Notes to Accounts of Satchmo Holdings Ltd.
Mar 31, 2018
1 Corporate Information
Nitesh Estates Limited (the Company or ''NEL'') was incorporated on 20 February 2004. NEL is a real estate developer engaged in the business development, sale, management and operation of residential buildings, retail and hotel projects, commercial premises and other related activities. The Company''s shares are listed on the BSE Limited and the National Stock Exchange of India Limited with effect from May 13, 2010. The registered office of the company is located at : Level 7, Nitesh Timesquare,#8, M.G. Road, Bangalore -560 001.
The standalone Ind AS financials statements were authorised for issue in accordance with a resolution of the directors on 30th May 2018.
Note:
Investment properties under construction
Capital work-in progress includes investment properties under construction amounting to Rs. 12,998 Lakhs. The Management is of the view that the fair value of investment properties under construction cannot be realiably measured and hence fair value disclosures pertaining to investment properties under construction have not been provided.
Note:
(i) Non-cumulative redeemable preference shares (NCRPS) carries non-cumulative dividend of 9% p.a. The preference shares carry discretionary dividend in accordance with the terms of issue. Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. Each NCRPS holder is entitled to one vote per share only on resolutions placed before the Company which directly affects the rights attached to NCRPS. These shares may be redeemed, in whole or in part, at the option of the company at any time on or after 12 December 2012 subject to satisfaction of certain conditions, at the stipulated redemption amount. If not redeemed earlier, these shares will be redeemed on 11 December 2032.
*The Company has advanced to various parties for purchase/joint development of land/properties. Considering the timelines of these advances and the period for conversion of these advances into acquired land /joint development agreements ranging between seven to ten years of time for the recoverability/conversion, the management keeping in view the long term nature of these advances and as an abundant caution, provision has been made on the basis of life time expected credit loss.
** The Company has granted unsecured loans and advances to related parties in the ordinary course of business towards furtherance of the business objectives of the Company. The interest charged on such loans and advances, wherever applicable, is not prejudicial to the interests of the Company.
*** 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..
As per records of the Company, including its register of shareholders/ members and other declaration received from shareholders regarding beneficial interest, the above shareholding represent both legal and beneficial ownership of shares.
d) There have been no buy back of shares or issue of shares pursuant to contract without payment being received in cash for the period of five years immediately preceding the balance sheet.
Note:
(i) 18.5% non Convertible Redeemable Debentures are redeemable in 21 equal monthly instalments starting from July 15, 2016 to March 15, 2018. The following amounts of such non convertible redeemable debentures, which became due have not been paid as on the Balance sheet date.
The Company is in the process of discussing its settlement with the lenders._
The Company has entered into joint development agreements with the land owners whereby the Company, at its cost, will construct apartments/buildings on the land owned by the land owners, and the portion of building constructed will be exchanged for ownership in the land. Such portion of land to be acquired by the Company as per joint development agreement is initially recorded at the estimated cost of construction for the portion of the building to be transferred to the land owner on completion of construction.
(ii) Details of CSR expenditure:
The company has not provided for any Corporate Social Responsibility expenses, due to the absence of sufficient cash profits.
(iii) During the year, the Company has incurred a loss from sale of 541,49,499 number of shares in ''Nitesh Residency Hotels Private Limited" to related parties, the sale consideration of which is based on the valuation report of an independent valuer.
Notes:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
There have been no transfers between the levels during the period.
The management assessed that the carrying values of cash and cash equivalents, trade receivables, deposits, trade payables, borrowings and other financial assets and liabilities approximate their fair values largely due to the short-term maturities.
The following methods and assumptions were used to estimate the fair values:
The fair values of the unquoted equity shares have been estimated using a Net Asset Value model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.
The Company has a defined benefit gratuity plan (funded). The Company''s defined benefit gratuity plan is a final salary plan, which requires contributions to be made to a separately administered fund.
a) Gratuity-Funded
The Company operates defined gratuity plan for its employees. Under the plan, every employee who has completed at least five years of service gets a gratuity on departure at 15 days of last drawn salary for each completed year of service.
The scheme is funded with an insurance company in the form of qualifying insurance policy.
b) As per the policy of the company, Cost of long term benefits by way of accumulating compensated absence arising during the tenure of service is calculated taking into account the pattern of availment of leave. The present value of obligations towards availment under such long term benefit is determined based on actual valuation carried on by an independent actuary using Projected Unit Credit Method as at the year end. It is an unfunded plan.
The following tables summarise the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans:
The defined benefit obligations have the under mentioned risk exposures-
Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.
Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
2 Earnings per share [''EPS'']
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity Shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
a(ii). The Company had filed its return of earlier year which subsequently become defective due to non-payment of MAT liability amounting to '' 488 Lakhs, as displayed in the income tax e-filing website dated on 16th October, 2017. The applicable interest liability on the above tax liability from the date of return filing till the date of balance sheet is yet to quantify.
Notes :
a. The Company has entered into various joint development agreements wherein, on completion of all obligations of the land owner and possession of land to the Company, the Company is required to construct and develop the entire property and hand over an agreed proportion of the built up area to the land owner as a consideration for the undivided share in land transferred to the Company.
b. The Company has provided support letters to subsidiary companies wherein it has accepted to provide the necessary level of financial support to enable the company to operate as a going concern and meet its obligations as and when they fall due.
Note : The information as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006 is determined to the extent such parties have been identified on the basis of the information available with the company. The company has received a claim for payment from a party under the MSME Act, 2006, which the company has contested against before the Micro and Small Enterprises Facilition Council of Haryana. Since the claim is contested against, the company is of the opinion that no interest is payable under the Act.
3 Financial instruments- accounting classification and fair value measurement.
The carrying values of trade and other receivables, other assets, cash and short term deposits, trade and other payables, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are re-priced frequently.
Company''s assets and liabilities which are measeured at amortised cost
4 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 the acquisition and Company''s real estate operations. The Company''s principal financial assets include cash and cash equivalents, loans that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The financial risk committee provides assurance to the Company''s senior management that the Company''s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company''s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
i. 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 three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings. The sensitivity analyses in the following sections relate to the position as at 31 March 2018 and 31 March 2017. The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt.
The analyses exclude the impact of movement in market variables on: the carrying values of gratuity and other postretirement obligations; provisions; and the non-financial assets and liabilities of foreign operations.
The following assumptions have been made in calculating the sensitivity analysis:
1. The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2018 and 31 March 2017.
ii. 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.
d. Credit risk
Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
Financial Instrument and Cash Deposit
Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and loans are given only within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Company''s Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterparty''s potential failure to make payments. 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.
5 Non-cancellable operating leases
The Company has various operating leases for office premises and other facilities (cancellable as well as non-cancellable leases) for a period between 3 and 10 years. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses. The leases are cancellable through notice period of 1 to 3 months.
6 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 maintain strong credit rating and healthy capital ratios in order to support its business and 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, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio minimal. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations. Further, advances received from customers pursuant to agreements, wherein the Company has committed prescribed return to customers contingent on exercise of the option given to such customers on expiry of the prescribed time period, including the amount of such return accrued by the company using effective interest method has been considered as part of net debt by the Company.
In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.
The company has defaulted in repayment of dues to debenture holders which includes overdue Principal and interest as on Balance Sheet date. [Refer Note no 17(i) for the details of default amount]
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
7 Standards issued but not yet effective
The standards issued, but not yet effective up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards when they become effective.
Ind AS 115 Revenue from Contracts with Customers Introduction of Ind AS 115, Revenue from Contracts with Customers
Ministry of Corporate Affairs has notified Ind AS 115 ''Revenue from Contracts with Customers'', which is effective from April 1, 2018, early adoption of which is not permitted. The new standard outlines the principle that revenue should be recognised when an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. The Company will adopt Ind AS 115 effective from April 01, 2018. As at the date of issuance of the Company''s financial statements, the Company is in the process of evaluating the requirements of the said standard and the impact on its financial statements in the period of initial application.
Amendments to Ind AS 21, The Effects of Changes in Foreign Exchange Rates
On March 28, 2018, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company''s operation primarily relate to operations in India, The directors of the Company do not anticipate that the application of the new standard in future will have significant impact on the financial statement.
Amendments to Ind AS 12 Recognition of Deferred Tax Assets for Unrealised Losses
The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.
Entities are required to apply the amendments retrospectively. However, on initial application of the amendments, the change in the opening equity of the earliest comparative period may be recognised in opening retained earnings (or in another component of equity, as appropriate), without allocating the change between opening retained earnings and other components of equity. Entities applying this relief must disclose that fact.
These amendments are effective for annual periods beginning on or after April 01, 2018.
Transfers of Investment PropertyâAmendments to Ind AS 40
The amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in management''s intentions for the use of a property does not provide evidence of a change in use.
Entities should apply the amendments prospectively to changes in use that occur on or after the beginning of the annual reporting period in which the entity first applies the amendments. An entity should reassess the classification of property held at that date and, if applicable, reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance with Ind AS 8 is only permitted if it is possible without the use of hindsight
These amendments are effective for annual periods beginning on or after 1 April 2018.
8 As per para 4 of Indian Accounting Standard (Ind AS) 108 - Operating Segments, if a financial report contains both the consolidated financial statements of a parent that is within the scope of this Ind AS as well as the parent''s separate financial statements, segment information is required only in the consolidated financial statements. Hence segment information as required under Ind AS 108 -Operating Segments is given in the Consolidated Ind AS financial statements of the Company.
9 First-time adoption of Ind AS Transition to Ind AS
These are the Company''s first financial statements prepared in accordance with Ind AS.
