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Notes to Accounts of Sobha Ltd.

Mar 31, 2016

1 Corporate Information

Sobha Limited (Formerly known as Sobha Developers Limited) (''Company'' or ''SL'') was incorporated on August 07, 1995. SL is a leading real estate developer engaged in the business of construction, development, sale, management and operation of all or any part of townships, housing projects, commercial premises and other related activities. The Company is also engaged in manufacturing activities related to interiors, glazing and metal works and concrete products which also provides backward integration to SL''s turnkey projects.

2 Basis of preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.

3.Related party disclosure

a List of related parties Subsidiaries

Direct Subsidiaries

Sobha City

Sobha Highrise Ventures Private Limited

[Subsidiary Company under Accounting Standards notified by Companies (Accounting

Standards) Rules, 2006 (as amended)]

Sobha Developers (Pune) Limited

Sobha Assets Private Limited

Sobha Tambaram Developers Limited (Formerly known as Megatech Software Private Limited)

[from March 16,2015]

Sobha Nandambakkam Developers Limited (Formerly Tirur Cybercity Developers Private

Limited) [from March 16, 2015]

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Shareholder

Mr. P. N. C. Menon [ Refer note 3 (c)]

Mrs. Sobha Menon [ Refer note 3 (c)]

Key Management Personnel

Mr. Ravi PNC Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

Mr. Ganesh Venkataraman [upto February 16, 2015]

Mr. Subhash Bhat [from February 16, 2015]

Mr. Kishore Kayarat

Relatives of key management personnel

Mrs. Sudha Menon

Other Related Parties [Enterprise owned or significantly influenced by key management personnel]

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Divyakaushal Properties LLP

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Mapedu Real Estates Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Engineering and Contracting LLC, Dubai

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Nandambakkam Developers Limited (Formerly Tirur Cybercity Developers Private Limited) [upto March 15, 2015]

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Tambaram Developers Limited (Formerly known as Megatech Software Private Limited)

[upto March 15, 2015]

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sri Parvathy Land Developers Private Limited

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber Real Estates Private Limited

4. Leases

(a) Finance lease: Company as lessee

The Company has acquired plant and machinery and scaffolding items under finance lease with the respective underlying assets as security. These leases have an average life of 3 to 5 years with renewal option included in the contract. Minimum lease payments (MLP) outstanding in respect of these assets are as follows (Figures in brackets are in respect of the previous year) :

(b) Operating lease: Company as lessee

Operating lease obligations: The Company has taken office, other facilities and other equipments under cancelable and non-cancelable operating leases, which are renewable on a periodic basis with escalation as per agreement.

5. Commitments

(a) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs. 100.92 million (Previous year - Rs. 526.46 million).

(b) At March 31, 2016, the Company has given Rs. 17,230.64 million (Previous year - Rs. 16,445.06 million) as advances for purchase of land. Under the agreements executed with the land owners, the Company is required to make further payments under the agreements based on the terms/ milestones stipulated under the agreement.

(c) The Company has entered into joint development agreements with owners of land for its construction and development. Under the agreements the Company is required to pay deposits to the owners of the land and share in area/ revenue from such development in exchange of undivided share in land as stipulated under the agreements. As of March 31, 2016 the Company has paid Rs. 3,983.18 million (Previous year - Rs. 3,059.14 million) as refundable deposit against the joint development agreements.

(d) The Company has entered into an aircraft usage agreement with a party wherein the Company along with certain other parties has committed minimum usage of aircraft.

(e) For commitments relating to lease arrangements, please refer note 28.

6. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs. 1,000,000. 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.

7. Segment reporting

As the Company operates on a backward integration model and its business activity primarily falls within a single business segment which constitutes real estate development, there are no additional disclosures to be provided under Accounting Standard 17 ''Segment Reporting1. The Company operates primarily in India and there are no other significant geographical segment.

8. Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as at March 31, 2016.

