Accounting Policies of Lok Housing & Constructions Ltd. Company

Mar 31, 2014

1.1. Basis of Preparation

2.1.1. The financial statements of the Company have been prepared and presented in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention on an accrual basis. The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013.

2.1.2. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2.2. Use of estimates: The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amounts of revenues and expenses for the year. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes different from the estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in the current and future periods.

2.3. Tangible Fixed assets

2.3.1. Fixed assets are stated at cost of acquisition or construction less accumulated depreciation / amortization and impairment losses.

2.3.2. Losses arising from the retirement of, and gains and losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

2.3.3. Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Capital work-in- progress".

2.4. Depreciation on tangible fixed assets

2.4.1. Depreciation on tangible fixed assets, is provided using the Written-down value method at the rates prescribed in schedule XIV to the Companies Act, 1956. The Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed off.

2.4.2. Leasehold assets are amortized on a straight-line basis over the period of lease.

2.4.3. Intangible Assets and Amortisation: Intangible assets are stated at cost of acquisition or construction less accumulated amortization and impairment losses if any. Intangible assets are amortised over their estimated useful economic life. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized. The Company does not have any substantial carrying cost of intangible assets.

2.5. Impairment of assets: The Carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

2.6. Borrowing Costs

2.6.1. Borrowing costs that are directly attributable to a project are allocated to respective project.

2.6.2. General and un-allocable borrowing costs are recognised as expense in the period in which they are incurred.

2.6.3. Borrowing costs are allocated to projects, only after the project has significantly commenced in its intended manner. Borrowing costs are suspended from capitalisation on the project when development work on the project is interrupted for extended / indefinite period.

2.6.4. Borrowing costs directly attributable to the acquisition and construction of an asset which takes a substantial period of time to get ready for its intended use, are capitalized as a part of the cost of such assets, until such time the asset is substantially ready for its intended use.

2.6.5. All other borrowing costs are recognized in the Statement of Profit and Loss in the period they occur.

2.6.6. Borrowing costs consist of interest and other costs incurred in connection with borrowing of funds.

2.7. Investments:

2.7.1. Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

2.7.2. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary, in the investments.

2.7.3. Current investments are carried at lower of cost or fair value.

2.8. Inventories: Inventories are valued after providing for obsolescence, as follows:

2.8.1. Inventories are valued at lower of cost or net realizable value.

2.8.2. Inventory in the nature of Construction Work-in-Progress are valued at lower of cost or net realizable value, for this purpose items of the same project are compared in totality. The cost of work in progress, includes cost of land, premium for development rights, construction costs, direct expenses associated with the construction project and directly attributable administrative, marketing and financial overheads and allocation of common unidentifiable overheads. The allocation of common unidentifiable overheads is done on the basis of estimated usage by each project, in the judgment of the management.

2.8.3. Construction materials are valued at cost.

2.8.4. Finished goods are valued at cost consisting of land development rights, construction, development, administration, marketing and finance expenses or market value whichever is lower. For this purpose items of the same project are compared in totality.

2.8.5. The Company regularly undertakes an exercise to evaluate the impairment of each inventory. On the basis of such exercise, the management is of the opinion that all the inventories which are carried over in the Balance Sheet are at their full realizable value. The auditors have relied on the judgment of the management as to the impairment of inventories.

2.9. Cash and Cash equivalents: Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand, demand deposits with banks and other short-term highly liquid investments / deposits with an original maturity of three months or less.

2.10. Revenue recognition: Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

2.10.1. Income from sale of real estate is recognised on transfer of significant risks and ownership to the buyers and when it is reasonable to expect ultimate collection and there is certainty regarding the amount of consideration.

2.10.2. Suitable provisions for cost to complete are made in cases where revenue is recognized in full.

2.10.3. The Company in respect of its construction activities follows substantial completion contract method of accounting, whereby profits in respect of units sold are recognised only when work in respect of the relevant units are substantially completed, which is determined on technical estimates as certified by management. The auditors have relied on such management certificate.

2.10.4. Revenue recognition in respect of transactions for sale of properties / development rights is done on the date of execution of agreement and the same are subject to conclusion of formalities such as conveyance and compliances of applicable legal formalities.

2.10.5. Revenue recognition in respect of constructed premises is on the basis of booking done by prospective customers and the same is subject to execution of registered sale deed under Maharashtra Ownership Flat Act (MOFA) and payment of consideration.

2.10.6. Sales in respect of a particular project is accounted net of cancellation during the same accounting period.

2.10.7. Interest income is accounted on an accrual basis at contracted rates except where there is uncertainty of ultimate collection.

2.10.8. Dividend income is recognised when the right to receive the same is established.

2.11. Government Grants and subsidies.

2.11.1. Government Grants and subsidies are recognized when there is reasonable assurance that the conditions attached to them will be complied, and grant/subsidy will be received.

2.11.2. Government grants and subsidies receivable against an expense are deducted from such expense and subsidy/ grant receivable against a specific fixed asset is deducted from cost of the relevant fixed asset.