The accounting policies set out in note have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS Balance Sheet as at April 1, 2016 (the Company''s date of transition). In preparing its opening Ind AS Balance Sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies
(Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or India GAAP).
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Ind AS optional exemptions
a) Deemed Cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment''s covered by Ind AS 16 Property, plant and equipment''s 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 intangible assets covered by Ind AS 38 Intangible assets.
Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value, which has been considered as deemed cost.
b) Fair value as deemed cost
Ind AS 101 permits a first-time adopter to measure an item investment properties under construction, at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date.
c) Ind AS 101 permits a first-time adopter to measure its investments in subsidiaries, joint ventures and associates at deemed cost, which should be either:
(i) fair value at the entity''s date of transition to Ind ASs in its separate financial statements; or
(ii) previous GAAP carrying amount at that date
The Company has elected to measure its investments in subsidiaries, associates and joint ventures using deemed cost at the Previous GAAP carrying amount at the date of transition to Ind AS.
Ind AS Manadatory Exemptions
a) Estimates
Ind AS 101 requires an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. The Company''s estimates as at April 01, 2016 are consistent with the estimates as at the same date made in conformity with Previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Previous GAAP:
- Investment carried at Fair Value through Profit & Loss (FVPL) or Fair Value through Other Comprehensive Income (FVOCI); and
- Impairment of financial assets based on expected credit loss model.
b) An entity estimates in accordance with Ind AS at the date of tranastion to Ind AS shall be consisitant with estimate made for the same date in accordance with previouse GAAP, unless there is objective evidence that those estimates were in error.
c) Classification and measurement of financial assets
Ind AS 101 requires that an entity should assess the classification of its financial assets on the basis of facts and circumstances exist on the date of transition. Accordingly, in its Opening Ind AS Balance Sheet, the company has classified all the financial assets on basis of facts and circumstances that existed on the date of transition, i.e. April 1, 2016.
Notes to reconciliations between previous GAAP and Ind AS
1 Gross accounting for joint development arrangements
Company has entered into certain joint development arrangements. In such a situation, revenue is recognised on gross basis. Since the goods exchanged under joint development arrangement i.e. land with flats are dissimilar in nature, as per para 12 of Ind AS 18, the exchange is regarded as a transaction which generates revenue. Company has measured revenue at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred. Since, fair value of the goods or services received cannot be measured reliably, revenue is measured in relation to transfer of constructed property to land owners on the basis of fair value of services provided to the landlord. Further, Company has recognised land with corresponding credit to "land cost payable" to account for land received under Joint development arrangement.
2 Financial Assets at amortized cost
Under Indian GAAP, there are certain lease deposits and refundable deposits which are carried at nominal value. Ind AS requires to measure these assets at fair value at inception and subsequently these assets are measured at amortized cost. At inception date, company recognises difference between deposits fair value and nominal value as deferred lease expenses and same is being recognised as lease expenses on straight line basis over the lease period. Further, company recognises notional interest income on these deposits over the lease term.
I n case of refundable deposits for joint development arrangement, difference between nominal value and fair value of deposits is treated as land cost and interest income recognised over the period of deposit is reduced from cosntruction cost. Further as per IND AS land has to be fair valued.
3 Provision for Life time Expected Credit Loss
Under Indian GAAP, company was not creating any provision against advances but under IND AS the company has created a provision for lifetime expected credit loss for doubtful advances. Also excess provision made at the date of transition has been reversed accordingly.
4 Compound financial instruments
The Company has issued non cumulative redeemable preference shares. The preference shares carry discretionary dividend in accordance with the terms of issue. Under Indian GAAP, the preference shares were classified as equity. Under IND AS, the preference shares are separated into liability and equity components (since these instruments carry discretionary dividend) based on the terms of the contract. Interest on liability component is recognised using the effective interest method.
5 Fair valuation of Investment property
I nd AS 101 permits a first-time adopter to measure an items of investment properties under construction, at the date of transition to Ind AS at its fair value and use that fair value as its deemed cost at that date.
6 Deferred tax
Indian GAAP required deferred tax accounting using the income statement approach, which focusses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focusses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences, which was not required under Indian GAAP. In addition, the various transitional adjustments lead to different temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction either in retained earnings or a separate component of equity.
7 Remeasurement of Post-employment benefit obligations (Net of Tax)
Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ''other comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. Accordingly, loss on remeasurements of postemployment benefit obligation has been reclassified to the Other Comprehensive Income for the year.
10. In respect of three of its residential projects, which the Company had pre launched in the prior years, as there are no ongoing development activities or sale of the apartments undertaken by the Company, pending approvals such as sanctioned plan and commencement certificate and also due to prevalent adverse market conditions severely impacting the cash flows, the Company has not registered the said projects under RERA Act, which has come into force during the current fiscal year 2017-18, w. e. f. 1st May 2017. The Company had accepted booking advances from the potential customers in respect of the said projects before the pre RERA period i.e. before 1st May 2017, which the Company is in the process of refunding to the customers as per terms of the bookings.
Similarly, in respect of one of its residential projects, Company has accepted booking advances more than 10% of the project cost before RERA period. Due to non-co-operation of land owners and pending arbitration proceedings between the Company and land owners, Company has decided to stop the project and the same is intimated to Real Estate Regulatory Authority, Karnataka. The Company is in the process of refunding to the customers as per the booking.
11. Prior year comparatives
The figures of the previous year have been regrouped/reclassified, where necessary, to confirm with the current year''s classification.
Mar 31, 2016
1. Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution in value, if any, is made to recognize a decline other than temporary in the value of the investments.
2. Fixed assets and depreciation
Tangible fixed assets
Fixed assets are carried at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets includes freight, duties, taxes and other incidental expenses related to the acquisition or construction of the respective assets.
Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized. Other borrowing costs are expensed as incurred.
Depreciation
Depreciation on Tangible Fixed assets is provided on the useful life computed as per Schedule II of Companies Act 2013.
Pro-rata depreciation is provided on all fixed assets purchased or sold during the year. Assets costing individually Rs 5000 or less are depreciated fully in the year of acquisition.
Intangible Fixed Assets
Computer software is amortized using straight line method over a period of 5 years, which is estimated by the management to be the useful life of the asset.
3. Employee benefits
Defined benefit plan
The Company''s gratuity plan is a defined benefit plan. The present value of gratuity obligation under such defined benefit plans is determined based on actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up the final obligation. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the profit and loss account. Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.
Other long term benefit
Cost of long term benefits by way of accumulating compensated absences arising during the tenure of service is calculated taking into account the pattern of availment of leave. The present value of obligations towards availment under such long term benefit is determined based on actuarial valuation carried out by an independent actuary using Projected Unit Credit Method as at the year end. The obligation is measured at the present value of estimated future cash flows. The discount rates used for determining the present value of obligation under defined benefit plans, is based on the market yields on Government securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognized immediately in the profit and loss account. Gains or losses on the curtailment or settlement of any defined benefit plan are recognized when the curtailment or settlement occurs.
Defined contribution plan
Contributions to the recognized provident fund and approved superannuation schemes, which are defined contribution schemes, are charged to the profit and loss account.
4. Leases
Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower.
For operating leases, lease payments (excluding cost for services, such as insurance and maintenance) are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term. The lease term is the non- cancellable period for which the lessee has agreed to take on lease the asset together with any further periods for which the lessee has the option to continue the lease of the asset, with or without further payment, which option at the inception of the lease it is reasonably certain that the lessee will exercise.
5. Earnings/(loss) per share
The basic earnings / (loss) per share is computed by dividing the net profit / (loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings/ (loss) per share comprises the weighted average shares considered for deriving basic earnings/ (loss) per share and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. In computing diluted earnings per share, only potential equity shares that are dilutive and which either reduces earnings per share or increase loss per share are included.
6. Provisions and contingent liabilities
The Company recognizes a provision when there is a present obligation as a result of a past obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow is remote, no provision or disclosure is made.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.
7. Impairment of assets
The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined if no impairment loss had been recognized.
8. Taxation
Income-tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year). Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward business loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets/ liabilities are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.
The Company offsets, the current tax assets and liabilities (on a year on year basis), where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.
9. Recognition and measurement of advances paid and received
Advances paid towards jointly developable properties
These advances represent monies paid to land owners and intermediaries, where the company proposes to jointly develop the property. Subsequent to a definitive agreement and on actual commencement of development activity, the Company acquires a right in the underlying land at which point, such advances are transferred to capital work in progress. Advances towards joint development rights are valued at cost. On transfer to capital work in progress, measurement is on the basis of cost, less impairment, if any, determined with reference to the discounted values of future anticipated cash flows.
Advance against property
These advances represent several intended purchases of parcels of land, which are in various stages of the acquisition process, which is typically long drawn and requires several regulatory compliances. The Company considers the purchase as complete only when all compliances are complete and the ownership right to the land is unfettered. Such advances, depending on the stage of the land acquisition process, are measured with reference to the value of the underlying, at the lower of cost or net realizable value, having regard to the protracted underlying process.
10. Inventories
Inventories are carried at the lower of cost and net realizable value. Cost includes all applicable costs incurred in bringing the properties to their present location and condition. The method of determination of cost for various categories of inventories is as follows:
Land
Land is valued at cost of acquisition. Cost includes acquisition cost and related development charges. Finished stocks of constructed properties are valued at their cost of construction / acquisition.
Properties under development
Represents cost incurred in respect of unsold area of the real estate development projects or cost incurred on projects where the revenue is yet to be recognized. Real estate work-in-progress is valued at lower of cost and net realizable value.
