options have lapsed due to separations and 11,21,800 Options were outstanding as on 31st March 2014.

c ESOP Scheme 2009

All Options granted and outstanding under Orbit ESOS 2009 were surrendered by the employees during the year

d Accounting

1 The charge of Rs. 2.26 millions has been reversed in the current year in respect of options surrendered under Orbit ESOS 2009 .

2 The employee compensation cost applicable for Options granted during the year net of lapse is Rs. 5.39 millions

3 During the year ended 2012-13, 10 employees holding options resigned. As a result of separations so far, 78,200 options have lapsed and are available for reissue.

4 Net amount of Rs. 0.02 millions has been charged on account of resignation and employee transfer to and from other subsidiary under both the schemes.

e Others

1 There is no employee who has been granted options equal to or exceeding 1% of the Issued Capital.

7 Staff benefi ts cost in accordance with Accounting Standard 15 (Revised 2005)

Retirement Benefi ts: Payments under defi ned contribution plans like Provident Fund and Family Pension have been charged to Profi t & Loss Account as and when made.

Disclosure for defi ned benefi t plan - Gratuity (non funded):

The Company provides for gratuity benefit under a defi ned benefit retirement scheme (the "Gratuity Scheme") as laid out by the Payment of Gratuity Act, 1972 of India covering eligible employees. The Gratuity Scheme provides for a lump sum payment to employees who have completed at least five years of service with the Company, based on salary and tenure of employment. Liabilities with regard to the Gratuity Scheme are determined by actuarial valuation carried out using the Projected Unit Credit Method by an independent actuary. The Gratuity Scheme is a non-funded scheme and the Company intends to discharge this liability through its internal resources.

1 The following table sets out the non-funded status of the Gratuity and Leave encashment scheme in respect of employees of the Company:

35 The total value of sales for project mentioned in note 36 for which revenue recognition is applicable is Rs. 11,296 millions. Out of which Rs. 8,394 millions was recognised in previous year and Rs. 2,90 millions is recognised revenue for the year as per percentage completion method. The remaining amount i.e. outstanding book size is Rs. 2,611 millions.

8. The following is the summary of the projects for which revenue has been recognised

9. Previous Year Figures

The previous year''s figures have been recast / regrouped / rearranged wherever considered necessary.


Mar 31, 2013

1 Contingent Liabilities and Commitments

1 Corporate Guarantee

The Company has provided corporate guarantee on behalf of Bhagyodaya Infrastructure Development Limited, the principal contractor for few projects undertaken by the Company, for availing credit facility to the extent of Rs. 99.00 million from State Bank of India. Loan Outstanding as on 31st March 2013 is Rs.92.19 million

2 Other money for which the company is contingently liable

a In continuation of Note 31(b), the Company has received Appeal orders for Assessment Year 2004-05 to 2010-11 passed by CIT (Ap- peals) 38, Mumbai and also received demand notice U/s 156 of the Income Tax Act, 1961. As per the said demand notice, the Income Tax department has raised demand for Income Tax and interest thereon for an amount ofRs. 1,719.91 millions. However, the company has contested the said order and the demand raised thereon by filing appeal before Income Tax Appellate Tribunal. The Company is confident that it will succeed in the appeal filed based on the available documents & evidence and the liability will not get materialize.

b A matter is sub-judice as a reason of certain differences and disputes between Orbit Corporation Limited and one of its clients, Rosy Blue (India) Private Limited. Due to various claims and counter claims and the complexity of the pending litigation, it is not practicable for the Management to quantify the estimate of its financial effects or liability that may arise in the matter.

2 Segment Reporting

The Company''s business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 ''Segment Reporting'', is not applicable.

3 Trade Receivables, Trade payable and loans and advances are subject to confirmation and reconciliation, if any

4 Borrowing cost

Borrowing cost specific to Project is capitalised as project cost and are charged to revenue based on percentage completion. Other Bor- rowing costs are charged to revenue.