2.11.3. Government grants of the nature of promoters'' contribution are credited to capital Reserve and treated as a part of shareholders funds.

2.11.4. During the year under review the company has not received any grant or subsidies.

2.12. Leases

2.12.1. Where the Company is the lessee: Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight- line basis over the lease term.

2.12.2. Where the Company is the lessor: Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the Statement of Profit and Loss.

2.12.3. Foreign currency transactions: Foreign currency transactions are initially recorded at the rates of exchange prevailing on the date of transactions. Foreign currency monetary items are subsequently reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

2.13. Employee benefits

2.13.1. Short term employee benefits: Short term employee benefits are recognized as an expense on accrual basis.

2.13.2. Defined contribution plans: The Company regularly contributes its employees contribution with govt recognized provident fund authority.

2.13.3. Defined benefit plans: The Company''s Gratuity fund scheme, additional gratuity scheme, provident fund scheme managed by trust and post employment benefit scheme are considered as defined benefit plans. The Company''s liability is determined on the basis of an actuarial valuation using the projected unit credit method as at Balance Sheet date. Actuarial gains / losses are recognized immediately in the Statement of Profit and Loss in the year in which they arise.

2.13.4. Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. These are provided based on past experience of leave availed.

2.13.5. For the purpose of presentation of Defined benefit plans and other long term benefits, the allocation between short term and long term provisions has been made as determined by an actuary. The Company presents the entire compensated absences as a short term provisions, since employee has an unconditional right to avail the leave at any time during the year.

2.14. Income Taxes:

2.14.1. Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and / or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income tax Act, 1961.

2.14.2. Deferred income taxes reflect the impact of current year''s timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

2.15. Provisions and contingent liabilities:

2.15.1. A provision is recognized when the Company has a present obligation as a result of past events, if it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date.

2.15.2. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

2.16. Earnings per share:

2.16.1. Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

2.16.2. Diluted earnings per share is determined by attributing the net profit or loss for the year to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

2.17. Classification of Current/ Non Current Assets and Liabilities: All assets and liabilities are presented as Current or Non-Current as per the Company''s normal operating cycle and other criteria set out in Revised Schedule VI of the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization, the Company has ascertained its operating cycle as 12 months for the purpose of current / Noncurrent Classification of assets and liabilities.

2.18. Segment Reporting:

2.18.1. Identification of segments: The Company''s operating businesses are organized and managed separately according to the nature of products and services provided with each segment representing a strategic business unit that offers different products and serves different markets.

2.18.2. The Company has identified two segments namely, construction and real estate development and cement and

building products. These segment identification are done on business differentiation basis. The Company do not have any bifurcation on geographical segment basis.

2.18.3. Allocation of common costs: Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

2.18.4. Unallocated items: Includes general corporate income and expense items which are not allocated to any business segment.

2.18.5. Segment Policies: The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

3.2.3 During the year there has not been any change in the Equity Share Capital of the Company.

3.3 There is no variation, change, restriction or special status to the equity shares issued by the Company. The equity shares have the rights and covenants as prescribed in the Companies Act, 1956.

3.5 During the year under review the Company has not bought back any shares.

3.6 Shares reserved for issue under options and contracts/commitments - Nil.

3.7 There are no unpaid calls on the equity share capital of the Company.

5.3.1 The Company had entered into a Corporate Debt Restructuring (CDR) with State Bank of India in respect of its debts. As per the CDR the total debt along with accrued interest, penal interest etc. has been renegotiated and settled for Rs. 95 crores, with an additional oblligation to pay Rs. 20 crores in the event the Company acquiring certain clearance in respect of its properties, to that extent the Company has a Contingent liability. Out of total restructured debt of Rs. 95 crores, Rs. 4.65 crores (previous year Rs. 25 crores) is due and payable before the year end, of the overdue debt of Rs. 4.65 crores (previuos year Rs. 25 crores) the Company has paid before the year end Rs. 15 lacs (previous year Rs. 16.67 crores). Debts of Rs. 65.35 crores (previous year Rs. 70 crores ) are not due and are payable in quarterly instalments of Rs. 4.65 crores commencing from March 2014 to September 2017. Interest payable on this restructured debt is at prevailing bank base rate which at present is 10 % p.a.

5.3.2 The terms of the CDR with State Bank of India are also subject to the Company paying specified instalments on time, failure of which entitles the bank to have all the rights and remedies available to it prior to the compromise settlement, to that extent the Company has a contingent liability.

5.3.3 The above loan is secured by registered mortgage of the Company''s properties at Ambernath and by equitable mortgage in respect of Company''s properties at Turbhe and Mandale.

6.2.1 Current maturity of long term debt- Rs. 1860 lacs (previous year Rs. 465 lacs ) is due to State Bank of India.

6.2.2 Interest accrued and due on borrowings-Banks & Financial Institutions- Rs. 1206.27 lacs (previous year Rs. Nil ) are due to State Bank of India.

6.2.3 Unpaid matured loans - Banks & Financial Institutions- Rs. 450 lacs (previous year Rs. 833 lacs ) are due to State Bank of India.