The net realizable value of work in progress is determined with reference to the selling prices of related constructed property. Raw materials and other supplies held for use in construction of property are not written below cost except in cases where material prices have declined and it is estimated that the cost of constructed property will exceed their net realizable value.
11. Land held under joint development arrangements
In case of joint development with the land owner on space sharing arrangement, land is initially recorded at the estimated cost of construction for the portion of the building to be transferred to the land owner on completion of construction. Changes in the estimate/ actual cost of construction from the estimated cost are adjusted in the cost of land in the year of such change/ occurrence.
12. Foreign exchange transactions
Foreign exchange transactions are recorded at the rates of exchange prevailing on the dates of the respective transactions. Exchange difference arising on foreign exchange transactions settled during the year are recognized in the profit and loss account for the year.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date; the resultant exchange differences are recognized in the profit and loss account.
13. Borrowing Cost
Borrowing cost attributable to the acquisition of qualifying assets (ie. The assets that necessarily takes substantial period of time to get ready for the intended use) are added to the cost upto the date when such assets are ready for their intended use. Other borrowing costs are recognized as expenses in the period in which these are incurred. Interest has been apportioned over various projects on the basis of loan amount utilize for each.
14. Segment reporting
The Company''s operating businesses are organized and managed separately according to the nature of business and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. General corporate income and expense items are not allocated to any business segment.
15. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
16. Cash flow statement
Cash flows are prepared using indirect method, whereby net profits/(losses) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals of accruals of past of future cash receipt or payments. The cash flows from regular operating, investing and financing activities of the Company are segregated.
(c) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2016, the amount of per share dividend recognized as distributions to equity shareholders was Rs. Nil (Previous year : Rs. Nil).
In event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(d) There have been no buy back of shares or issue of shares pursuant to contract without payment being received in cash for the period of five years immediately preceding the balance sheet.
Details of security and terms of loans and debentures
(i) Short-Term loans from banks are secured by:
Bank term loan amounting to: Rs 62,481,904 (previous year: Rs 75,000,000)
i. Equitable mortgage of vacant land situated at Mulavukkad Village, Kanaynnur Taluk district registered with Kakanad Enterprises Private Limited, a Subsidiary Company.
ii. Developers share of 13,621 sq ft of commercial area on an undivided basis in the Project Nitesh Ceasers Palace situated at Bangalore South Taluk registered with the Company.
iii. Simple and registered mortgage of a flat in the project Nitesh Camp David situated at Pulakeshi Nagar registered with the Company.
iv. Personal Guarantee of Mr. Nitesh Shetty.
v. Guarantee of Subsidiary Company - Kakanad Enterprises Private Limited.
(ii) Short-Term loans from financial institutions are secured by:
a) Term Loan amounting to: Rs 156,729,130 (previous year: Nil)
i. Mortgage of developer''s share of unsold units in Nitesh Park Avenue admeasuring 0.62 acres and one Pent House (measuring 15221 sq. ft.) of the same project retained by Mr. Nitesh Shetty situated at Sankey Road, Vasant Nagar, Bangalore.
ii. All future receivables of the project Nitesh Park Avenue.
iii. Personal guarantee of Mr. Nitesh Shetty.
c) General purpose Working Capital Loan amounting to: Rs 301,602,860 (previous year: Rs 347,602,473)
i. First and exclusive charge by way of a mortgage by deposit of title deeds of Nitesh Park Avenue project and Hypothecation of future receivables of the project Nitesh Park Avenue.
ii. First and exclusive charge by way of a mortgage by deposit of title deeds of Land situated at Kochin, Kakanad, registered in the name of the Company.
e) Term Loan amounting to: Rs 550,000,000 (previous year: Rs Nil)
i. Mortgage of developer''s share of receivables of the following projects ;
- Nitesh British Columbia
- Nitesh Long Island
- Nitesh Chelsea (64%)
ii. Mortgage of developer''s share of area of the following projects ;
- Nitesh Knights Bridge
- Nitesh RIO
- Nitesh Hunter Valley
iii. Mortgage of developer''s share of area in the project Nitesh Virgin Island situated at SY No 2/6 and developers share of revenue (65.5%)in the project situated at SY No 2/2, 2/3. 2/4 & 2/5 at Konadasapura Village, Bidarahalli, Bangalore.
iv. Charge on all the future receivables from the booked, sold and unsold apartments in the above projects.
v. Mortgage of developer''s share of area in the project Nitesh Soho (formerly known as Plaza) situated at Ali Aksar Road.
vi. Mortgage of Flat No A-04 (on 3rd Floor) in the Project ''Nitesh Buckingham Gate''
vii. Personal guarantee of Mr. Nitesh Shetty.
The Company has entered into a joint development agreement with the land owner whereby the Company, at its cost, will construct apartments/buildings on the land owned by the land owner, and the portion of building constructed will be exchanged for ownership in the land. Such portion of land to be acquired by the Company as per joint development agreement is initially recorded at the estimated cost of construction for the portion of the building to be transferred to the land owner on completion of construction. Changes in the estimate/ actual cost of construction from the originally estimated cost are adjusted in the cost of land in the year of such change/ occurrence.
17. Interest in Joint Venture
The Company has a 24% share in the profits and losses of Nitesh Estates - Whitefield (Association of Persons), formed in India, a jointly controlled entity, which is engaged in real estate development. The Company''s proportionate share of the assets, liabilities, income and expenses of the jointly controlled entity are as follows :
Note: The capital expenditure and contingent liability as at and for the year ended 31 March 2016 is Rs. Nil (Previous year: Rs. Nil).
18. The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006'' (''the Act''). The Company has no dues to Micro and Small Enterprises as at 31 March 2016 and 31 March 2015 in the financial statements based on information received and available with the Company.
19. The Company primarily operates only in three business segments - Residential, Retail and Hospitality. All the operations are carried out in India and hence there is no geographical segment.
Accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.
Assets, liabilities, revenues and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company, therefore, believes that it is not practicable to provide segment disclosures relating to such items, and accordingly such items are separately disclosed as unallocated.
20. During the previous year, the Company had revised its estimates of useful life of its fixed assets as prescribed in Part C of Schedule II of the Companies Act, 2013.
The carrying amount less residual value of the assets whose remaining useful life has become nil at the beginning of the period amounting to Rs 17,13,325/- has been adjusted in opening retained earnings as on 1st April, 2015
21. In respect of debentures outstanding of Rs. 125 Crores, the transfer to Debenture Redemption Reserve to the tune of Rs. 31.25 Crores could not be made due to absence of adequate profit.
22. The Land and construction cost includes Rs. 1268 Lakhs as finance cost towards interest for the year ended on March 31, 2016.
23.. Previous years'' figures have been regrouped/ reclassified wherever necessary to conform to current years'' presentation.
Mar 31, 2015
1. Company overview
Nitesh Estates Limited (the Company or 'NEL') was incorporated on 20
February 2004. NEL is a real estate developer engaged in the business
development, sale, management and operation of residential buildings,
retail and hotel projects, commercial premises and other related
activities.
2. Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2015, the amount of per share dividend
recognized as distributions to equity shareholders was Rs. Nil
(Previous year : Rs.Nil).
In event of liquidation of the Company, the holders of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
3. There have been no buy back of shares or issue of shares pursuant
to contract without payment being received in cash for the period of
five years immediately preceding the balance sheet.
4. Short-Term loans from banks are secured by:
Bank term loan amounting to: Rs 75,000,000 (previous year: Rs
75,000,000)
i. Equitable mortgage of vacant land situated at Mulavukkad Village,
Kanaynnur Taluk district registered with Kakanad Enterprises Private
Limited, a Subsidiary Company.
ii. Developers share of 13,621 sq ft of commercial area on an
undivided basis in the Project Nitesh Ceasers Palace situated at
Bangalore South Taluk registered with the Company.
iii. Simple and registered mortgage of a flat in the project Nitesh
Camp David situated at Pulakeshi Nagar registered with the Company.
iv. Personal Guarantee of Mr. Nitesh Shetty.
5. Short-Term loans from financial institutions are secured by:
a) Term Loan amounting to: Rs Nil (previous year: Rs 210,000,000)
i. Mortgage of the project Nitesh Logos to the extent of the
developers share of units admeasuring 29,695 sq.ft (i.e. 6 apartments)
along with the undivided share in land.
ii. Mortgage of the project Nitesh Key Biscayne to the extent of the
developers share 12 acres of land of Nitesh Key Biscayne project
situated at Chikkasane village, Kasaba Hobli, Devanahalli taluk,
Bangalore District.
iii. Personal Guarantee of Mr. Nitesh Shetty.
(iii) Debentures
a) 18.5% Non-Convertible, Redeemable debentures from financial
institution amounting to Rs.Nil (previous year: 560,000,000) are
secured by:
i. First and exclusive charge by way of a mortgage by deposit of title
deeds over the Hunter Valley Property, Caesar's Palace Property, Long
Island Mortgage Property, Nitesh Park Avenue.
ii. Escrow account in respect of the receivables from the projects
Nitesh Hunter Valley, Nitesh Caesar's Palace, Nitesh Long Island
Project, Nitesh Park Avenue.
iii. First and exclusive charge by way of hypothecation on the
receivables in the projects Nitesh Hunter Valley, Nitesh Caesar's
Palace, Nitesh Long Island and Nitesh Park Avenue.
iv. Guarantee in favour of the Debenture Trustee.
v. Creation of a fixed deposit for an amount equivalent to Rs.
9,250,000 required for maintaining the minimum debt service amount of
one months interest with a lien marked in favour of the Debenture
Trustee and Security Cheques in respect of the entire value of the
Debentures.