9. Capitalization of expenditure

During the year, the company has capitalized the following expenses of revenue nature to capital work- in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

10. Corporate Social Responsibility (CSR)

The gross amount to be spent by the Company on Corporate Social Responsibility (CSR) during the year is Rs. 60.06 million (Previous year - Rs. 59.78 million). The details of amount spent during the year by the Company on CSR are as below:

* During the year ended March 31, 2015, the Company had charged CSR expenditure incurred as an appropriation of profit in accordance with the clarification issued by the Institute of Chartered Accountants of India (''ICAI''), vide FAQ''s on the provisions of CSR applicability under the Companies Act, 2013, pending issue of detailed guidance note on accounting for CSR expenditure. For the year ended March 31, 2016, based on the subsequent Guidance Note on Accounting for Expenditure on CSR activities issued by ICAI, which requires amount spent on CSR activities to be charged to the statement of profit and loss account, the Company has charged Rs. 150.10 million to the statement of profit and loss account.

11. Tax expenses (net) for the year ended March 31, 2016 includes taxes of Rs. 237.50 million (Previous year - Rs. 23.82 million) relating to earlier years.

12. Disclosure required under Section 186(4) of the Companies Act 2013

For details of loans, advances and guarantees given and securities provided to related parties refer note 26.

13. Disclosure as per clause 32 of the Listing agreement of the loans and advances granted to subsidiaries, fellow subsidiaries, joint ventures, associates and other Companies in which the directors are interested:

14. On May 19, 2016, the Board of Directors approved a buyback proposal for purchase by the Company of up to 2,275,000 million shares of Rs. 10 each (representing 2.32% of total equity capital) from shareholders of the Company on a proportionate basis by way of a tender offer route at a price of Rs. 330 per equity share for an aggregate amount not exceeding Rs. 750.75 million in accordance with the provision of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998 (as amended).

15. Transfer pricing

As per the transfer pricing rules prescribed under the Income-tax Act, 1961, the Company is examining the domestic and international transactions and documentation in respect thereof to ensure compliance with the said rules. The management does not anticipate any material adjustment with regard to the transactions involved.

16.Prior year comparatives

The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current year''s classification.


Mar 31, 2013

1 Corporate Information

Sobha Developers Limited (''Company'' or ''SDL'') was incorporated on August 7,1995. SDL is a leading real estate developer engaged in the business of construction, development, sale, management and operation of all or any part of townships, housing projects, commercial premises and other related activities. The Company is also engaged in manufacturing activities related to interiors, glazing and metal works and concrete products which also provides backward integration to SDL''s turnkey projects.

2 Basis of preparation

The financial statements have been prepared to comply in all material respects with the accounting standards notified by Companies (Accounting Standards) Rules 2006, (as amended) and the relevant provisions of the Companies Act, 1956 ("the Act"). The financial statements have been prepared under the historical cost convention on an accrual basis in accordance with accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and are consistent with those used in previous year, except for the change in accounting policy explained in note 2.1 (a) below.

(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 dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in ensuing Annual General Meeting. In event of liquidation of the Company, the holders of equity shares would 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 Related party disclosure

a List of related parties Subsidiaries

Direct Subsidiaries

Sobha City

Sobha Highrise Ventures Private Limited [Subsidiary Company under Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) incorporated on May 28, 2012.] Sobha Developers (Pune) Limited [Formerly Sobha Developers (Pune) Private Limited]

[With effect from July 1, 2011 Sobha Developers (Pune) Limited has ceased to be an associate of the Company and has become a subsidiary of the Company.]

Sobha Assets Private Limited [Subsidiary incorporated on March 13,2012]

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Management Personnel

Mr. P. N. C. Menon [Chairman and Director upto June 30, 2012. Also a key shareholder, refer note 3 (c)]

Mr. Ravi PNC Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

Mr. S. Baaskaran [upto January 31, 2013]

Mr. Ganesh Venkataraman [from January 31, 2013]

Mr. Kishore Kayarat

Relatives of key management personnel

Mrs. Sobha Menon [a key shareholder, refer note 3 (c)]

Mrs. Sudha Menon

Mr. P. N. Haridas

Other Related Parties [Enterprise owned or significantly influenced by key management personnel]

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Megatech Software Private Limited

Mapedu Real Estates Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited.