Borrowing costs amounting to Rs.859.56 million (Previous Year Rs.680.97 million) has been charged to revenue during the year (including portion of accumulated interest).

5. Note on Taxes

a. The Company considering interlia, the legislative intent of the provisions of the Section 80-IB (10) of the Income Tax Act, 1961, particularly with respect to the deduction of the profits derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profits derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profit computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim u/s. 80-IB (10).

The company has applied for admission at settlement commission for various issues inter alia under section 80-IB(10) claim made by the Company to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verification of facts, the same is subjudice for deduction u/s 80 - IB(10). Submission of facts & justification of the said claim is in process through various hearing from time to time at the Hon''ble Income Tax Settlement Commission.

For the financial year ended 2013 (AY 2013-14), Company has not availed any deduction under Section 80-IB (10) in respect of the profits derived from redevelopment of buildings/properties. Hence, amount of Rs. 58.96 millions provided during the year for tax.

In addition to the amount of Rs. 964.11 millions provided cumulative for previous years for tax, Rs. 776.79 millions may be an additional amount for the same in case the deduction U/s 80 IB (10) is not available for such previous years.

b. The Company inter alia had received notice U/s 153A of the Income Tax Act, 1961 in respect of search carried out by the relevant authority in February 2010. The Company has filed return for the same and also for the cases pending with Hon''ble Income Tax Settlement Commission. The Income Tax department has passed orders assessment yearwise in response to the said returns filed by the Company. However the company has contested the said orders and the demand raised thereon by filing appeal before Income Tax Appellate Tribunal.

6. Employee Stock Options

I. ESOP Scheme 2009

1 At an Extra Ordinary Meeting held on 9th July, 2009 resolution to grant upto 300,000 options to employees was approved. The Compensation Committee of the Board granted 161,500 options on 27th January, 2010 to selected 107 employees of the Company under Orbit ESOS 2009.

2 At the time of allotment of bonus shares in July 2010, in the ratio of 1 share for every 1 share held, further 161,500 bonus options were granted to these employees

3 90,330 options have vested on 27th Jan 2012 and balance 1,11,350 options have vested on 27th Jan 2013.

4 The pricing of options granted is based on 30% discount of average price of equity shares computed as the average of weekly high and low of the closing prices of the shares for 2 weeks ending on the date of vest. Bonus options do not have any exercise price but are exercisable along with original options

a Repricing of ESOP on AGM

1 The AGM held on 9th August 2011 approved the re-pricing of the Options in such a way that the reference of Vesting Date is not required. The revised price is a fixed price of Rs. 46.71 per option/share for all the Options granted but not vested as on 9th August 2011.

2 The vesting schedule after 9th August 2011: 90,330 options on 27th January 2012 and 111,350 options on 27th January 2013.

3 The closing market price on 8th August, 2011 (being previous date to the re-pricing) was Rs. 36.60 per share on NSE (volume of trade 814,885 shares) and Rs. 37.05 per share on BSE (volume of trade 391,656 shares). The NSE closing price has been taken as a base for working out intrinsic value

b Rationale for re-pricing

Existing pricing formula has uncertainty about pricing and is linked to market price to the date of vesting. This is likely to render the Options unatractive due to volatile market conditions.

c Accounting

1 As the market price is less than the re-priced option, there would be no charge towards employee compensation cost in respect of 2nd and 3rd vesting.

2 The employee compensation cost in respect of 1st Vesting for 119,250 options, applicable at Rs. 20.54 per share ( i.e. Rs. 67.25 less Rs. 46.71 per share) has already been charged to Profit and loss account in the previous years.

3 During the year ended 2012-13, 8 employees holding options resigned. As a result of separations so far, 42,100 options have lapsed and are available for reissue.

4 The charge of Rs. 135,975 has been reversed in the current year in respect of 6,620 options (out of 1st Vesting) which lapsed in the year. Net amount of Rs. 27,318 has been charged on account of resignation and employee transfer to and from other subsidiary and other group company.