6. Commitments and contingent liabilities Rs.
As at As at
Particulars 31 March 2015 31 March 2014
Contingent liabilities
Claims against the company not
acknowledged
as debts in respect of
- Income-tax 27,185,945 18,040,389
- Service tax 31,156,450 31,156,450
Corporate guarantee for loans taken by - 3,400,000,000
group companies
Commitments
Estimated amount of contracts remaining 575,905,220 1,631,001,600
to be executed on projects
(net of advances)
and not provided for
Notes :
a During the previous year, Nitesh Urban Development Private Limited, a
subsidiary Company, issued compulsorily convertible debentures to an
investor amounting to Rs 350,000,000. Pursuant to this, the Company and
the investor have entered into a share sale right agreement whereby the
investor has a right (but not obligation) to sell all the debentures to
the Company on or after the end of 48 months from the closing date and
the Company will be obliged to purchase these debentures at Rs
787,500,000 if such option is exercised by the investor.
b The Company has entered into various joint development agreements
wherein, on completion of all obligations of the land owner and
possession of land to the Company, the Company is required to construct
and develop the entire property and hand over an agreed proportion of
the built up area to the land owner as a consideration for the
undivided share in land transferred to the Company.
c The Company has provided support letters to subsidiary companies
wherein it has accepted to provide the necessary level of financial
support to enable the company to operate as a going concern and meet
its obligations as and when they fall due.
d Commitment towards purchase of equity shares of a subsidiary company
The Company has provided a put option to the investor of Nitesh Housing
Developers Private Limited (subsidiary company) whereby the investor
has the right to sell the shares held in the subsidiary company at a
price which will yield a post-tax internal rate of return of 26% p.a.
on their cost of investment, either to the principal promoter (Mr.
Nitesh Shetty) or the Company in the following events :
(a) In the event where the investor exercises the right to sell, the
Principal Promoter shall have the obligation to purchase and/or
buy-back the share put securities at the share put price, on a spot
delivery basis.
(b) However, in the event where the Principal Promoter does not perform
his obligation and/or paying the amount to the investor of the
Subsidiary Company, the Company shall have the obligation to perform
and/or pay to the investor the amounts payable by the Principal
Promoter as if it were the primary obligor.
7. Related parties
(i) Names of related parties and description of relationship:
Enterprises where control exists
Nitesh Indiranagar Retail Private Limited Subsidiary company
Nitesh Housing Developers Private Limited Subsidiary company
Nitesh Urban Development Private Limited Subsidiary company
Kakanad Enterprises Private Limited Subsidiary company
Nitesh Property Management Private Limited Subsidiary company
Related parties where significant influence exists and with whom
transactions have taken place during the year
Individuals, Associates and Companies under common control
Associate company Nitesh Residency Hotels Private
Limited
Enterprises owned or significantly Nisco Ventures Private Limited
influenced by Key Managerial Person Southern Hills Developers Private
Limited
Serve & Volley Signages Private
Limited
Nitesh Infrastructure and
Construction
Serve & Volley Media Private
Limited
Serve & Volley Outdoor
Advertising Private Limited
Grass Outdoor Media Private
Limited
Nitesh Industries Private Limited
Pushrock Environment Private
Limited
Partnership firm in which the Company is a Nitesh Estates - Whitefield
partner
Key management personnel Nitesh Shetty [Chairman and
Managing Director]
L.S.Vaidyanathan [Executive
Director]
Ashwini Kumar [Executive Director
and Chief Operating Officer]
8. The Ministry of Micro, Small and Medium Enterprises has issued an
office memorandum dated 26 August 2008 which recommends that the Micro
and Small Enterprises should mention in their correspondence with its
customers the Entrepreneurs Memorandum Number as allocated after filing
of the Memorandum in accordance with the 'Micro, Small and Medium
Enterprises Development Act, 2006' ('the Act'). The Company has no dues
to Micro and Small Enterprises as at 31 March 2015 and 31 March 2014 in
the financial statements based on information received and available
with the Company.
9. The Company primarily operates only in three business segments -
Residential, Retail and Hospitality. All the operations are carried out
in India and hence there is no geographical segment.
Accounting policies consistently used in the preparation of the
financial statements are also applied to record revenue and expenditure
in individual segments.
Assets, liabilities, revenues and direct expenses in relation to
segments are categorized based on items that are individually
identifiable to that segment, while other items, wherever allocable,
are apportioned to the segments on an appropriate basis. Certain items
are not specifically allocable to individual segments as the underlying
services are used interchangeably. The Company, therefore, believes
that it is not practicable to provide segment disclosures relating to
such items, and accordingly such items are separately disclosed as
unallocated.
10. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
('NHDPL'), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL
sold 10.1% of its investment in NHDPL to another party ('the Buyer1).
As at 31 March 2013, NEL holds 89.9% of the equity share capital of
NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh
Shetty have entered into an agreement whereby NHDPL would issue and
allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to
Rs.620,000,000. The Debentures and interest thereon are secured by way
of pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project
specific properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr. Nitesh Shetty. During the previous year, NHDPL has
partially redeemed principal amounting to Rs 399,129,000. During the
current year, NHDPL has redeemed the balance principal due and
accordingly, the pledge of shares of NHDPL will be released on
exercising the buy-back option by the Company.
Further, HDFC AMC has a put a option to require Mr.Nitesh Shetty to buy
the 505,000 shares purchased from NEL under the terms of the agreement.
NEL has given corporate guarantee in Sep 2013 in respect of the put
option. The guarantee given by NEL in respect of put option is
outstanding as on 31 March 2015.
11. Unsecured advance includes advance aggregating to Rs. 157,000,000
to a party for facilitating acquisition of land from number of land
owners for the purpose of construction of project and joint
development. This involves negotiation with multiple agencies under
different authorities and statutes and as such the specific time limit
has been set for 7 years for the completion of transfer of title and
conveyancing.
12. During the year under review, the Company had revised its
estimates of useful life of its fixed assets as prescribed in Part C of
Schedule II of the Companies Act, 2013.
The carrying amount less residual value of the assets whose remaining
useful life has become nil at the beginning of the period amounting to
Rs 5,558,854/- has been adjusted in opening retained earnings as on 1st
April, 2014.
13. In respect of debentures outstanding of Rs. 125 Crores, the
transfer to Debenture Redemption Reserve to the tune of Rs. 31.25
Crores could not be made due to absence of adequate profit.
14. Previous years' figures have been regrouped/reclassified wherever
necessary to conform to current years' presentation.
Mar 31, 2014
1. Earnings/(loss) per share
The basic earnings / (loss) per share is computed by dividing the net
profit / (loss) attributable to equity shareholders for the year by the
weighted average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings/ (loss) per
share comprises the weighted average shares considered for deriving
basic earnings/ (loss) per share and also the weighted average number
of equity shares which could have been issued on the conversion of all
dilutive potential equity shares. Dilutive potential equity shares are
deemed converted as of the beginning of the year, unless they have been
issued at a later date. In computing diluted earnings per share, only
potential equity shares that are dilutive and which either reduces
earnings per share or increase loss per share are included.
2. Employee benefits
Defined benefit plans
The Company''s gratuity plan is a Defined benefit plan. The present value
of gratuity obligation under such Defined benefit plans is determined
based on actuarial valuation carried out by an independent actuary
using the Projected Unit Credit Method, which recognises each period of
service as giving rise to additional unit of employee benefit
entitlement and measure each unit separately to build up the final
obligation. The obligation is measured at the present value of
estimated future cash flows. The discount rates used for determining the
present value of obligation under Defined benefit plans, is based on the
market yields on Government securities as at the balance sheet date,
having maturity periods approximating to the terms of related
obligations. Actuarial gains and losses are recognised immediately in
the profit and loss account. Gains or losses on the curtailment or
settlement of any Defined benefit plan are recognised when the
curtailment or settlement occurs.
The gratuity scheme is administered through a trust with the Life
Insurance Corporation of India and the provision for the same is
determined on the basis of actuarial valuation carried out as at the
year end. Provision is made for the shortfall, if any, between the
amounts required to be contributed to meet the accrued liability for
gratuity as determined by actuarial valuation and the available corpus
of funds.
Other long term benefit
Cost of long term benefits by way of accumulating compensated absences
arising during the tenure of service is calculated taking into account
the pattern of availment of leave. The present value of obligations
towards availment under such long term benefit is determined based on
actuarial valuation carried out by an independent actuary using
Projected Unit Credit Method as at the year end. The obligation is
measured at the present value of estimated future cash flows. The
discount rates used for determining the present value of obligation
under Defined benefit plans, is based on the market yields on Government
securities as at the balance sheet date, having maturity periods
approximating to the terms of related obligations. Actuarial gains and
losses are recognised immediately in the profit and loss account. Gains
or losses on the curtailment or settlement of any Defined benefit plan
are recognised when the curtailment or settlement occurs.
Defined contribution plan
Contributions to the recognized provident fund which is a Defined
contribution scheme, is charged to the Statement of profit and loss.
3. Leases
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classifed as finance leases. Such assets
acquired are capitalised at fair value of the asset or present value of
the minimum lease payments at the inception of the lease, whichever is
lower.
For operating leases, lease payments (excluding cost for services, such
as insurance and maintenance) are recognised as an expense in the
statement of profit and loss on a straight line basis over the lease
term. The lease term is the non- cancellable period for which the
lessee has agreed to take on lease the asset together with any further
periods for which the lessee has the option to continue the lease of
the asset, with or without further payment, which option at the
inception of the lease it is reasonably certain that the lessee will
exercise.