6.2.4 Attention is invited to Note number 5.3.land 5.3.2 to arrive at terms of debt due to State Bank of India.

6.2.5 Unpaid matured loans - Others, represents loans taken by the Company, where it has defaulted in its payment. These loans are unsecured. These loans are overdue since 1998-99.The Company provides simple interest @18% p.a. on the outstanding principal amount. The outstanding principal loan is Rs. 144.87 lacs (previous year Rs. 173.28 lacs ) and unpaid outstanding interest provided till date is Rs. 522.61 lacs (previous year Rs. 590.19 lacs).

6.2.6 The Company is in the process of restructuring and renegotiating its outstanding unsecured loans. Consequently provision for interest due on the outstanding unsecured loans has been made on simple interest basis @18% p.a. Interest is not provided at the original /last contracted rate and also no provision for interest is made on the unpaid interest amount. On account payments made by the Company to its lenders are first apportioned towards unpaid principal, instead of unpaid interest, without the consent of the lenders, this practice results in reduction in the provision for probable interest liability.

6.2.7 In case of disputed / defaulted loans taken by the Company, provision for interest due on the outstanding secured loans has been made at @18% p.a. rate of interest. No provision is being made for interest on unpaid interest as also for any penal interest and other charges.

6.2.8 The Company had entered into debt re-settlement with Ranbaxy Laboratories Ltd. However the Company has failed in its re-structured debt obligations to Ranbaxy Laboratories Limited. At the time of resettlement the Company had received benefit of interest waiver amounting to Rs. 21.77 lacs which was credited to Work in Progress account. In the opinion of the

Company the revised liabilities as per the settlement with Ranbaxy Laboratries Limited is valid and subsisting, because the Company has not received any legal notice from the concerned Lender for termination of the settlement. The liability in respect of Ranbaxy Laboratories Ltd., as reflected in the Books of Accounts of the Company is Rs. 81.54 lacs (previous year Rs. 70.77 lacs).

6.2.9 The balances in overdue secured and unsecured loans are subject to confirmation. The management has been advised that for tactical reasons not to obtain confirmations from its lenders as the same would impact the ongoing negotiations of the Company. The Company has also requested the auditors not to directly write to the lenders to obtain confirmations. The auditors have relied on the judgment of the management in this regard.

6.2.10 The balances in trade payables, secured and unsecured loans are subject to confirmation. During the year under review balances in the accounts of the several trade payables and other current liabilities have been written off, as in the opinion of the management the same are no longer payable. The auditors have relied on the judgment of the management in this regard.

8.4 All the above shares are fully paid up and the Company has no further obligations towards them.

8.5 Investments are valued at their respective cost of acquisition.

8.6 Of the above investments, Rs. 593.74 lacs (previous year Rs. 593.74 lacs ) are in companies under same management / group companies.

8.7 Aggregate amount of un-quoted investments - Rs. 593.99 lacs ( previous year Rs. 593.99 lacs).

8.8 Aggregate amount of provision for diminution in value of investments Rs. Nil.

9.2 All the above long term loans and advances are unsecured and considered good for recovery.

9.3 Long term loans and advances include Rs. Nil due from directors and other officers of the Company or entities in which directors and other officers of the Company are interested.

10.9 Investments are valued at their respective cost of acquisition.

10.10 Of the above investments, investment in Lok Nagari Developers JV is having credit balance and accordingly shown under other current liability.

10.11 Of the above investments, investment of Rs. 2620.57 lacs (previous year Rs. 789.61 lacs) are in companies under same management / group companies.

10.12 Aggregate amount of un-quoted investments - Rs. 2620.67 lacs (previous year Rs. 789.61 lacs).

10.13 Aggregate amount of provision for diminution in value of investments Rs. Nil.

12.2 All the above trade receivables are unsecured, but considered good for recovery to the extent not provided for.

12.3 Trade receivables include Rs. 335.50 lacs ( previous year Rs. 1870 lacs ) due from joint ventures where the Company is a Co-venturer. Trade receivables due from directors, other officers of the Company or entities in which directors and other officers of the Company are interested Rs. 2.91 lacs (previous year Rs. 224.75 lacs).

12.4 The balances in receivables are subject to confirmation. The management is of the opinion that all the receivables reflected in the financial statements are fully realizable and that there is no impairment in them. During the year under review balances in the accounts of the several receivables have been written off because in the opinion of the management the same are no longer receivable. The auditors have relied on the judgment of the management in this regard.

14.2 All the above short term loans and advances are unsecured, but considered good for recovery.

14.3 Short term loans and advances include Rs. 0.65 lacs (previous year Rs. 6.49 lacs) due from the joint venture where the Company is a co-venturer and due from directors, other officers of the Company or entities in which directors and other officers of the Company are interested.

15 CONTINGENT LIABILITIES AND COMMITMENTS I

15.1 Contingent Liabilities

Claims against the Company not acknowledged as debt See notes below See notes below

Guarantees - Others

# Arrears of Preference share dividend

15.2 Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Uncalled liability on shares and other investments which are partly paid.