7 Staff benefits cost in accordance with Accounting Standard 15 (Revised 2005)

Retirement Benefits: Payments under defined contribution plans like Provident Fund and Family Pension have been charged to Profit & Loss Account as and when made.

Disclosure for defined benefit plan - Gratuity (non funded):

"The Company provides for gratuity benefit under a defined benefit retirement scheme (the "Gratuity Scheme") as laid out by the Payment of Gratuity Act, 1972 of India covering eligible employees. The Gratuity Scheme provides for a lump sum payment to employees who have completed at least five years of service with the Company, based on salary and tenure of employment. Liabilities with regard to the Gratuity Scheme are determined by actuarial valuation carried out using the Projected Unit Credit Method by an independent actuary. The Gratuity Scheme is a non- funded scheme and the Company intends to discharge this liability through its internal resources."

8 The total value of sales for project mentioned in note 37 for which revenue recognition is applicable is Rs. 14,534 millions. Out of which Rs. 9,587 millions was recognised in previous year and Rs. 2,103 millions is recognised revenue for the year as per percentage completion method. The remaining amount i.e. outstanding book size is Rs. 2,845 millions.

9 The following is the summary of the projects for which revenue has been recognised

10 Previous Year Figures

The previous year''s figures have been recast / regrouped / rearranged wherever considered necessary.


Mar 31, 2012

A. Terms/ Rights 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 General Meeting, except interim dividend. In the event of liquidation of the Company, the holders of Equity shares will be entitled to receive remaining assets , if any 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.

Terms/ Rights attached to Preference Shares

If at any time, the share capital by reason of issue of Preference shares or otherwise is divided into different classes of shares, then all or any of the rights and privileges attached to any class, then the rights and restrictions attaching to the Redeemable Preference Shares shall differ from those attaching to Equity Shares as follows:

The Redeemable Preference Shares carry rights to receive dividends.

The holders of Redeemable Preference Shares have no rights to receive notices of, attend or vote at general meetings except in certain limited circumstances affecting their interests & rights.

Subject to the provisions of the Companies Act 1956, the Company shall have the right to redeem the Redeemable Preference Shares at any time on giving not less than seven days' written notice.

On a distribution of assets of the Company, on a winding-up or other return of capital (subject to certain exceptions), the holders of Redeemable Preference Shares have priority over the holders of Ordinary Shares to receive the capital paid-up on those shares.

b. Shares reserved for issue under options

The Company had at Extra Ordinary General Meeting held on 9th July 2009 approved the resolution to grant, upto 3,00,000 Options to its and subsidiaries employees.

Company issued bonus shares to the shareholders in the ratio of 1 for every share held as on 30th June 2010. Accordingly, option holders have been granted bonus options in the same ratio.

(Refer Note 34 for details)

1. Contingent Liabilities:

1. Corporate Guarantee

The Company had provided corporate guarantee on behalf of Bhagyodaya Infrastructure Development Limited, the principal contractor for few projects undertaken by the Company, for availing credit facility to the extent of Rs. 175.00 million from State Bank of India. Loan Outstanding as on 31st March 2012 is Rs. 94.10 millions.

2. Other money for which the company is contingently liable

a. In continuation of Note 33(b), the Company has received Assessment orders for Assessment year 2004-05 to 2010-11 passed by Dy. Commissioner Income Tax, Centre Circle, Mumbai U/s 153A r.w.s. 143(3) of the Income Tax Act,1961 and also received demand notice U/s 156 of the Income Tax Act, 1961. As per the said demand notice, the Income Tax department has raised demand for Income Tax and interest thereon for an amount of Rs. 1,573.24 millions. However, the company has contested the said order and the demand raised thereon by filing appeal before Commissioner of Income Tax (Appeals). The Company is confident that it will succeed in the appeal filed based on the available documents & evidence and the liability will not get materialized.

b. As a reason of differences and disputes relating to certain issues, between Orbit Corporation Limited and Rosy Blue (India) Private Limited, arbitration was invoked under the Arbitration and Conciliation Act, 1996, whereby an Arbitrator was appointed. The claim made by Rosy Blue is unlikely to be awarded as since 2009, Orbit has been calling upon Rosy Blue (India) Private Limited to take possession of the property "Orbit Plaza", which Rosy Blue (India) Private Limited, has been avoiding. In the event, Award is granted in favour of Rosy Blue, Orbit may suffer potential monetary to the extent of outstanding amount receivable.