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Engineering and Contracting LLC, Dubai

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha InnercityTechnopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sri Parvathy Land Developers Private Limited

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber City Developers Private Limited

Tirur Cyber Real Estates Private Limited

4 Leases

(a) Finance lease: Company as lessee

The Company has acquired plant and machinery and scaffolding items under finance lease with the respective underlying assets as security. These leases have an average life of 3 to 5 years with renewal option included in the contract. Minimum lease payments (MLP) outstanding in respect of these assets are as follows (Figures in brackets are in respect of the previous year):

* During the year ended March 31, 2011, a customer has initiated arbitration proceedings against the Company forRs. 846.72 million for breach of contractual obligation for which the Company has filed a statement of objection and counter claim for non payment. Based on legal advice obtained by the management the Company is confident of recovering full dues. Pending settlement, the claims made against the Company have been disclosed as contingent liability.

Note:

The Company is also involved in certain litigation for lands acquired by it for construction purposes, either through joint development agreements or through outright purchases, the impact of which is not quantifiable. These cases are pending with various courts and are scheduled for hearings. After considering the circumstances and legal advice received, management believes that these cases will not adversely effect its financial statements.

ii. Commitments

(a) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs. 81.56 million (Previous year - Rs. 33.90 million)

(b) At March 31, 2013, the Company has given Rs. 13,830.50 million (Previous year -Rs. 13,882.30 million) as advances for purchase of land. Under the agreements executed with the land owners, the Company is required to make further payments under the agreements based on the terms/ milestones stipulated under the agreement.

(c) The Company has entered into joint development agreements with owners of land for its construction and development. Under the agreements the Company is required to pay deposits to the owners of the land and share in area/ revenue from such development in exchange of undivided share in land as stipulated under the agreements. As of March 31, 2013 the Company has paid Rs. 2,569.04 million (Previous year - Rs. 2,455.24 million) as refundable deposit against the joint development agreements.

(d) The Company has entered into an aircraft usage agreement with a party wherein the Company along with certain other parties has committed minimum usage of aircraft.

(e) For commitments relating to lease arrangements, please refer note 28.

5 Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum ofRs. 1,000,000. 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.

6 Segment reporting

As the Company operates on a backward integration model and its business activity primarily falls within a single business segment which constitutes real estate development, there are no additional disclosures to be provided under Accounting Standard 17 ''Segment Reporting''. The Company operates primarily in India and there is no other significant geographical segment.

7 Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as at March 31, 2013.

8 Disclosure as per clause 32 of the Listing agreement of the loans and advances granted to subsidiaries, fellow subsidiaries, joint ventures, associates and other Companies in which the directors are interested:

9 Transfer pricing

As per the transfer pricing rules prescribed under the Income-tax Act, 1961, the Company is examining the domestic and international transactions and documentation in respect thereof to ensure compliance with the said rules. The management does not anticipate any material adjustment with regard to the transactions involved.

10 Prior year comparatives

The figures of the previous year have been regrouped/reclassified, where necessary, to conform with the current year''s classification.


Mar 31, 2012

1. Corporate Information

Sobha Developers Limited ('Company' or 'SDL') was incorporated on August 7, 1995. SDL is a leading real estate developer engaged in the business of construction, development, sale, management and operation of all or any part of townships, housing projects, commercial premises and other related activities. The Company is also engaged in manufacturing activities related to interiors, glazing and metal works and concrete products which also provides backward integration to SDL's turnkey projects.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the accounting standards notified by Companies (Accounting Standards) Rules 2006, (as amended) and the relevant provisions of the Companies Act, 1956 ("the Act"). The financial statements have been prepared under the historical cost convention on an accrual basis in accordance with accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and are consistent with those used in previous year, except for the change in accounting policy explained in note 2.1 (a) below.

1. On April 13, 2005, Karnataka Industrial Areas Development Board ('KIADB') allotted land to the Company on a lease cum sale basis until December 17, 2010 (further extended till September 29, 2012), to be sold to the Company at the end of lease period upon fulfillment of certain conditions. The lease has been registered in favour of the Company. The Company is confident of fulfilling the conditions. Accordingly, the initial and subsequent lease payments in this regard Have been capitalised as leasehold land.

2. Amount of borrowing cost aggregating Rs85 million (Previous year - Rs30 million) incurred during the year, is included under capital work in progress (CWIP). The amount of borrowing cost shown as other adjustment reflects the accumulated borrowing cost transferred from CWIP on capitalisation.

* Advances for land though unsecured, are considered good as the advances have been given based on arrangements/ memorandum of understanding executed by the Company and the Company/ seller/ intermediary is in the course of obtaining clear and marketable title, free from all encumbrances, including for certain properties under litigation.