4. Segment reporting
The Company''s operating businesses are organized and managed separately
according to the nature of business and services provided, with each
segment representing a strategic business unit that ofers diferent
products and serves diferent markets. Common allocable costs are
allocated to each segment according to the relative contribution of
each segment to the total common costs. General corporate income and
expense items are not allocated to any business segment.
5. Recognition and measurement of advances paid
a) Advance against property
These advances represent several intended purchases of parcels of land,
which are in various stages of the acquisition process, which is
typically long drawn and requires several regulatory compliances. The
Company considers the purchase as complete only when all compliances
are complete and the ownership right to the land is unfettered. Such
advances, depending on the stage of the land acquisition process, are
measured with reference to the value of the underlying, at the lower of
cost or net realisable value, having regard to the protracted
underlying process.
b) Advances paid towards jointly developable properties
These advances represent monies paid to land owners and intermediaries,
where the company proposes to jointly develop the property. Subsequent
to a defnitive agreement and on actual commencement of development
activity, the Company acquires a right in the underlying land at which
point, such advances are transferred to inventory work in progress.
Advances towards joint development rights are valued at cost. On
transfer to inventory work in progress, measurement is on the basis of
cost, less impairment, if any, determined with reference to the
discounted values of future anticipated cash flows.
6. Cash and cash equivalents
Cash and cash equivalents comprise cash and balances with banks. The
Company considers all highly liquid investments with a remaining
maturity at the date of purchase of three months or less and that are
readily convertible to known amounts of cash to be cash equivalents.
7. Cash fow statement
Cash flows are reported using indirect method, whereby net profits/
(losses) before tax is adjusted for the efects of transactions of a
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from regular operating, investing
and fnancing activities of the Company are segregated.
Equity shares were allotted during the year ended 31 March 2010 as
fully paid bonus shares by capitalisation of securities premium of Rs.
567,020,724 and balance in profit and loss account of Rs. 61,027,176 in
the ratio of nine equity shares for every one equity share held.
(d) Rights, preferences and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The Company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2014, the amount of per share dividend
recognized as distributions to equity shareholders was Rs. Nil
(Previous year : Rs.Nil).
In event of liquidation of the Company, the holders of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
(e) There have been no buy back of shares or issue of shares pursuant
to contract without payment being received in cash for the period of
five years immediately preceding the balance sheet.
Vehicle loan from a bank [amounting to: Rs 1,097,572 (previous year: Rs
1,749,325) - including amounts disclosed as current maturities of
long-term debts]
Vehicle loans from banks are secured by hypothecation of vehicles.
Repayment and interest terms
Nature of Loan Repayment and interest terms
Vehicle loans The loans are repayable in 60 equal
monthly instalments starting from
[amounting to: Rs 1,097,573 September 2010 and to be settled by
September 2015 with an interest
(previous year: Rs 1,749,325) rate of 9.3% per annum.
Details of security and terms of loans and debentures
(i) Short-term loans from banks are secured by :
Bank term loan amounting to: Rs 75,000,000 (previous year: Rs Nil)
i. Equitable mortgage of vacant land situated at Mulavukkad Village,
Kanaynnur Taluk district registered with Kakanad Enterprises Private
Limited, a Subsidiary Company.
ii. Developers share of 13,621 sq ft of commercial area on an
undivided basis in the Project Nitesh Ceasers Palace situated at
Bangalore South Taluk registered with the Company.
iii. Simple and registered mortgage of a fat in the project Nitesh
Camp David situated at Pulakeshi Nagar registered with the Company.
iv. Personal Guarantee of Mr. Nitesh Shetty.
v. Guarantee of Subsidiary Company - Kakanad Enterprises Private
Limited.
(ii) Short-Term loans from financial institutions are secured by:
a) Term Loan amounting to: Rs Nil (previous year: Rs 119,000,000)
i. Mortgage of the projects Nitesh Forest Hills and Nitesh Flushing
Meadows to the extent of developers share of 200,021 sq.ft. (i.e. 134
apartments) and common area along with proportionate share of land and
along with present and future construction thereon.
ii. Mortgage of the project Nitesh Forest Hills to the extent of unsold
area of 10,019 sq.ft. (i.e. 7 apartments ) and common areas along with
proportionate share of land and with present and future unsold
construction thereon.
iii. Charge on all the future receivables from the booked, sold and to
be sold apartments in the above projects.
iv. Irrevocable personal guarantee of Mr. Nitesh Shetty.
b) Term Loan amounting to: Rs 210,000,000 (previous year: Rs
205,000,000)
i. Mortgage of the project Nitesh Logos to the extent of the
developers share of units admeasuring 29,695 sq.ft (i.e. 6 apartments)
along with the undivided share in land.
ii. Mortgage of the project Nitesh Key Biscayne to the extent of the
developers share 12 acres of land in the project situated at Chikkasane
village, Kasaba Hobli, Devanahalli taluk, Bangalore District.
iii. Personal Guarantee of Mr. Nitesh Shetty.
c) Term Loan amounting to: Rs Nil (previous year: Rs 57,167,772)
i. Mortgage of the projects Nitesh Central Park and Nitesh Camp David
to the extent of developers share of 20 apartments and 1 apartment
respectively.
ii. All future receivables of the project Nitesh Central Park and
Nitesh Camp David will be credited to Escrow account.
iii. Personal guarantee of Mr. Nitesh Shetty.
d) Term Loan amounting to: Rs Nil (previous year: Rs 5,321,256)
i. Mortgage of the projects Nitesh Central Park and Nitesh Camp David
to the extent of developers share of 20 apartments and 1 apartment
respectively.
ii. All future receivables of the project Nitesh Central Park and
Nitesh Camp David will be credited to Escrow account.
iiI. Personal guarantee of Mr. Nitesh Shetty.
e) Term Loan amounting to: Rs 88,162,442 (previous year: Rs Nil)
i. Mortgage of the project Nitesh Flushing Meadows situated at to the
extent of developers share of 19 apartments. ii. Escrow of
receivables of the project Nitesh Flushing Meadows. iii. Personal
guarantee of Mr. Nitesh Shetty.
(iii) 18.5% Non-Convertible, Redeemable Debentures from financial
institution [amounting to Rs. 560,000,000 (previous year: Rs
600,000,000)] are secured by:
i. First and exclusive charge by way of a mortgage by deposit of title
deeds over the Hunter Valley Property, Caesar''s Palace Property, Long
Island Mortgage Property and Nitesh Park Avenue.
ii. Escrow account in respect of the receivables from the projects
Nitesh Hunter Valley, Nitesh Caesar''s Palace, Nitesh Long Island
Project, Nitesh Park Avenue.
iii. First and exclusive charge by way of hypothecation on the
receivables in the projects Nitesh Hunter Valley, Nitesh Caesar''s
Palace, Nitesh Long Island and Nitesh Park Avenue.
iv. Personal Guarantee of Mr. Nitesh Shetty in favour of the Debenture
Trustee.
v. Creation of a fixed deposit for an amount equivalent to Rs. 92,50,000
required for maintaining the minimum debt service amount of one months
interest with a lien marked in favour of the Debenture Trustee and
Security Cheques in respect of the entire value of the Debentures.
(iv) Cash credit from banks are secured by :
a) Cash credit amounting to: Rs 99,949,218 (previous year: Rs
97,917,924)
i. Lien on refundable deposits paid to land owners and which are not
hypothecated to any Banks/ Institutions in respect of projects which
are under pipeline and for which approvals have not yet been received.
ii. Hypothecation of Receivables/ other current assets.
iii. Personal Guarantee of Mr. Nitesh Shetty.
b) Cash credit amounting to: Rs 149,817,460 (previous year: Rs Nil)
i. Exclusive charge on the Property admeasuring 21,000 Sq ft situated
at Sampangi Ramaswamy Temple Road registered with Courtyard
Constructions Private Limited.
ii. Personal Guarantee of Mr. Nitesh Shetty.
iii. Corporate Guarantee of a Joint Venture with Courtyard
Construction Private Limited (50% shareholding by Nitesh Urban
Development Private Limited).
The Company has entered into a joint development agreement with the
land owner whereby the Company, at its cost, will construct
apartments/buildings on the land owned by the land owner, and the
portion of building constructed will be exchanged for ownership in the
land. Such portion of land to be acquired by the Company as per joint
development agreement is initially recorded at the estimated cost of
construction for the portion of the building to be transferred to the
land owner on completion of construction. Changes in the estimate/
actual cost of construction from the originally estimated cost are
adjusted in the cost of land in the year of such change/ occurrence.
Note :
i The Company has made further investments in its subsidiaries based on
the independent valuation reports obtained by the Company and as
approved by the Board. As at the balance sheet date, the subsidiary
companies are in various stages of development/ project set-up and
hence, the management believes that there is no diminution other than
temporary in the value of its investments.
ii Non-cumulative redeemable preference shares (NCRPS) carries
non-cumulative dividend of 9% p.a. The Company declares and pays
dividends in Indian rupees. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting. Each NCRPS holder is entitled to one vote per
share only on resolutions placed before the Company which directly
afects the rights attached to NCRPS. These shares may be redeemed, in
whole or in part, at the option of the company at any time on or after
12 December 2012 subject to satisfaction of certain conditions, at the
stipulated redemption amount. If not redeemed earlier, these shares
will be redeemed on 11 December 2032.
Note:
Deferred tax asset on carried forward business loss and unabsorbed
depreciation in tax has been recognized only to the extent there is
virtual certainty as enunciated in AS 22 ''Accounting for Taxes on
Income''.