2. Segment Reporting

The Company's business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 'Segment Reporting', is not applicable.

3. Trade Receivables, Trade payable and loans and advances are subject to confirmation and reconciliation, if any 30. Borrowing cost

Borrowing cost specific to Project is capitalised as project cost and are charged to revenue based on percentage completion. Other Borrowing costs are charged to revenue.

Borrowing costs amounting to Rs. 1092.28 millions (excluding interest on income tax) incurred towards real estate development activities have been accumulated as part of inventory balances. Out of accumulated interest, an amount of Rs. 680.97 millions has been charged to revenue during the year.

4. Note on Taxes

A. The Company considering interlia, the legislative intent of the provisions of the Section 80-IB (10) of the Income Tax Act, 1961, particularly with respect to the deduction of the profits derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profits derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profit computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim u/s. 80-IB (10).

The company has applied for admission at settlement commission for various issues inter alia under section 80-IB(10) claim made by the Company, to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verification of facts, the same is subjudice for deduction u/s 80

- IB(10). Submission of facts & justification of the said claim is in process through various hearing from time to time at the Hon'ble Income Tax Settlement Commission

In addition to the amount of Rs. 141.36 millions provided during the year for tax, Rs. 12.67 millions may be an additional amount for the same in case the deduction u/s 80-IB (10) is not available for the year.

In addition to the amount of Rs. 905.15 millions provided cumulative for previous years for tax, Rs. 776.79 millions may be an additional amount for the same in case the deduction U/s 80 IB (10) is not available for such previous years.

B. The Company inter alia had received notice U/s 153A of the Income Tax Act, 1961 in respect of search carried out by the relevant authority in February 2010. The Company has filed return for the same and also for the cases pending with Hon'ble Income Tax Settlement Commission. The Income Tax department has passed orders assessment yearwise in response to the said returns filed by the Company. However the company has contested the said orders and the demand raised thereon by filing appeal before Commissioner of Income Tax (Appeals).

5. Employee Stock Options

A. ESOP Scheme 2009

1. At an Extra Ordinary Meeting held on 9th July, 2009 resolution to grant upto 300,000 options to employees was approved. The Compensation Committee of the Board granted 161,500 options on 27th January, 2010 to selected 107 employees of the Company under Orbit ESOS 2009.

2. At the time of allotment of bonus shares in July 2010, in the ratio of 1 share for every 1 share held, further 161,500 bonus options were granted to these employees

3. 90,330 options have vested on 27th Jan 2012 and balance 111,350 options will vest on 27th Jan 2013.

4. The pricing of options granted is based on 30% discount of average price of equity shares computed as the average of weekly high and low of the closing prices of the shares for 2 weeks ending on the date of vest. Bonus options do not have any exercise price but are exercisable along with original options

B. Repricing of ESOP on AGM

1. The AGM held on 9th August 2011 approved the re-pricing of the Options in such a way that the reference of Vesting Date is not required. The revised price is a fixed price of Rs. 46.71 per option/share for all the Options granted but not vested as on 9th August 2011.

2. The vesting schedule after 9th August 2011: 90,330 options on 27th January 2012 and 111,350 options on 27th January 2013.

3. The closing market price on 8th August, 2011 (being previous date to the re-pricing) was Rs. 36.60 per share on NSE (volume of trade 814885 shares) and Rs. 37.05 per share on BSE (volume of trade 391656 shares). The NSE closing price has been taken as a base for working out intrinsic value

C. Rational for re-pricing

Existing pricing formula has uncertainty about pricing and is linked to market price to the date of vesting. This is likely to render the Options unattractive due to volatile market conditions.