Others See notes below See notes below

15.3 In respect of all the loans, secured and unsecured, (which are not re- negotiated) no provision has been made for compound interest and penal interest. The same will be accounted on final settlement of the accounts with the lenders. To that extent Company has Contingent Liability which is unascertainable.

15.4 No provision has been made in respect of contractual delays, lapses and defaults committed by the Company in respect of various contracts in the course of business. These delays, defaults and lapses are generally accepted to occur in the real estate development business and generally settled amicably by the parties. No provision for any probable / additional cost, compensation or penalties are being made by the Company, to that extent the Company has a Contingent Liability, which is unascertainable.

15.5 The Company is in dispute with the Income Tax deparment on several counts, these disputes pertain to different accounting periods and are pending before different appellate authorities. The aggreagate demand raised by the Income Tax department for which disputes are pending is Rs. 28.45 crores, against these disputed demand the Company has provided liability to the extent of Rs. 1.12 crores. The balance contingent liability of Rs. 27.33 crores is not provided.

15.6 The Company is re-negotiating terms with its vendors, particularly Mr. Suresh Thanawalla and others, who have demanded interest/additional compensation for delay in payments due to them. The Company has provided for the original liability and not for any additional claim/interest/compensation demanded by such creditors. There is a probability that the additional claim/interest/compensation demanded by such creditors will be paid by the Company but since the same is under negotiation, it is unascertainable and unquantifiable, to that extent the Company has a contingent liability.

15.7 Attention is also invited on Note numbers 5.3.1 and 5.3.2 to arrive the total picture of contingent liabilities.

15.8 OBLIGATIONS:

15.8.1 The Company has obligation to deliver completed premises, where it has entered in to agreement with customers to sell premises under construction.

15.8.2 The Company has obligation to get certain sanctions, approvals, clearances, development rights, in respect of properties where it has entered in to joint venture arrangement. The estimated cost of this obligation are unascertainable.

15.8.3 The Company has an obligation to make an additional investments in the joint venture. Depending on the financial needs of the joint venture from time to time, amount unascertainable .

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Mar 31, 2013

Basic Accounting :

1.1 Financial statements are prepared under historical cost convention on accrual basis in accordance with requirements of the Companies Act'' 1956'' except in case of items which are uncertain in nature and are not possible to quantify.

1.2 Revenue Recognition :

1.2.1 The Company in respect of its construction activity follows substantial completed contract method of accounting. Under this method profit in respect of units sold is recognised only when work in respect of the relevant units are substantially completed which is determined on technical estimates as certified by management. The auditors have relied upon such management certificate.

1.2.2 Revenue recognition in respect of transactions for sale of properties / development rights is done on the date of execution of agreement and the same are subject to conclusion of formalities such as conveyance and compliance of applicable legal formalities.

1.2.3 Revenue recognition in respect of constructed premises is on the basis of booking done by the prospective customer and the same is subject to execution of registered sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment of consideration.

1.2.4 Sales in respect of a particular project is accounted net of cancellation during the same accounting period.

1.2.5 The completion status of a project at the end of each accounting period'' the estimated cost for completion of the construction and development work relating to the units sold'' which are considered for profit are estimated on the basis of technical evaluation and are so certified by the management. The auditors have relied upon such management certificate.

2.2.3 During the year there has not been any change in the Equity Share Capital of the Company. However'' during the previous year the Company had converted 22''00''000 optionally convertible share warrants into equity shares at Rs. 40/- per warrant (including a premium of Rs. 30/-)'' which were issued on preferential basis to parties and companies covered in the register maintained under section 301 of the Act.

2.3 There is no variation'' change'' restriction or special status to the equity shares issued by the Company. The equity shares have the rights and covenants as prescribed in the Companies Act'' 1956.

2.5 During the year under review the Company has not bought back any shares.

2.6 Shares reserved for issue under options and contracts/commitments - Nil.

2.7 The Company had in the past issued warrants which were convertible into equity shares. During the year Nil (previous year 11''33''400) warrants have lapsed. As on the date of Balance Sheet there are no pending warrants.

4.3.1 The Company has entered into a Corporate Debt Restructuring (CDR) with State Bank of India in respect of its debts due to them. As per the CDR the total debt along with accrued interest'' penal interest etc. has been renegotiated and settled for a sum of Rs. 95 crores with an additional sum of Rs. 20 crores payable to State Bank of India in the event of the Company acquiring certain clearance in respect of properties belonging to the Company and to that extent the Company has a Contingent liability. Out of the restructured debt of Rs. 95 crores'' Rs. 25 crores is due and payable before 31-03-2013'' of which the Company has paid Rs. 16.67 crores. Thus Rs. 8.33 crores has become overdue. The remaining sum of Rs. 70 crores is to be paid in 15 quarterly instalments of Rs. 4.65 crores commencing from March 2014 to September 2017. Interest payable on this restructured debt is at prevailing bank base rate which at present is 10 % p.a.

4.3.2 The terms of the CDR with State Bank of India are also subject to the Company paying specified instalments on time'' failure of which entitles the bank to have all the rights and remedies available to it prior to the compromise settlement and to that extent the Company has a contingent liability.