Of the above, Rs 9,250,000 (previous year: Rs 9,250,000) has been
provided as collateral security to 6,000, 18.5% Non-Convertible,
Reedeemable Debentures having a face value of Rs. 100,000 each
amounting to Rs.600,000,000.
* Includes an amount of Rs 134,292,416 (previous year: Rs 123,676,497)
receivable from Companies/ firms where directors of the Company are also
directors/ members in such other companies.
Note :
The above amount in escrow accounts with banks are in lien towards
repayment of project loans.
8. Commitments and contingent liabilities
As at As at
Particulars 31 March 2014 31 March 2013
Contingent liabilities
Claims against the company not
acknowledged as debts in respect of
- Income-tax 18,040,389 22,440,182
- Service tax 31,156,450 31,156,450
Corporate guarantee for loans
taken by group companies 3,400,000,000 1,020,000,000
Commitments
Estimated amount of contracts remaining
to be executed on projects 1,631,001,600 658,464,627
(net of advances) and not provided for
Notes :
a During the previous year, Nitesh Urban Developments Private Limited,
a subsidiary Company, issued compulsorily convertible debentures to an
investor amounting to Rs 350,000,000. Pursuant to this, the Company and
the investor have entered into a share sale right agreement whereby the
investor has a right (but not obligation) to sell all the debentures to
the Company on or after the end of 48 months from the closing date and
the Company will be obliged to purchase these debentures at Rs
787,500,000 if such option is exercised by the investor.
b The Company has entered into various joint development agreements
wherein, on completion of all obligations of the land owner and
possession of land to the Company, the Company is required to construct
and develop the entire property and hand over an agreed proportion of
the built up area to the land owner as a consideration for the
undivided share in land transferred to the Company.
c The Company has provided support letters to subsidiary companies
wherein it has accepted to provide the necessary level of financial
support to enable the company to operate as a going concern and meet
its obligations as and when they fall due.
d Commitment towards purchase of equity shares of a subsidiary company
The Company has provided a put option to the investor of Nitesh Housing
Developers Private Limited (subsidiary company) whereby the investor
has the right to sell the shares held in the subsidiary company at a
price which will yield a post-tax internal rate of return of 26% p.a.
on their cost of investment, either to the principal promoter (Mr.
Nitesh Shetty) or the Company in the following events :
(a) In the event where the investor exercises the right to sell, the
Principal Promoter shall have the obligation to purchase and/ or
buy-back the share put securities at the share put price, on a spot
delivery basis.
(b) However, in the event where the Principal Promoter does not perform
his obligation and/ or paying the amount to the investor of the
Subsidiary Company, the Company shall have the obligation to perform
and/ or pay to the investor the amounts payable by the Principal
Promoter as if it were the primary obligor.
9. Employee benefits
The Company has a Defined benefit gratuity plan. The gratuity plan
entitles an employee, who has rendered atleast five years of continuous
service, to receive one-half months'' salary for each year of completed
service at the time of retirement/ exit. The Company provides the
gratuity benefit through annual contributions to a fund managed by the
insurer (Life Insurance Corporation of India). Under this plan, the
settlement obligation remains with the Company, although the Employees
Gratuity Trust administers the plan and determines the contribution
premium required to be paid by the Company.
During the previous year, the scheme was unfunded and hence, the
disclosures with respect to plan assets as per Accounting Standard - 15
(Revised) - Employee benefits were not applicable to the Company.
The following tables summarise the components of net benefit expense
recognised in the statement of profit and loss and the funded status and
amounts recognised in the balance sheet for gratuity benefit.
The estimates of future salary increases, considered in actuarial
valuation, takes into account infation, seniority, promotion and other
relevant factors such as supply and demand factors in employment
market.
10. Related parties
(i) Names of related parties and description of relationship:
Enterprises where control exists
Nitesh Indiranagar Retail Private Limited Subsidiary company
Nitesh Housing Developers Private Limited Subsidiary company
Nitesh Urban Development Private Limited Subsidiary company
Kakanad Enterprises Private Limited Subsidiary company
Nitesh Property Management Private Ltd Subsidiary company
Related parties where significant infuence exists and with whom
transactions have taken place during the year
Individuals, Associates and Companies under common control
Associate company Nitesh Residency Hotels Private Ltd
Enterprises owned or significantly Nisco Ventures Private Limited
infuenced by Key Managerial Person :
Southern Hills Developers Private Limited
Serve & Volley Signages Private Limited
Nitesh Infrastructure and Construction
Serve & Volley Media Private Limited
Serve & Volley Outdoor Advertising Private Limited
Grass Outdoor Media Private Limited
Nitesh Industries Private Limited
Nitstone Environment Private Limited
Partnership firm in which the Company is a partner :
Nitesh Estates  Whitefeld
Key management personnel :
Nitesh Shetty [Chairman and Managing Director]
L.S.Vaidyanathan [Executive Director]
Ashwini Kumar [Executive Director and Chief Operating Ofcer]
Notes :
The Company has invested a sum of Rs. 1,472,405,790 (Previous year:
Rs.800,805,790) towards 117,340,579 (Previous year: 50,180,579) Class A
equity shares of Nitesh Residency Hotels Private Limited (''NRHPL''). The
aforesaid investment has certain transfer restrictions (including
consent of another investor) under the Shareholders'' Agreement entered
into with the other investors in NRHPL. As part of the loan arrangement
entered into by NRHPL for funding the hotel project, the Company has
provided an undertaking to lenders not to divest its shares in NRHPL.
The aforesaid Class A shares have similar voting rights to the Class B
shares held by another investor but have diferent dividend rights in
terms of the shareholders agreement. Efective 30 October 2009, NRHPL
became an associate of the Company.
11. Interest in Joint Venture
The Company has a 24% share in the profits and losses of Nitesh Estates
- Whitefeld (Association of Persons), formed in India, a jointly
controlled entity, which is engaged in real estate development. The
Company''s proportionate share of the assets, liabilities, income and
expenses of the jointly controlled entity are as follows :
Note: The capital expenditure and contingent liability as at and for
the year ended 31 March 2014 is Rs. Nil (Previous year: Rs. Nil).
12. The Ministry of Micro, Small and Medium Enterprises has issued an
ofce memorandum dated 26 August 2008 which recommends that the Micro
and Small Enterprises should mention in their correspondence with its
customers the Entrepreneurs Memorandum Number as allocated after fling
of the Memorandum in accordance with the ''Micro, Small and Medium
Enterprises Development Act, 2006'' (''the Act''). The Company has no dues
to Micro and Small Enterprises as at 31 March 2014 and 31 March 2013 in
the financial statements based on information received and available
with the Company.
13. The Company primarily operates only in three business segments -
Residential, Retail and Hospitality. All the operations are carried out
in India and hence there is no geographical segment.
Accounting policies consistently used in the preparation of the
financial statements are also applied to record revenue and expenditure
in individual segments.
Assets, liabilities, revenues and direct expenses in relation to
segments are categorized based on items that are individually
identifable to that segment, while other items, wherever allocable, are
apportioned to the segments on an appropriate basis. Certain items are
not Specifically allocable to individual segments as the underlying
services are used interchangeably. The Company, therefore, believes
that it is not practicable to provide segment disclosures relating to
such items, and accordingly such items are separately disclosed as
unallocated.
14. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
(''NHDPL''), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL
sold 10.1% of its investment in NHDPL to another party (''the Buyer'').
As at 31 March 2013, NEL holds 89.9% of the equity share capital of
NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh
Shetty have entered into an agreement whereby NHDPL would issue and
allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to
Rs.620,000,000. The Debentures and interest thereon are secured by way
of pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project
Specific properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr. Nitesh Shetty. During the previous year, NHDPL has
partially redeemed principal amounting to Rs 399,129,000. During the
current year, NHDPL has redeemed the balance principal due and
accordingly, the pledge of shares of NHDPL will be released on
exercising the buy-back option by the Company.
Further, HDFC AMC has a put a option to require Mr.Nitesh Shetty to buy
the 505,000 shares purchased from NEL under the terms of the agreement.
NEL has given corporate guarantee in Sep 2013 in respect of the put
option. The guarantee given by NEL in respect of put option is
outstanding as on 31 March 2014.
15. The Company has advanced an amount aggregating Rs 157,000,000 as
at 31 March 2014, to various parties for purchase/ joint development of
land/ properties. Considering the timeline of these advances, the same
should have been converted into acquired land/ joint development
agreements or these amounts should have been recovered. While these
advances are unsecured, Management continues to believe that these
advances have been made to parties for which a joint development
agreements/ acquisition of land will be consummated and in the event
that it does not consummate, these advances can be recovered.
16. Previous years'' figures have been regrouped/ reclassified wherever
necessary to conform to current years'' presentation.
Mar 31, 2013
1. Commitments and contingent liabilities
Rs.
For the year For the year
Particulars ended ended
31 March 2013 31 March 2012
Contingent liabilities
Claims against the company not
acknowledged as debts in
respect of
- Income-tax 22,440,182 35,416,412
- Service tax 31,156,450
Corporate guarantee for loans
taken by group companies 1,020,000,000 1,020,000,000
Commitments
Estimated amount of contracts
remaining to be executed on
projects (net of 658,464,627 280,921,873
advances) and not provided for
Notes :
a During the year, Nitesh Urban Development Private Limited, a
subsidiary Company, issued compulsorily convertible debentures to an
investor amounting to Rs. 350,000,000. Pursuant to this, the Company
and the investor have entered into a share sale right agreement whereby
the investor has a right (but not obligation) to sell all the
debentures to the Company on or after the end of 48 months from the
closing date and the Company will be obliged to purchase these
debentures at Rs. 787,500,000 if such option is exercised by the
investor.
b The Company has entered into various joint development agreements
wherein, on completion of all obligations of the landowner and
possession of land to the Company, the Company is required to construct
and develop the entire property and hand over an agreed proportion of
the built up area to the land owner as a consideration for the
undivided share in land transferred to the Company.