# Excise duty on sales amounting to Rs55.11 million (Previous year - Rs32.36 million) has been reduced from sales in statement of profit and loss and excise duty on decrease in inventory of finished goods amounting to Rs0.55 million (Previous year - Rs0.53 million has been considered as (income)/expense in note 24 of financial statements.

3. Related party disclosure

a. List of related parties

Subsidiaries

Direct Subsidiaries

Sobha City

Sobha Developers (Pune) Private Limited

[With effect from July 1, 2011 Sobha

Developers (Pune) Private Limited has ceased to be an associate of the Company and has become a subsidiary of the Company.]

Sobha Assets Private Limited [Subsidiary incorporated on March 13, 2012]

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Management Personnel

Mr. P. N. C. Menon

Mr. Ravi Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

Mr. S. Baaskaran

Mr. Kishore Kayarat

Relatives of key management personnel

Mrs. Sobha Menon [a key shareholder, refer note 3 (d)]

Mrs. Sudha Menon

Mr. P. N. Haridas

Other Related Parties [Enterprise owned or significantly influenced by key management personnel]

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Real Estates Private Limited

Mapedu Realtors Private Limited

Megatech Software Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited.

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC (Dubai)

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber City Developers Private Limited

Tirur Cyber Real Estates Private Limited

4. Leases

a. Finance lease: Company as lessee

The Company has acquired plant and machinery and scaffolding items under finance lease with the respective underlying assets as security. These leases have an average life of 3 to 5 years with renewal option included in the contract. Minimum lease payments (MLP) outstanding in respect of these assets are as follows (Figures in brackets are in respect of the previous year) :

b. Operating lease: Company as lessee

Operating lease obligations: The Company has taken office, other facilities and other equipments under cancelable and non-cancelable operating leases, which are renewable on a periodic basis with escalation as per agreement.

The Company does not expect any reimbursement in respect of the above contingent liability and it is not practiable to estimate the timings of the cash outflows, if any, in respect of matters above pending resolution of the arbitration/ appellate proceedings and it is not probable that an outflow of resources will be required to settle the above obligations/claims.

* During the year ended March 31, 2011, a customer has initiated arbitration proceedings against the Company for Rs 846.72 million for breach of contractual obligation for which the Company has filed a statement of objection and counter claim for non payment. Based on legal advise obtained by the management the Company is confident of recovering full dues. Pending settlement, the claims made against the Company have been disclosed as contingent liability.

Note:

The Company is also involved in certain litigation for lands acquired by it for construction purposes, either through joint development agreements or through outright purchases. These cases are pending with various courts and are scheduled for hearings. After considering the circumstances and legal advice received, management believes that these cases will not adversely effect its financial statements.

ii. Commitments

(a) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs33.90 million (Previous year-Rs227.16 million)

(b) At March 31, 2012, the Company has given Rs13,351.87 million (Previous year: Rs17,750.77 million) as advances for purchase of land. Under the agreements executed with the land owners, the Company is required to make further payments under the agreements based on the terms/ milestones stipulated under the agreement.

(c) The Company has entered into joint development agreements with owners of land for its construction and development. Under the agreements the Company is required to pay deposits to the owners of the land and share in area/ revenue from such development in exchange of undivided share in land as stipulated under the agreements. As of March 31, 2012 the Company has paid Rs2,985.67 million (Previous year- Rs2,550.58 million) as refundable deposit against the joint development agreements.

(d) The Company has entered into an aircraft usage agreement with a party wherein the Company along with certain other parties has committed minimum usage of aircraft.

(e) For commitments relating to lease arrangements, please refer note 29

5. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs1,000,000. 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.

Notes:

i. The Company expects to contribute Rs20.60 million (Previous year - Rs5.00 million) to the trust towards gratuity fund in 2012-13.

ii. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other several factors such as supply and demand factor in the employment market. Employee turnover varies based on various age groups.

6. Segment reporting

As the Company operates on a backward integration model and its business activity primarily falls within a single business segment which constitutes real estate development, there are no additional disclosures to be provided under Accounting Standard 17 'Segment Reporting'. The Company operates primarily in India and there is no other significant geographical segment.

7. Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as at March 31, 2012.

8. Prior year comparatives

Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed by the Company for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

 
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