4.3.3 The above loan is secured by registered mortgage of the Company''s properties at Ambernath and by equitable mortgage in respect of Company’s properties at Turbhe and Mandale.

5.1.3 Secured short term loan from Banks- Rs. Nil (previous year Rs.243.59 lacs) was taken from State Bank of India. This overdraft facility was repayable on demand and the same was secured by fixed deposits placed with the same bank. The fixed deposits were made out of funds earmarked for payment to customers. The rate of interest on this short term loans / overdraft facility was 10.5% pa.

5.1.4 The above loans are not personally guaranteed by directors or any other persons. There is no default in repayment of the said loans.

5.2.1 Current maturity of long term debt-Rs. 465 lacs (previous year Rs. Nil is due to State Bank of India.

5.2.2 Unpaid matured loans - Banks & Financial Institutions- Rs. 833 lacs (previous year Rs.4''961.59 lacs) are due to State Bank of India.

5.2.3 Attention is invited to Note number 4.3.1and 4.3.2 to arrive at terms of debt due to State Bank of India.

5.2.4 Unpaid matured loans - Others'' represents loans taken by the Company'' where it has defaulted in its payment. These loans are unsecured. These loans are overdue since 1998-99.The Company provides simple interest @18% p.a. on the outstanding principal amount. The outstanding principal loan is Rs. 173.28 lacs (previous year Rs. 175.28 lacs ) and unpaid outstanding interest provided till date is Rs. 590.19 lacs (previous year Rs. 550.17 lacs ).

5.2.5 The Company is in the process of restructuring and renegotiating its outstanding unsecured loans. Consequently provision for interest due on the outstanding unsecured loans has been made on simple interest basis @18% p.a. Interest is not provided at the original /last contracted rate and also no provision for interest is made on the unpaid interest amount. On account payments made by the Company to its lenders are first apportioned towards unpaid principal'' instead of unpaid interest'' without the consent of the lenders'' this practice results in reduction in the provision for probable interest liability.

5.2.6 The Company had entered into debt re-settlement with Ranbaxy Laboratories Ltd. However the Company has failed in its re-structured debt obligations to Ranbaxy Laboratories Limited. At the time of resettlement the Company had received benefit of interest waiver amounting to Rs. 21.77 lacs which was credited to Work in Progress account. In the opinion of the Company the revised liabilities as per the settlement with Ranbaxy Laboratories Limited is valid and subsisting'' because the Company has not received any legal notice from the concerned Lender for termination of the settlement. The liability in respect of Ranbaxy Laboratories Ltd.'' as reflected in the Books of Accounts of the Company is Rs. 70.77 lacs (previous year Rs. 60 lacs).

5.2.7 In case of disputed /defaulted loans taken by the Company'' provision for interest due on the outstanding secured loans has been made at the last contractual rate of interest. No provision is being made for interest on unpaid interest as also for any penal interest and other charges.

5.2.8 The balances in overdue secured and unsecured loans are subject to confirmation. The management has been advised that for tactical reasons not to obtain confirmations from its lenders as the same would impact the ongoing negotiations of the Company. The Company has also requested the auditors not to directly write to the lenders to obtain confirmations. The auditors have relied on the judgment of the management in this regard.

5.4 The balances in trade payables'' secured and unsecured loans are subject to confirmation. During the year under review balances in the accounts of the several trade payables and other current liabilities have been written off'' as in the opinion of the management the same are no longer payable. The auditors have relied on the judgment of the management in this regard.

7.4 All the above shares are fully paid up and the Company has no further obligations towards them.

7.5 Investments are valued at their respective cost of acquisition.

7.6 Of the above investments'' except investment in The Shamrao Vithal Co op Bank Ltd.'' other investmant are in companies under same management / group companies.

7.7 Aggregate amount of un-quoted investments - Rs. 593.99 lacs ( previous year Rs. 594.01 lacs ).

7.8 Aggregate amount of provision for diminution in value of investments Rs. Nil.

8.2 All the above long term loans and advances are unsecured and considered good for recovery.

8.3 Long term loans and advances include Rs. Nil due from directors and other officers of the Company or entities in which directors and other officers of the Company are interested.

10.8 Investments are valued at their respective cost of acquisition.

10.9 Of the above investments'' investment of Rs. 789.61 lacs ( previous year Rs. 238.48 lacs ) are in companies under same management / group companies.

10.10 Aggregate amount of un-quoted investments - Rs. 789.61 lacs ( previous year Rs. 238.48 lacs ).

10.11 Aggregate amount of provision for diminution in value of investments Rs. Nil.

10.12 The Company has an obligation to make an additional investments in the joint venture depending on the financial needs of the joint venture from time to time'' amount unascertainable .

11.2 Inventory is valued at lower of market value or cost of acquisition. All direct expenses in respect of acquisition and clearance of title of such inventory are included in the cost of such inventory.

11.3 Construction materials are valued at cost.

11.4 Work in progress are valued at costs'' consisting of land development rights'' construction'' development'' administration'' marketing and finance expenses or market value whichever is lower. For this purpose items of the same project are compared in totality.