2. Employee benefts
The Company has a defned beneft gratuity plan. The gratuity plan
entitles an employee, who has rendered atleast fve years of continuous
service, to receive one-half months'' salary for each year of completed
service at the time of retirement/ exit. The scheme is unfunded and
hence the disclosures with respect to plan assets as per Accounting
Standard-15(Revised)- Employee benefts are not applicable to the
Company.
The following tables summarise the components of net beneft expense
recognised in the statement of proft and loss and the funded status and
amounts recognised in the balance sheet for gratuity beneft.
3. Related parties
(i) Names of related parties and description of relationship:
Enterprises where control exists
Nitesh Indiranagar Retail Private Limited Subsidiary company
Nitesh Housing Developers Private Limited Subsidiary company
Nitesh Urban Development Private Limited Subsidiary company
(formerly Nitesh Boat Club Development Private Limited)
Kakanad Enterprises Private Limited Subsidiary company
Nitesh Property Management Private Limited Subsidiary company
Related parties where signifcant infuence exists and with whom
transactions have taken place during the year
Individuals, Associates and Companies under common control
Associate company Nitesh Residency Hotels Private Limited
Enterprises owned or signifcantly Nisco Ventures Private Limited
infuenced by Key Managerial Southern Hills Developers Private Limited
Person (formerly Nitesh Estates Projects Private Limited)
Serve & Volley Signages Private Limited
Nitesh Infrastructure and Construction
Serve & Volley Media Private Limited
Serve & Volley Outdoor Advertising Private Limited
Grass Outdoor Media Private Limited
Partnership frm in which the Company Nitesh Estates  Whitefeld is a
partner
Key management personnel Nitesh Shetty [Chairman and Managing Director]
L.S.Vaidyanathan [Executive Director] Ashwini Kumar [Executive Director
and Chief Operating Ofcer]
4. Interest in Joint Venture
The Company has a 24% share in the profts and losses of Nitesh Estates
- Whitefeld (Association of persons), formed in India, a jointly
controlled entity, which is engaged in real estate development. The
Company''s proportionate share of the assets, liabilities, income and
expenses of the jointly controlled entity are as follows:
5. In accordance with section 117C of the Companies Act read along
with circular issued by Department of Company Afairs No 9/2002 which
states that the section requires the amount to be credited to debenture
redemption reserve only out of profts of the Company, the Company has
not transferred any amounts to debenture redemption reserve as it has
incurred losses during the year.
6. The Ministry of Micro, Small and Medium Enterprises has issued an
ofce memorandum dated 26 August 2008 which recommends that the Micro
and Small Enterprises should mention in their correspondence with its
customers the Entrepreneurs Memorandum Number as allocated after fling
of the Memorandum in accordance with the ÂMicro, Small and Medium
Enterprises Development Act, 2006'' (Âthe Act''). The Company has no dues
to Micro and Small Enterprises as at 31 March 2013 and 31 March 2012 in
the fnancial statements based on information received and available
with the Company.
7. The Company primarily operates only in three business segments -
Residential, Retail and Hospitality. All the operations are carried out
in India and hence there is no geographical segment.
Accounting policies consistently used in the preparation of the
fnancial statements are also applied to record revenue and expenditure
in individual segments.
Assets, liabilities, revenues and direct expenses in relation to
segments are categorized based on items that are individually
identifable to that segment, while other items, wherever allocable, are
apportioned to the segments on an appropriate basis. Certain items are
not specifcally allocable to individual segments as the underlying
services are used interchangeably. The Company, therefore, believes
that it is not practicable to provide segment disclosures relating to
such items, and accordingly such items are separately disclosed as
unallocated.
8. On 24 September 2009, NEL invested a sum of Rs.49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
(ÂNHDPL''), a subsidiary of NEL. Subsequently, on 25 September 2009, NEL
sold 10.1% of its investment in NHDPL to another party (Âthe Buyer'').
As at 31 March 2013, NEL holds 89.9% of the equity share capital of
NHDPL. On 25 September 2009, NEL, NHDPL, the Buyer and Mr. Nitesh
Shetty have entered into an agreement whereby NHDPL would issue and
allot to the Buyer, 6,200,000 Debentures of Rs.100 each aggregating to
Rs.620,000,000. The Debentures and interest thereon are secured by way
of pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project
specifc properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr. Nitesh Shetty. During the year, NHDPL has partially
redeemed principal amounting to Rs. 399,129,000. The Buyer has an
option to sell and Mr. Nitesh Shetty has an obligation to buy 505,000
shares.
9. Advance against property as at 31 March 2013 includes
Rs.215,000,000 (Previous year: Rs.215,000,000) paid to an intermediary
party for purchase of a particular parcel of land and consequently, the
intermediary party entered into an agreement with the landlord for
purchase of the said land. Subsequently, at the request of the Company,
the intermediary party assigned its rights and obligations under the
agreement with the landlord to the Company. There is no specifc
confrmation from the landlord in acceptance of the aforesaid
assignment. The Company has obtained an independent legal opinion based
on which it is confdent of the enforceability of the assignment
agreement and has accordingly initiated the legal proceedings with
respect to refund of the aforesaid amount and is confdent that the
legal proceedings would be in favour of the Company. Accordingly, the
management is of the view that no adjustment is required to be made in
respect of the carrying value of the advance against property as at 31
March 2013.
10. Previous years'' fgures have been regrouped/ reclassifed wherever
necessary to conform to current years'' presentation.
Mar 31, 2012
1. Corporate information
Nitesh Estates Limited (the Company or 'NEL') was incorporated on
February 20, 2004. NEL is a real estate developer engaged in the
business of development, sale, management and operation of all or any
part of housing and hotel projects, commercial premises and other
related activities.
On April 23, 2010, the Company launched its Initial Public offer (IPO)
of 75,000,000 equity shares of Rs. 10 each for cash at a price of Rs.54
each and raised capital of Rs.4,050,000,000. Pursuant to the IPO, the
Company's shares are listed on The National Stock Exchange and The
Bombay Stock Exchange effective May 13, 2010.
2. Basis of preparation
The financial statements of the Company have been prepared in accordance
with 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 the
Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial statements
have been prepared under the historical cost convention on an accrual
basis.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year, except for the
change in accounting policy explained below.
3. Segment reporting
The Company is engaged in the business of real estate development in
India. Since, the Company's business activity primarily falls within a
single business and geographical segment, no further disclosures are
required, other than those already given in the financial statements.
4. Related party information a) List of Related parties
Key managerial personnel ('KMP')
Mr. Nitesh Shetty [Managing Director] Mr. L. S. Vaidyanathan [Executive
Director]
Subsidiary companies
Nitesh Indiranagar Retail Private Limited
Nitesh Housing Developers Private Limited
Nitesh Urban Development Private Limited
(formerly Nitesh Boat Club Development Private Limited)
Kakanad Enterprises Private Limited
(formerly Nitesh Kochi Projects & Developers Private Limited)
Nitesh Property Management Private Limited
Associate company Nitesh Residency Hotels Private Limited
Joint venture enterprise Nitesh Estates à Whitefeld [Association of
persons]
Enterprises owned or significantly influenced by KMP
Globosport India Private Limited
Lob Media Private Limited
Madison Developers Private Limited
Nisco Ventures Private Limited
Nitesh Agrico Private Limited
Nitesh Airways Private Limited
Winter Lands Developers Private Limited
(formerly Nitesh Devanahalli Township Private Limited)
Southern Hills Developers Private Limited
(formerly Nitesh Estates Projects Private Limited)
Nitesh Energy Private Limited
Nitesh Healthcare Private Limited
Nitesh Hospitals Private Limited
Nitesh Industries Private Limited
Nitesh Infrastructure Private Limited
Nitesh Land Holdings Private Limited
Nitesh Media Private Limited
Nitesh Mylapore Developers Private Limited
Nitesh Pharmacy Private Limited
Nitesh Publishers Private Limited
Nitstone Environment Private Limited
Nitstone Waste Management Private Limited
Nitesh Telecom Private Limited
Nitesh Warehousing Private Limited
Nitesh Property Management Private Limited
Serve & Volley Holdings Private Limited
Grass Outdoor Media Private Limited
Serve & Volley Outdoor Advertising Private Limited
Serve & Volley Signages Private Limited
Courtyard Constructions Private Limited
Hampton Investments Private Limited
Nitesh Healthcare
Richmond Trading Enterprises
Nitesh Infrastructure and Construction
5. Contingent liabilities and commitments (to the extent not provided
for)
i. Contingent Liabilities
a. Claims not acknowledged as debts in respect of income tax Ã
Rs.35,416,412 (Previous year: Rs. 30,275,706)
b. Guarantees given
i. Guarantee in respect of debentures as discussed in Note 37 below
ii. Other guarantees à Rs.431,175,000 (Previous year: Rs.14,075,000).
c. Also, refer note 39 and note 43.
ii. Commitments
a. The estimated amount of contracts, net of advances remaining to be
executed on capital account is Rs. 1,920,428 (Previous year:
Rs.1,790,000).
b. As at March 31, 2012, the Company has given Rs.1,038,742,815
(Previous year: Rs.838,695,080) as advances/deposits for joint
development/purchase of land. Under the arrangements executed with the
land owners/intermediary parties, the Company is required to make
further payments under the arrangements based on the terms/ milestones
stipulated thereunder. Further, in respect of joint development
arrangements the Company is also required to give share in area/
revenue from such development in exchange of undivided share in land as
stipulated under the arrangements.
c. Also, refer note 29(c) and note 43.