D. Accounting

1. As the market price is less than the re-priced option, there would be no charge towards employee compensation cost in respect of 2nd and 3rd vesting.

2. The employee compensation cost in respect of 1st Vesting for 119,250 options, applicable at Rs. 20.54 per share (i.e. Rs. 67.25 less Rs. 46.71 per share) has already been charged to Profit and loss account in the previous year

3. The charge of Rs. 49,501 has been reversed in the current year in respect of 2,410 options (out of 1st Vesting) which lapsed in the year.

4. During the year ended 2011-12, 15 employees holding options resigned. As a result of separations so far, 9,100 vested options and 13,090 unvested options have lapsed and are available for reissue

6. Staff benefits cost in accordance with Accounting Standard 15 (Revised 2005)

1. Retirement Benefits: Payments under defined contribution plans like Provident Fund and Family Pension have been charged to Profit & Loss Account as and when made.

2. Disclosure for defined benefit plan - Gratuity (non funded):

"The Company provides for gratuity benefit under a defined benefit retirement scheme (the "Gratuity Scheme") as laid out by the Payment of Gratuity Act, 1972 of India covering eligible employees. The Gratuity Scheme provides for a lump sum payment to employees who have completed at least five years of service with the Company, based on salary and tenure of employment. Liabilities with regard to the Gratuity Scheme are determined by actuarial valuation carried out using the Projected Unit Credit Method by an independent actuary. The Gratuity Scheme is a non-funded scheme and the Company intends to discharge this liability through its internal resources."

7. The total value of sales for project mentioned in note 37 for which revenue recognition is applicable is Rs. 20,723 millions. Out of which Rs. 15,102 millions was recognised in previous year and Rs. 1,935 millions is recognised revenue for the year as per percentage completion method. The remaining amount i.e. outstanding book size is Rs. 3,687 millions.

8. Previous Year Figures

The previous year's figures have been recast / regrouped / rearranged wherever considered necessary in accordance with Revised Schedule VI forming part of companies Act, 1956 and effective for the financial year commencing on or after 01st April 2011.


Mar 31, 2011

1. Contingent Liabilities: Corporate Guarantee (previous years Rs Nil)

The Company had provided corporate guarantee on behalf of Bhagyodaya Infrastructure Development Limited, the principal contractor for few projects undertaken by the Company, for availing credit facility to the extent of Rs 175.00 million from State Bank of India. Loan Outstanding as on 31st March 2011 is Rs 87.08 million.

Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) Rs Nil; (Previous year Rs Nil).

2. Non Convertible Debentures (NCDs) issued by the company are held by Life Insurance Corporation of India (LIC) for an outstanding amount of Rs 1,500 millions. The said NCDs have been secured by mortgage of its property situated at Santacruz, Mumbai and over immovable property at Gujarat. In addition to above, the said NCDs have also been secured by personal guarantee of Mr. Ravi Kiran Aggarwal and Mr. Pujit Aggarwal. The Redemption schedule is as under:

Debenture Redemption Reserve (DRR) has been created in accordance with circular No.9/2002 dated 18th April, 2002 issued by Department of Company Affairs, Ministry of Law Justice and Company Affairs Government of India and Section 117(C) of the Companies Act, 1956. Amount set aside for DRR represents proportionate amount of outstanding NCDs equally spread over terms of Debentures.

3. Sundry creditors includes Rs Nil (Previous year Rs Nil) due to vendors covered by the Micro, Small and Medium Enterprises Development Act, 2006.

4. Sundry debtors, sundry creditors and loans and advances are subject to confirmation and reconciliation, if any.

5. Segment Reporting

The Companys business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 Segment Reporting, is not applicable.

6. Acquisition of Subsidiaries:

a. During the year, the Company had acquired 10,000 equity shares of M/s Orbit Habitat Private Limited at Rs 10 each, thereby making it 100% subsidiary of the Company. The company had made advances of Rs 142.65 Mn for further acquisition of shares.

b. The Company has further acquired 7,258,065 shares of subsidiary M/s Orbit Highcity Private Limited at Rs 62 per share i.e. at premium of Rs 52 per share, thereby holding 97.35% shares of the said subsidiary company.

c. During the Year, Company had acquired the entire 10,000 equity shares of M/s Anaya Infrastructure Private Limited @ Rs 10 each, thereby making it a 100% subsidiary of the company. However, the shares were sold off during the year for @ Rs 123.50 each.

7. Orbit ESOS 2009

a. At an Extra Ordinary Meeting held on 9th July, 2009 resolution to grant upto 300,000 options to employees was approved. The Compensation Committee of the Board granted 161,500 options on 27th January, 2010 to selected 107 employees of the Company under Orbit ESOS 2009.

b. At the time of allotment of bonus shares in July 2010, in the ratio of 1 share for every 1 share held, further 161,500 bonus options were granted to these employees.

c. There is no employee who has been granted options equal to or exceeding 1% of the Issued Capital.

d. The pricing of options granted is based on 30% discount of average price of equity shares computed as the average of weekly high and low of the closing prices of the shares for 2 weeks ending on the date of vest. Bonus options do not have any exercise price.

e. The number of options which have vested on 27th January 2011 is 121,320 Options. Subsequently, 2070 vested options have lapsed on resignation of 2 employees. These options are available for reissue.

f. Each option is convertible into One Equity share of Rs 10 each at an effective exercise price of Rs 46.71 per share (including impact of bonus options), in respect of Options which have vested on 27th January 2011

g. The balance options will vest on 27th January 2012 and 27th January 2013. The options granted would vest over a vesting period of 3 years from the date of grant. Pricing of options which will vest in the coming years will be worked out on date of vesting and accounted at that time

h. As per the pricing formula of the scheme, the exercise price of the options can be determined on the basis of average price of shares for certain period prior to the date of vest as mentioned in point d above. Accordingly, the price of options granted but not vested cannot be ascertained. Thereby each vest is considered as a separate grant and date of vest is treated as grant date for the purpose of accounting.

i. Market Price of Rs 67.25 per share is closing price on NSE on the previous date of vesting. (i.e 25th January 2011)

j. 10,900 options granted were allocated to employees of subsidiary and group company, of which 3,810 vested on 27th January 2011. On account of which, the company had transferred and recovered employee compensation of Rs 0.08 Mn from subsidiary and group company.

m. For purposes of the proforma disclosures, the fair value of each option grant was estimated on the date of grant using the Black Scholes Option Valuation model with the following assumptions:

- Risk free interest rate of 7%;

- Expected volatility of 57%

- Expected option life : Average life taken as 1 year from date of Vesting

- Expected Dividends : Not separately included, factored in volatility working

- Closing market price of share on a date prior to date of Vesting: Rs 67.25

*The Company has during the year allotted 1,000,000 Equity shares each on conversion of warrants into Equity shares and 1,000,000 Bonus shares each thereon to Shri Ravi Kiran Aggarwal and Shri Pujit Aggarwal, the promoters of the Company.

During the current year company has paid Professional fees to Mr. Hafeez Contractor (Director) Rs 22.12 millions in his professional capacity.

8. During the current year company has redeemed all units of LIC MF Liquid Fund, for Rs 200.25 millions and earned dividend income of Rs 0.25 millions on same. The company has redeemed all units of LIC MF Saving Fund, for Rs 200.14 millions and earned dividend income of Rs 0.14 millions on same.

Besides, the company has received a dividend income of Rs 4.02 millions, and has redeemed 1,998,640.924 units of Birla Sunlife Savings Fund for Rs 20 million. All the above mentioned units were classified as short term investments.

9. Borrowing Cost

Borrowing cost specific to Project is capitalised as project cost and are charged to revenue based on percentage completion. Other Borrowing costs are charged to revenue. During the year Interest cost Rs 252.81 million had been charged to revenue (including portion of accumulated interest).

10. Earnings Per Share:

The amount considered in ascertaining the Companys earnings per share constitutes the net profit after tax attributable to Equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of shares which could have been issued on conversion of all dilutive potential shares.

Diluted EPS is calculated on the number of equity shares outstanding as on the balance sheet date and also the dilutive component of convertible warrants and employee stock options. Dilutive nature have been calculated as difference between fair value i.e. average of past six months daily closing price as on 31st March, 2011 and actual conversion price for such warrants.

11. The Company considering interlia, the legislative intent of the provisions of the Section 80-IB (10) of the Income Tax Act, 1961, particularly with respect to the deduction of the profits derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profits derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profit computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim u/s. 80-IB (10).

The company has applied for admission at settlement commission for various issues inter alia Section 80-IB (10) claim made by the Company, to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verification of facts, the same is subjudice for deduction u/s 80 – IB(10).

In addition to the amount of Rs 298.04 millions provided during the year for tax, Rs 75.38 millions may be an additional amount for the same in case the deduction u/s 80-IB (10) is not available for the year.

In addition to the amount of Rs 763.79 millions provided cumulative for previous years for tax, Rs 764.12 millions may be an additional amount for the same in case the deduction u/s 80 IB (10) is not available for such previous years.

The Company inter alia has received notice u/s 153A of the Income Tax Act, 1961 in respect of search carried out by the relevant authority in February 2010. The Company has filed return for the same except cases pending for hearing at Honble Settlement Commission.

12. The total value of sales for project mentioned in note 19 for which revenue recognition is applicable is Rs 21,451.06 millions (including previous 100% completed projects). Out of which Rs 15,552.81 millions was recognised in previous years and Rs 3,433.08 millions is recognised revenue for the current year based on percentage completion method. The remaining amount i.e. outstanding book size is Rs 2,465.18 millions

13. Retirement Benefits: Payments under defined contribution plans like Provident Fund and Family Pension have been charged to Profit & Loss Account as and when made.

14. Figures for the previous year have been regrouped/reclassified wherever necessary.


Mar 31, 2010

1. Contingent Liabilities: Corporate Guarantee Rs. Nil (previous year Rs. Nil)

2. Estimated amounts of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. Nil; (Previous year Rs. Nil).

3. Auditors’ remuneration and expenses charged to accounts:

4. Other Loans is secured against immovable properties of the Company.

5. Sundry creditors includes Rs. Nil (Previous year Rs. Nil) due to vendors covered by the Micro, Small and Medium Enterprises Development Act, 2006.

6. Sundry debtors, sundry creditors and loans and advances are subject to confirmation and reconciliation, if any.

7. Segment Reporting

The Company’s business activities fall within a single segment, viz. real estate and redevelopment and predominantly operates in domestic market. Accordingly, disclosure requirements under Accounting Standard (AS) 17 Segment Reporting, is not applicable.

8. Disclosure of related parties / Related party transactions: i) List of related parties:

Sr. No Name of the Related Party Nature of Relationship

(a) Particulars of subsidiary company

1. Orbit Residency Private Limited 100% Subsidiary company

2. Orbit Highcity Private Limited 87.18 % Subsidiary Company

3. Ahinsa Buildtech Private Limited 85% Subsidiary Company

(b) Key Management Personnel

1. Mr. Ravi Kiran Aggarwal Chairman

2. Mr. Pujit Aggarwal Managing Director & CEO

(c) Others:

1. Revati Academic & Infrastructure Private Limited

2. Mazda Construction Company Private Limited

3. Orbit Abode Private Limited

4. Orbit Lifestyle City Developers Private Limited

5. Ambuj Infrastucture Private Limited

6. Orbit Translink & Logistics Private Limited

7. Orbit Retail Chain Private Limited

8. Orbit Lifeline Private Limited

9. Property Redevelopers Association Enterprises over which

10. Brio Academic Infrastructure and Resource

Key Managerial Personnel

Management Private Limited Are able to exercise

11. Pheonix Appliances Pvt. Ltd. Significant influence

12. Emgee Foils Private Limited

13. Orbit Habitat Private Limited

14. Orbit Raking Solutions Limited

15. Orbit Entertainment Private Limited

16. Orbit Power & Transmission Private Limited

17. Orbit Socio Foundation

18. Orbit Dwelling Pvt. Ltd.

19. Orbit Parkcity Private Limited

20. Orbit Infraserve Private Limited

ii) Names of the related parties with whom transactions were carried out during the year and description of relationship

Sr. No Name of the Related Party Relationship

(a) Particulars of subsidiary company

1. Orbit Residency Private Limited 100% Subsidiary company

2. Orbit Highcity Private Limited 87.18% Subsidiary company

3. Ahinsa Buildtech Private Limited 85% Subsidiary company

(b) Key Management Personnel

1. Mr. Ravi Kiran Aggarwal Chairman

2. Mr. Pujit Aggarwal Managing Director & CEO

(c) Others :

1. Mazda Construction Company Pvt. Ltd Enterprises over which

2. Orbit Abode Private Limited

Key Managerial Personnel

3. Property Redevelopers Association are able to exercise

4. Pheonix Appliances Pvt. Ltd.

5. Orbit Socio Foundation Significant influence

6. Orbit Dwelling Pvt. Ltd.

9. During the current year company has redeemed all units of LIC MF Liquid Fund, for Rs. 853.52 millions and earned dividend income of Rs 0.15 millions on same. The company has redeemed all units of LIC MF Saving Fund, for Rs. 849.44 millions and earned dividend income of Rs. 5.94 millions on same. The company has redeemed all units of Sundaram BNP Paribas Ultra short term funds for Rs. 278.09 million and earned dividend income of 3.09 million

All the above mentioned units were classified as short term investments.

Besides, the company has received a dividend income of Rs. 3.52 millions, from Birla Sunlife Savings Fund. The investment in shares are classified as Short Term Investments.

10. Earnings Per Share:

The amount considered in ascertaining the Company’s earnings per share constitutes the net loss after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of shares which could have been issued on conversion of all dilutive potential shares.

Diluted EPS is calculated on the number of equity shares outstanding as on the balance sheet date and also the dilutive component of convertible warrants. Dilutive nature have been calculated as difference between fair value i.e. average of past six months weekly closing price as on 31st March, 2010 and actual conversion price for such warrants

11. The Company considering interlia, the legislative intent of the provisions of the Section 80-IB (10) of the Income Ta x Act, 1961, particularly with respect to the deduction of the profits derived from redevelopment of buildings/properties, is of the considered opinion that it shall be entitled to a 100% deduction of its profits derived from such property redevelopment activities undertaken in accordance with Development Control Regulations (DCR) in force in the state of Maharashtra, notwithstanding approvals etc. in terms of provisions of the said Section 80-IB (10). Accordingly the taxable profit computed in accordance with the provisions of Income Tax Act, 1961 have been reduced to the extent of claim U/s. 80-IB (10).

The company has applied for admission at settlement commission for various issues interlia 80- IB(10) claim made by the Company, to which Income Tax department had contested upon.

The company has been granted interim relief in form of stay order against abatement of all cases. In view of the matter being subject of scrutiny by Settlement Commission and further verification of facts, the same is subjudice for deduction u/s 80 – IB(10).

In addition to the amount of Rs. 175.48 millions provided during the year for tax, Rs. 99.34 millions may be an additional amount for the same in case the deduction u/s 80-IB(10) is not available for the year.

In addition to the amount of Rs 465.75 millions provided cumulative for previous years for tax, Rs 688.74 millions may be an additional amount for the same in case the deduction u/s 80 IB(10) is not available for such previous years.

12. The total value of sales for project mentioned in point 18 for which revenue recognition is applicable is Rs. 16,135.03 millions. Out of which Rs. 8,098.28 millions was recognized in previous year and Rs. 4,867.26 millions is recognized revenue for the year as per percentage completion method. The remaining amount i.e. outstanding book size is Rs. 3,169.48 millions

13. Figures for the previous year have been regrouped/reclassified wherever necessary.