11.5 Finished goods are valued at cost consisting of land development rights'' construction'' development'' administration'' marketing and finance expenses or market value whichever is lower. For this purpose items of the same project are compared in totality.

11.6 The Company regularly undertakes an exercise to evaluate the impairment of each inventory. On the basis of such exercise'' the management is of the opinion that all the inventories which are carried over in the Balance Sheet are at their full realizable value. The auditors have relied on the judgment of the management as to the impairment of inventories.

12.2 All the above trade receivables are unsecured'' but considered good for recovery.

12.3 Trade receivables include Rs. 1''870 lacs (previous year Rs. 830 lacs) due from joint ventures where the Company is a Co- venturer. Trade receivables due from directors'' other officers of the Company or entities in which directors and other officers of the Company are interested Rs. 224.75 lacs (previous year Rs. Nil).

12.4 The balances in receivables are subject to confirmation. The management is of the opinion that all the receivables reflected in the financial statements are fully realizable and that there is no impairment in them. During the year under review balances in the accounts of the several receivables have been written off because in the opinion of the management the same are no longer receivable. The auditors have relied on the judgment of the management in this regard.

14.2 All the above short term loans and advances are unsecured'' but considered good for recovery.

14.3 The above short term loans and advances given are without interest.

14.4 Short term loans and advances include Rs. 6.49 lacs (previous year Rs. 4.72 lacs) due from the joint venture where the Company is a co-venturer.

15.3 In respect of all the loans'' secured and unsecured'' (which are not re- negotiated) no provision has been made for compound interest and penal interest. The same will be accounted on final settlement of the accounts with the lenders. To that extent Company has Contingent Liability which is unascertainable.

15.4 No provision has been made in respect of contractual delays'' lapses and defaults committed by the Company in respect of various contracts in the course of business. These delays'' defaults and lapses are generally accepted to occur in the real estate development business and generally settled amicably by the parties. No provision for any probable / additional cost'' compensation or penalties are being made by the Company'' to that extent the Company has a Contingent Liability'' which is unascertainable.

15.5 The Company is in dispute with the Income Tax department on several counts'' these disputes pertain to different accounting periods and are pending before different appellate authorities. The aggreagate demand raised by the Income Tax department for which disputes are pending is Rs. 32.29 crores'' against these disputed demand the Company has provided liability to the extent of Rs. 86.39 lacs. The balance contingent liability of Rs.31.43 crores is not provided.

15.6 Attention is also invited on Note numbers 4.3.1 and 4.3.2 to arrive the total picture of contingent liabilities.

15.7 OBLIGATIONS:

15.7.1 The Company has obligation to deliver completed premises'' where it has entered in to agreement with customers to sell premises under construction.

15.7.2 The Company has obligation to get certain sanctions'' approvals'' clearances'' development rights'' in respect of properties where it has entered in to joint venture arrangement. The estimated cost of this obligation are unascertainable.

15.7.3 Attention is also invited on Note numbers 10.12 to arrive at the total picture of obligations.

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Mar 31, 2012

Basic Accounting :

1.1 Financial statements are prepared under historical cost convention on accrual basis in accordance with the requirements of the Companies Act,1956, except in the case of items which are uncertain in nature and not possible to quantify.

1.2 Revenue Recognition :

1.2.1 The Company, in respect of its construction activity, follows substantial completed contract method of accounting . Under this method profit in respect of units sold is recognised only when the work in respect of the relevant units are substantially completed, which is determined on technical estimates as certified by management. The auditors have relied upon such management certificate.

1.2.2 Revenue recognition in respect of transactions for sale of properties / development rights is done on the date of execution of agreement and the same are subject to conclusion of formalities such as conveyance and compliance of applicable legal formalities.

1.2.3 Revenue recognition in respect of constructed premises is on the basis of booking done by the prospective customer and the same is subject to execution of registered sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment of consideration.

1.2.4 Sales in respect of a particular project is accounted, net of cancellation, during the same accounting period.

1.2.5 The completion status of a project at the end of each accounting period, the estimated cost for completion of the construction and development work relating to the units sold, which are considered for profit are estimated on the basis of technical evaluation and are so certified by the management. The auditors have relied upon such management certificate.

2.2.3 During the year the Company has converted 22,00,000 (previous year 16,66,600) optionally convertible share warrants into equity shares at Rs. 40/- per warrant (including a premium of Rs. 30/-) on preferential basis to parties and companies covered in the register maintained under section 301 of the Act.

2.3 There is no variation, change, restriction or special status to the equity shares issued by the Company. The equity shares have the rights and covenants as prescribed in the Companies Act, 1956.

2.5 During the year under review the Company has not bought back any shares.

2.6 Shares reserved for issue under options and contracts/commitments - Nil.

2.7 In the period of five years immediately preceding the date of Balance Sheet, the Company has not allotted any shares without payment being received in cash, nor has it issued any shares by way of bonus shares, nor has it bought back any shares, save and except issue of 1,92,27,791 equity shares of Rs. 10/- each fully paid up issued for consideration other than cash on account of Merger- amalgamation of Lok Shelters Ltd. with the Company.