6. Employee benefits
The Company has a defned benefit gratuity plan. Every employee who has
completed five years or more of service gets gratuity on departure at 15
days basic salary (last drawn salary) for each completed year of
service subject to maximum of Rs.1,000,000. The scheme is unfunded and
hence the disclosures with respect to plan assets as per AS-15(R) are
not applicable to the Company.
7. Leases
The Company has taken office, vehicles and other facilities under
cancelable and non-cancelable operating leases, which are renewable on
a periodic basis. The total lease expense for such leases recognised in
the statement of Profit and loss is Rs.22,012,791 (Previous year:
Rs.19,373,663). The future minimum lease payments for non-cancelable
operating leases are as follows:
8. On September 24, 2009, NEL invested a sum of Rs.49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
('NHDPL'), a subsidiary of NEL. Subsequently, on September 25, 2009,
NEL sold 10.1% of its investment in NHDPL to another party ('the
Buyer'). As at March 31, 2012, NEL holds 89.9% of the equity share
capital of NHDPL.
On September 25, 2009, NEL, NHDPL, the Buyer and Mr. Nitesh Shetty have
entered into an agreement whereby NHDPL would issue and allot to the
Buyer, 6,200,000 Debentures of Rs.100 each aggregating to
Rs.620,000,000. The Debentures and interest thereon are secured by way
of pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr. Nitesh Shetty in NEL, equitable mortgage of project
Specific properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr. Nitesh Shetty. Further, the Buyer has a put option to
require Mr. Nitesh Shetty to buy the 505,000 shares purchased from NEL
under the terms of the agreement. The Buyer has the option to exercise
conversion of such Debentures into preference shares of NHDPL after
August 31, 2010 or secure the redemption of the same by NHDPL anytime
on or after September 5, 2010 and no later than September 20, 2012.
Further, NHDPL had the option to redeem the Debentures to the extent of
Rs.500,000,000 on or before March 31, 2011, which has not been
exercised by NHDPL. NHDPL had the obligation to redeem all the
Debentures on September 20, 2012. The Debentures are redeemable at a
price that shall entitle the Buyer to a pre-tax IRR of 18% p.a. on the
subscribed amount if on such date of redemption NEL has not completed
its initial public offering ('IPO'), or a post-tax IRR of 25% p.a., if
on the date of redemption NEL has completed its IPO. NHDPL has issued
Debentures amounting to Rs.620,000,000 as at March 31, 2012.
On May 15, 2010, certain terms of Debenture agreement have been amended
and the Debentures have been converted from 'Redeemable Optionally
Convertible Debentures' to 'Compulsorily Convertible Debentures', which
will be later converted to 'Redeemable Non-convertible Preference
Shares' anytime on or after September 5, 2010 and no later than
September 20, 2012. Such Redeemable Non-convertible Preference Shares
are to be redeemed at an IRR to the Buyer as discussed above. As per
the aforesaid terms, the debentures are convertible at par into
preference shares and the premium on redemption of preference shares
thereon in the opinion of the management, will be out of utilization of
securities premium arising from fresh issue of equity shares to
existing shareholders of NHDPL.
9. Inventories as at March 31, 2012 includes Land amounting to
Rs.307,388,948 (Previous year: Rs.193,090,461) comprising cost of land
held by the Company and other related costs incurred thereto. The land
is to be developed under a joint arrangement with another party ('the
Other Party') along with the adjoining parcel of land owned by the
Other Party. As per the joint arrangement, the Company was required to
commence the project by May 18, 2010, failing which the Other Party is
entitled to terminate the joint arrangement. The Other Party has not
exercised the right to terminate and the Company is in negotiation with
the Other Party on various matters relating to structuring the
arrangement, including revised timelines for commencement of the
project. The Company is reasonably confident of finalizing the
arrangement with the Other Party.
10. Advance against property as at March 31, 2012 includes
Rs.215,000,000 (Previous year: Rs.215,000,000) paid to an intermediary
party for purchase of land and consequently, the intermediary party
entered into an agreement with the landlord for purchase of land.
Subsequently, at the request of the Company, the intermediary party
assigned its rights and obligations under the agreement with the
landlord to the Company. There is no Specific confirmation from the
landlord in acceptance of the aforesaid assignment. The Company
continues to deal with the intermediary party on another project.
Further, based on the advice of the Company's external legal counsel,
the Company is reasonably confident of the enforceability of the
assignment agreement and has accordingly initiated the legal
proceedings with respect to refund of the aforesaid amount and is
reasonably confident that the legal proceedings would be in favour of
the Company. Accordingly, the management is of the view that no
adjustment is required to be made in respect of the carrying value of
the advance against property as at March 31, 2012.
11. As at March 31, 2012, the Company has made investment of
Rs.2,436,388,828 (including Share application money pending allotment
of Rs. 830,647,828 in subsidiary companies). The Subsidiary companies
have given advances to companies owned/ significantly influenced by key
managerial personnel amounting to Rs.828,236,000, towards real estate
projects, which are in various stages of development/ project set-up.
The management is confident of settlement of such advances or
achievement of Profitable operations of such real estate projects in
future. Accordingly, management is of the view that no adjustments are
required to be made to the financial statements for the year ended March
31, 2012.
12. As at March 31, 2012, the Company has an investment of
Rs.1,323,900,000 (Previous year: Rs.1,484,722,764) in the equity
shares/towards share capital of Nitesh Indiranagar Retail Private
Limited ('NIRPL'), a wholly owned subsidiary of the Company. Capital
work in progress of NIRPL includes a non-refundable deposit of
Rs.855,000,000 (Previous year: Rs.855,000,000) paid to the landowner
under a Joint Development Agreement ('JDA') and other project Specific
payments amounting to Rs.307,982,644 (Previous year: Rs.629,604,666).
As per the aforesaid JDA, NIRPL is required to adhere to all the terms
of the JDA (as amended) including the specified project timelines,
failing which the other party is entitled to forfeit the aforesaid
nonrefundable deposit and not continue with the joint development
arrangement. Management is reasonably confident of NIRPL adhering to all
the terms of the aforesaid JDA including the specified project
timelines.
13. The Company has entered into share subscription and shareholders
agreement dated October 21, 2007 with Sagar Nitesh Projects Private
Limited ('SNPPL') and its promoters. Pursuant to the agreement, the
Company had made an initial payment of Rs.50,000,000, towards the
Company's obligation to subscribe upto 20% of the paid up capital of
SNPPL amounting to Rs.354,125,000 upon fulfillment of certain conditions
by the parties to the agreement. The Company, in consultation with its
legal counsel is of the opinion that there has been a breach in
fulfillment of the aforesaid conditions on the part of the promoters of
SNPPL and accordingly, the Company has initiated arbitration
proceedings with respect to refund of share application money. Based on
the advice of the Company's external legal counsel, the Company is
confident that the arbitration proceedings would be in the favour of the
Company and the realisable value will be atleast equal to its carrying
value. Accordingly, the management is of the view that no provision is
required to be made in respect of the carrying value of the aforesaid
share application money as at March 31, 2012.
14. Previous year figures
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.
Mar 31, 2011
1. Background
Nitesh Estates Limited ('the Company' or 'NEL') was incorporated on
February 20,2004. NEL is a real estate developer engaged in the
business of development, sale, management and operation of all or any
part of housing and hotel projects, commercial premises and other
related activities.
On April 23,2010, the Company launched its Initial Public Offer (IPO)
of 75,000,000 equity shares of Rs 10 each for cash at a price of Rs.54
each and raised capital of Rs.4,050,000,000. Pursuant to the IPO, the
Company's shares are listed on The National Stock Exchange and The
Bombay Stock Exchange effective May 13,2010.
2. Commitments and Contingent liabilities not provided for
(a) Guarantees given
i. Corporate guarantee in respect of debentures as discussed in Note
16 below.
ii. Other guarantees - Rs 14,075,000 (Previous year: Rs. 225,950,000).
(b) Claims not acknowledged as debts in respect of sales tax - Rs.Nil
(Previous year: Rs.928,560) and income tax - Rs.30,275,706 (Previous
year: Rs.418,536).
(c) The Company has entered into share subscription and shareholders
agreement dated October 21, 2007 with Sagar Nitesh Projects Private
Limited ('SNPPL') and its promoters. Pursuant to the agreement, the
Company had made an initial payment of Rs.50,000,000, towards the
Company's obligation to subscribe upto 20% of the paid up capital of
SNPPL amounting to Rs.354,125,000 upon fulfillment of certain
conditions by the parties to the agreement. The Company, in consultation
with its legal counsel is of the opinion that there has been a breach
in fulfillment of the aforesaid conditions on the part of the promoters
of SNPPL and accordingly, the Company has initiated arbitration
proceedings with respect to refund of share application money. Based
on the advice of the Company's external legal counsel, the Company is
reasonably confident that the arbitration proceedings would be in the
favour of the Company and the realisable value will be atleast equal to
its carrying value. Accordingly, the management is of the view that no
provision is required to be made in respect of the carrying value of
the aforesaid share application money as at March 31,2011.
(d) The estimated amount of contracts, net of advances remaining to be
executed on capital account is Rs.1,790,000 (Previous year:
Rs.865,528).
3. