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Notes to Accounts of TCI Developers Ltd.

Mar 31, 2018

1. Background

TCI Developers Limited (“the Company”“) is a Company registered under the companies act, 1956. It was incorporated on 14 May, 2008 as a real estate arm of TCI Group. The company is engaged in the business of Real estate and Warehousing development activities.

The Real Estate and Warehousing division of Transport Corporation of India Ltd. stood transferred to the Company effective from 1st April, 2010 in terms of the Scheme of Arrangement between the Company and Transport Corporation of India Ltd. as approved vide order dated 15th September 2010 of The Hon’ble Andhra Pradesh High Court.

2. Basis of preparation

The financial statements are separate financial statements prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time). For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These standalone financial statements for the year ended March 31, 2018 are the first the Company has prepared in accordance with Ind AS. Refer to note 39 for information on how the Company adopted Ind AS.

The standalone financial statements have been prepared on the historical cost basis, except for the following assets and liabilities which have been measured at fair value:

Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments). The standalone financial statements are presented in INR

The details of investments by the Company in subsidiaries are as follows:

3. Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make judgements, estimates and assumptions that affect the reported balances of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

a) Judgements

In the process of applying the accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:

i) Classification of property The Company determines whether a property is classified as investment property or inventory property:

Investment property comprises land and buildings (principally offices, commercial warehouse and retail property) that are not occupied substantially for use by, or in the operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are substantially rented to tenants and not intended to be sold in the ordinary course of business.

Inventory property comprises property that is held for sale in the ordinary course of business. Principally, this is residential property that the Company develops and intends to sell before or on completion of construction.

b) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i) Estimation of net realisable value for inventory property (including land advance)

Inventory property is stated at the lower of cost and net realisable value (NRV).

NRV for completed inventory property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the Company, based on comparable transactions identified by the Company for properties in the same geographical market serving the same real estate segment.

NRV in respect of inventory property under construction is assessed with reference to market prices at the reporting date for similar completed property, less estimated costs to complete construction and an estimate of the time value of money to the date of completion.

With respect to Land advance given, the net recoverable value is based on the present value of future cash flows, which depends on the estimate of, among other things, the likelihood that a project will be completed, the expected date of completion, the discount rate used and the estimation of sale prices and construction costs.

Terms/ rights attached to equity shares

The Equity Shares of the Company, having par value of Rs. 10.00 per share, rank pari passu in all respects including voting rights and entitlement of dividend. In the 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.

Terms/ rights attached to preference shares

The 5% Preference Shares allotted by the company are Non-Convertible Non-Cumulative Redeemable Preference Shares of Rs. 10/- each which are redeemable in a term not exceeding 20 years from the date of allotment and on such terms and conditions and in such manner as the Board may, deem fit. The dividend rights are non-cumulative. The preference shares rank ahead of the equity shares in the event of a liquidation. The presentation of the liability and equity portions of these shares is explained in the summary of significant accounting policy.

This note covers the equity component of the issued preference shares. The liability component is reflected in financial liabilities.

(d) Details of shareholders holding more than 5% of the Shares in the company

(i) Details of shareholders holding more than 5% of the Equity Shares in the company

4. In the opinion of Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans and advances in the ordinary course of business, would not be less than the amount at which the same are stated in the Balance Sheet.

5. During the previous year 2016-17, the company had received Rs. 16,153,956/- towards compensation from the Government Authorities against part of a land acquired for highway road widening, the proportionate book value of such land being Rs. 283,076/-. The resultant profit of Rs. 15,870,880/- has been accounted for as a Profit on Sale of Assets.

6. As the Company’s main business activity falls within a single primary Business segment viz. “Real Estate and Warehousing Development” the disclosure requirements of Ind AS 108 ‘Operating Segments’ is not applicable.

7. Earning Per Share (EPS)

8. 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 30.

9. Financial risk management objectives and policies

The Company’s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Company’s operations. The Company’s principal financial assets include inventory, trade and other receivables, cash and cash equivalents and land advances and refundable deposits that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk.

A. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and other price risk, such as equity price risk and commodity/realestate risk. Financial instruments affected by market risk include loans and borrowings and refundable deposits

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company does not enter into any interest rate swaps.

B. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including refundable joint development deposits, security deposits, loans to employees and other financial instruments.

Trade receivables

(a) Receivables resulting from sale of properties: Customer credit risk is managed by requiring customers to pay advances before transfer of ownership, therefore, substantially eliminating the Company’s credit risk in this respect.

(b) Receivables resulting from other than sale of properties: The firm has established credit limits for customers and monitors their balances on ongoing basis. Credit Appraisal is performed before leasing agreements are entered into with customers. The risk is also marginal due to customers placing significant amount of security deposits for lease and fit out rentals.

Financial Instrument and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s Finance department in accordance with the Company’s policy. Investments of surplus funds are reviewed and approved by the Company’s Board of Directors on an annual basis The Company’s maximum exposure to credit risk for the components of the statement of financial position at 31 March 2018 and 2017 is the carrying amounts.

C. Liquidity risk

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank deposits and loans.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:

10. Capital Management

For the purpose of the Company’s capital management, capital includes issued equity capital, and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

11. First-time adoption of Ind AS

These financial statements, for the year ended March 31, 2018, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1, 2016, the Company’s date of transition to Ind AS.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

(a) Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for investment property covered by Ind AS 40 Investment Properties. Accordingly, the Company has elected to measure all of its property, plant and equipment and investment property at their previous GAAP carrying value.

(b) Ind AS 27 requires investments in subsidiaries to be recorded at cost or in accordance with Ind AS 109 in its separate financial statements. However Ind AS 101 provides an option in case the Company decides to measure such investment at cost (determined in accordance with Ind AS 27) or deemed cost (fair value or previous GAAP carrying amount) at that date. The Company can avail the above exemption and recognize the investment in subsidiaries at the previous GAAP carrying amount at the date of transition to Ind AS.

The Company has also prepared a reconciliation of equity as at March 31, 2017 and April 1, 2016 under the Previous GAAP with the equity as reported in these financial statements under Ind AS, that reflect the impact of Ind AS on the components of statement of balance sheet which is presented below:

Notes to reconciliations between previous GAAP and Ind AS

a) Financial liabilities at amortized cost

A preference share that provides for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date, or gives the holder the right to require the issuer to redeem the instrument at or after a particular date for a fixed or determinable amount, is a financial liability. Preference shares are separated into liability and equity components based on the terms of the contract. Thus the preference share capital is reduced by INR 423 lacs (31 March 2016: INR 423 lacs) with a corresponding increase in borrowings as liability component.

b) Proposed dividend

Under Indian GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of financial statements were considered as adjusting events. Accordingly provision for proposed dividend was recognised as a liability. Under Ind AS such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed preference dividend has been reversed with corresponding adjustment to retained earnings. Consequently the total equity increased by an equivalent amount. As Preference share capital are now part of the borrowings, the preference dividend treated as finance cost and charged to profit and loss account.

c) Other comprehensive income

Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit/loss to profit/loss as per Ind AS. Further, Indian GAAP profit/loss is reconciled to total comprehensive income as per Ind AS.

12. Recent Amendments

Impact of changes in Ind AS prospectively

The Ministry of Corporate Affairs has issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2017 on March 17, 2017 notifying amendments to Ind AS 7 ‘Statement of cash flows’ and Ind AS 102 ‘Share based payment’. These amendments are applicable from financial year beginning on or after April 1, 2017.

Amendment to Ind AS 7:

The amendment in Ind AS 7 introduces an additional disclosure that will enable the users of financial statements to evaluate changes in liabilities arising from financing activities.

These include changes arising from

(i) Cash flows, such as drawdowns and repayments of borrowings

(ii) Non-cash changes (i.e. changes in fair values), changes resulting from acquisitions and disposals of subsidiaries/ businesses and the effect of foreign exchange differences. Hence, the amendment will enable the users of financial statements to better understand the changes in entity’s debt. The Company does not have such transactions and therefore the amendment is not expected to have any impact on the financial statements.

Amendment in Ind AS 102:

The amendment in Ind AS 102 addresses three classification and measurement issues.

These relate to:-

(i) Measurement of cash-settled share-based payments that include non-market based performance condition

(ii) Modification of cash-settled arrangements to equity-settled share-based payments

(iii) Equity-settled awards that include a ‘net-settlement’ feature relating to tax obligations.

The Company does not have share based payment awards. Hence, the amendment is not expected to have any impact on the financial statements.

13. Previous year’s figures have been regrouped and rearranged, wherever found necessary.


Mar 31, 2017

The Board of Directors, in its meeting on 28th May, 2016, proposed a final dividend of Rs. 0.50 /- per Preference Share and the same was approved by the shareholders at the Annual General Meeting held on 2nd August, 2016, this resulted in a cash outflow of Rs. 2,545,572/- including corporate dividend tax.

The Board of Directors, in its meeting on 16th May, 2017, have proposed a final dividend of Rs. 0.50 /-per Preference Share for the financial year ended March 31, 2017. The proposal is subject to the approval of shareholders at the ensuring Annual General Meeting and if approved would result in a cash outflow of approximately Rs. 2,545,572/- including corporate dividend tax.

(b) 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 held. The dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the 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.

(c) Terms of Conversion/ redemption of Preference Shares

The 5% Preference Shares allotted by the company are Non-Convertible Non-Cumulative Redeemable Preference Shares of Rs. 10/- each which are redeemable in a term not exceeding 20 years from the date of allotment and on such terms and conditions and in such manner as the Board may, deem fit.

1. In the opinion of Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans and advances in the ordinary course of business, would not be less than the amount at which the same are stated in the Balance Sheet.

2. During the year 2016-17, the company had receive Rs. 16,153,956/- towards compensation from the Government Authorities against part of a land acquired for highway road widening, the proportionate book value of such land being Rs. 283,076/-. The resultant profit of Rs. 15,870,880/- has been accounted for as a Profit on Sale of Assets.

3. During Previous year 2015-16, the company had received Rs. 1,076,522 /- from the Government Authorities towards compensation against part of a land acquired for highway road widening, the proportionate book value of such land being Rs. 4,452,232/-. The resultant loss of Rs. 3,375,710 /- was accounted for as a Loss on Sale of Assets. The company also made a representation to the Government Authorities for enhancement in such compensation. However any further compensation shall be treated as capital gain, as and when received.

* For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

4. Previous year''s figures have been regrouped and rearranged, wherever found necessary.


Mar 31, 2016

(b) 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 held. The dividend, if any, proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting. In the 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.

(c) Terms of Conversion/ redemption of Preference Shares

The 5% Preference Shares allotted by the company are Non-Convertible Non-Cumulative Redeemable Preference Shares of Rs. 10/- each which are redeemable in a term not exceeding 20 years from the date of allotment and on such terms and conditions and in such manner as the Board may, deem fit.

(d) Details of shareholders holding more than 5% of the Shares in the company

1. In the opinion of Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans and advances in the ordinary course of business, would not be less than the amount at which the same are stated in the Balance Sheet.

2. During the year 2015-16, the company had received Rs. 1,076,522 /- from the Government Authorities towards compensation against part of a land acquired for highway road widening, the proportionate book value of such land being Rs. 4,452,232/-. The resultant loss of Rs. 3,375,710 /- was accounted for as a Loss on Sale of Assets. The company also made a representation to the Government Authorities for enhancement in such compensation. However any further compensation shall be treated as capital gain, as and when received.

3. Previous year''s figures have been regrouped and rearranged, wherever found necessary.


Mar 31, 2013

1. Background

TCI Developers Limited ("the Company") is a Company registered under the Companies Act, 1956. It was incorporated on 14th May, 2008. It is a real estate arm ofTCI Group which has been created to look into development of the commercial properties. The company is engaged in the business of Real estate and Warehousing development activities.

The Real Estate and Warehousing division of Transport Corporation of India Ltd. stood transferred to the Company effective from 1st April 2010 in terms of the Scheme of Arrangement between the Company and Transport Corporation of India Ltd. as approved vide order dated 15th September 2010 of the Hon''ble Andhra Pradesh High Court.

2. During the financial year 2012-13, the Company has paid remuneration of Rs. 23.63 lacs to Mr. Naresh Kumar Baranwal, whole time director, subject to the approval of shareholders in the ensuing general meeting of the Company keeping in view of the provisions of the Section 198, 309 & Schedule XIII of the Companies Act, 1956. The net profits for the year, as computed under section 349 & 350 of the Companies Act are inadequate. Accordingly the remuneration paid has exceeded by Rs. 16.72 lacs. The Company has filed an application seeking permission of Central Government for the remuneration of Mr. Naresh Kumar Baranwal and the same is awaited.

3. In the opinion of Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans and advances in the ordinary course of business, would not be less than the amount at which the same are stated in the Balance Sheet.

4. Preliminary expenses being intangible asset, written off fully as per Accounting Standard. Exceptional Items incurred in the previous year, as referred in Statement of Profit and Loss consists of costs related to equity shares issued and allotted as per the Scheme of Arrangement. These preliminary expenses have been written off in the year the same were incurred.

5. Previous year''s figures have been regrouped and rearranged, wherever found necessary.


Mar 31, 2012

1.1 The Real Estate and Warehousing division of Transport Corporation of India Ltd. stood transferred to the Company effective from 1st April 2010 in terms of the Scheme of Arrangement between the Company and Transport Corporation of India Ltd. as approved vide order dated 15 th September 2010 of The Hon'ble Andhra Pradesh High Court. Necessary effects in the accounts were taken in the previous financial year ended 31st March 2011.

1.2 Exceptional Items, as referred in Statement of Profit and Loss consists of costs related to equity shares issued and allotted as per the Scheme of Arrangement. These preliminary expenses have been written off in the year the same were incurred.

1.3 In the opinion of Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans and advances in the ordinary course of business, would not be less than the amount at which the same are stated in the Balance Sheet.

1.4 Preliminary expenses being intangible asset, written off fully as per Accounting Standard.

1.5 Contingent Liabilities and Commitments (to the extent not provided for) 31-03-2012 31-03-2011

Rupees Rupees

Contingent Liabilities - -

Commitments:

Estimated amount of contracts remaining to be executed for Project in Progress 11,167,618 -

1.6 Previous year's figures have been regrouped and rearranged, wherever found necessary


Mar 31, 2011

To the Balance Sheet as on March 31, 2011 and Profit and Loss Account for the year ended March 31, 2011

1. The Honble Andhra Pradesh High Court, vide its order dated September 15, 2010 approved the Scheme of Arrangement (the Scheme) between the Company and Transport Corporation of India Ltd. effective from April 1, 2010. In terms of the Scheme:

i. The Real Estate and Warehousing division of Transport Corporation of India Ltd. together with all the properties and assets, investments, licenses, tenancy rights, trademarks, leases and all rights, powers, interests etc. as described in the Scheme stand transferred to the Company effective from April 1, 2010 at their respective book values, then prevailing.

ii. All debts, liabilities including contingent liabilities, duties and obligations, present or futures, relating to the said division whether secured or unsecured, whether provided or not, related to the period up to March 31, 2010, have been treated as liabilities, duties and obligations of the Company.

iii. All profits or losses, income and expenses accruing or arising or incurred relating to the said division effective from April 1, 2010 have been credited/ charged in the accounts of the Company.

iv. The balance amount remaining after recording the aforesaid assets and liabilities has been credited to Capital Reserve as on April 1, 2010.

v. The title deeds for lands, buildings, licenses, agreements, bank accounts, other contracts and arrangements etc. are being transferred in the name of the Company.

vi. All permanent employees engaged in/ or relating to the said division stand transferred to the Company. The accumulated funds i.e. Provident Fund, Gratuity, Superannuation etc. will be transferred to the Companys funds as and when the legal formalities for the creation/ transfer of such funds are completed.

vii. Transport Corporation of India Ltd. is deemed to have been carrying all business and activities relating to the said division and stand possessed of the properties so transferred to the Company effective from April 1, 2010 for and on account of and in trust for the Company. Accordingly all vouchers, documents etc. in respect of the said division for the transition period are in the name of Transport Corporation of India Ltd.

viii. In consideration of the transfer of the existing business of the said division in favour of the Company; each share holder of Transport Corporation of India Ltd. is entitled to receive from the Company 1 Equity Share of Rs. 10/- each credited as fully paid up for every 20 fully paid up equity shares of Rs. 2/- each held in Transport Corporation of India Ltd. Accordingly 3,629,431 shares of the Company have been allotted to the members of Transport Corporation of India Ltd. on October 23, 2010.

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