2.8 The Company had, in past issued warrants which were convertible in to equity shares. During the year 11,33,400 warrants have lapsed and the application money of Rs. 10/- per warrant is forfeited and transferred to capital reserve. As on the date of Balance Sheet there are no pending warrants.

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Mar 31, 2011

A. Basis of Accounting

Financial statements are prepared under historical cost convention on accrual basis in accordance with the requirements of the Companies Act,1956, except in the case of items which are uncertain in nature and not possible to quantify.

b. Revenue Recognition

i. The Company follows substantial completed contract method of accounting in respect of its construction activity. Under this method profit in respect of units sold is recognised only when the work in respect of the relevant units are substantially completed, which is determined on technical estimates as certified by management.

ii. The completion status of a project at the end of each accounting period, the estimated cost for completion of the construction and development work relating to the units sold, which are considered for profit are estimated on the basis of technical evaluation and are so certified by the management. The auditors have relied upon such management certifcate..

iii. Revenue recognition in respect of transactions for sale of properties / development rights is on the date of execution of agreement to sale and are subject to conclusion of formalities as to conveyance and compliance of applicable legal formalities.

iv. Revenue recognition in respect of constructed premises is on the basis of booking done by the prospective customer and the same is subject to execution of registered sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment of consideration.

v. Sales in respect of a particular project is accounted for, net of cancellation, in the same accounting period.

c. Fixed Assets :-

Fixed Assets are stated at cost of acquisition less accumulated depreciation.

d. Depreciation

i. Depreciation on fixed assets has been provided under Written Down Value method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

ii. Depreciation on additions to fixed assets has been charged from the date when they were frst put to use.

iii. Goodwill is amortised over period of fve years in equal installments.

e. Inventories

i. Construction materials are valued at cost.

ii. Work in progress are valued at costs consisting of land development rights, construction, development, administration, marketing and fnance expenses or market value whichever is lower. For this purpose items of the same project are compared in totality.

iii. Finished goods are valued at cost consisting of land development rights, construction, development, administration, marketing and fnance expenses or market value whichever is lower. For this purpose items of the same project are compared in totality.

2) LOANS & BORROWINGS:

a. Secured Loans are subject to charge created / to be created on the assets/properties of the Company.

b. In case of disputed /defaulted loans taken by the Company, provision for interest due on the outstanding secured loans has been made at the last contractual rate of interest. No provision is being made for interest on unpaid interest as also for any penal interest and other charges.

c. The Company is in the process of restructuring and renegotiating its outstanding unsecured loans. Consequently provision for interest due on the outstanding unsecured loans has been made on simple interest basis at rate which is consistent with the trend at which other unsecured loans are restructured and renegotiated, and not at the original /last contracted rate of interest, further no provision for interest is being made on the unpaid interest amount. On account payments made by the Company to its lenders are frst apportioned towards unpaid principal, instead of unpaid interest, without the consent of the lenders, this practice would result in to reduction in provision for probable interest liability.

d. In respect of all the loans, secured and unsecured, (which are not re- negotiated) no provision has been made for compound interest and penal interest. The same will be accounted for on fnal settlement of the accounts with the lenders. To that extent Company has Contingent Liability which is unascertainable.

e. The Company in the past has entered into settlement with several lenders of which the company has failed to meet its commitment in respect of Ranbaxy Laboratories

Ltd. The agreed liability as refected in the Books of Accounts of the Company is Rs.60 lacs in respect of Ranbaxy Laboratories Ltd. (Previous Year Rs.60 lacs). The waiver of interest liability in terms of the settlement with Ranbaxy Laboratories Ltd amounting to Rs. 21.77 lacs was credited to Work in Progress account during the earlier years. In the opinion of the Company the revised liabilities as per the settlement with these parties are still valid and subsisting as the Company has not received any legal notice for termination of the settlement from the concerned Lenders.

f. The balance in the secured loan account of State Bank of India as per the Company’s books of accounts as on 31.03.2011 is Rs. 4,580 lacs (including interest provision of Rs.1,857 lacs). This balance is based on the settlement arrived at with the Bank vide its letter dated 14th June 2006. As per the said settlement the entire dues were to be paid off by 14th December, 2007 to which the Company has not adhered. The Company is in continuous dialogue with the Bank to settle the dues. The Company has not received any formal notice terminating the settlement. The Company has also not received any balance confrmation from the Bank. As per the legal advice received by the Company, the settlement agreement dated 14th June 2006 is valid, subsisting and binding till date. In view of the facts as mentioned herein it is not possible to ascertain whether the Bank has withdrawn the concessions granted in the settlement of June 2006. Accordingly the fnal liability towards this Bank loan is not ascertainable. The Company has to that extent unascertainable contingent liability towards any additional claim which may be made by the Bank against this loan liability.

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Mar 31, 2010

A. Basis of Accounting

Financial statements are prepared under historical cost convention on accrual basis in accordance with the requirements of the Companies Act,1956, except in the case of items which are uncertain in nature and not possible to quantify.

b. Revenue Recognition

i. The Company follows substantial completed contract method of accounting in respect of its construction activity. Under this method profit in respect of units sold is recognised only when the work in respect of the relevant units are substantially completed, which is determined on technical estimates as certified by management.

ii. The completion status of a project at the end of accounting period, estimated construction and development cost for completion relating to the sold units, which are considered for profit are estimated on the basis of technical evaluation, as certified by management and relied to by the auditors.

iii. Revenue recognition in respect of transactions for sale of properties is on the date of execution of agreement to sale and are subject to execution of conveyance and compliance of applicable legal formalities. Revenue recognition in respect of constructed premises is on the basis of booking done by the prospective customer and the same is subject to execution of registered sale deed under the Maharashtra Ownership Flats Act (MOFA) and payment of consideration.

iv. Sales in respect of a particular project is accounted for, net of cancellation, in the same accounting period.

c. Fixed Assets :-

Fixed Assets are stated at cost of acquisition less accumulated depreciation.

d. Depreciation

i. Depreciation on fixed assets has been provided under Written Down Value method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

ii. Depreciation on additions to fixed assets has been charged from the date when they were first put to use.

iii. Goodwill is amortised over period of five years in equal installments.

e. Inventories

i. Construction materials are valued at cost.

ii. Work in progress are valued at costs consisting of land development rights, construction, development, administration, marketing and finance expenses or market value whichever is lower. For this purpose items of similar nature arc compared in totality.

iii. Finished goods are valued at cost consisting of land development rights, construction, development, administration, marketing and finance expenses or market value whichever is lower. For this purpose items of similar nature are compared in totality.

2) Loans & borrowings:

a. Secured Loans are subject to charge created / to be created on the assets/properties of the Company.

b. In case of disputed /defaulted loans provision for interest due on outstanding secured loans taken by the Company has been made at the last contractual rate of interest.

c. The Company is in the process of restructuring and renegotiating its outstanding unsecured loans. Consequendy provision for interest due on outstanding unsecured loans has been made on simple interest basis at rate which is consistent with the trend at which other unsecured loans are restructured and renegotiated, and not at the original /last contracted rate of interest, further no provision is made on the unpaid interest. On account payments made by the Company to its lenders is first apportioned towards unpaid principal, instead of unpaid interest, without the consent of the lenders, this practice would result in to reduction in provision for probable interest liability.

d. In respect of all the loans, secured and unsecured, (which are not re- negotiated) no provision has been made for compound interest and penal interest. The same will be accounted for on final settlement of the accounts with the lenders. To that extent Company has Contingent Liability which is unascertainable.

e. The Company has not made provision in respect of penal interest and additional interest in respect of hire purchase installment due but not paid by the Company. The same will be provided as and when the claims are settled with the parties concerned. To that extent Company has Contingent Liability which is unascertainable.

f. During the year under review the Company has entered in to Financial Restructuring with certain lenders according to which some lenders have agreed to waive / forgo accumulated finance cost to the tune of Rs. Nil (previous year Rs.8,99.04 lacs) and have also rescheduled the payment terms of the balance agreed amounts. This waived / forgone Finance Cost of Rs. Nil (previous year Rs.8,99.04 lacs) is credited by the Company to Work In Progress Account. The accumulated interest waiver which are pending fulfillment of settlement terms, for which the Company has taken credit in its Work In Progress account is Rs.21.771acs (previous year Rs. 21.77 lacs).

g. The Company, in past, has entered in to settlement with several lenders of which the Company has failed to meet its commitment, as per the revised settlement terms with State Bank of India and Ranbaxy Laboratories Limited, the aggregate liability of which, as reflected in the books of account of the Company, is Rs.42,58.99 lacs (previous year Rs.46,37.67 lacs). The Company has taken interest credit of Rs. 21.77 lacs (previous year Rs. 21.77 lacs) (credited to Work in Progress), during the earlier financial years. In the opinion of the Company the concessions by way of interest waiver are still valid as, the Company has not received any legal notice tor termination of the settlement terms and restatement of original liability from the concerned lenders, therefore the concessions are not reversed in the books of account.

h. The balance in the secured loan account of State Bank of India as per the Companys books of accounts as on 31.03.2010 is Rs. 41.99 crores (including interest provision of Rs.14.75 crores). This balance is based on the settlement arrived at with the Bank vide its letter dated 14th June 2006. As per the said settlement the entire dues were to be paid off by 14th December, 2007 to which the Company has not adhered. The Company is in continuous dialogue with the Bank to settle the dues. The Company has not received any formal notice terminating the settlement. The Company has also not received any balance confirmation from the Bank. As per the legal advice received by the Company, the settlement agreement dated 14th June 2006 is valid, subsisting and binding till date. In view of the facts as mentioned herein it is not possible to ascertain whether the Bank has withdrawn the concessions granted in the settlement of June 2006. Accordingly the final liability towards this Bank loan is not ascertainable. The Company has to that extent unascertainable contingent liability towards any additional claim which may be made by the Bank against this loan liability.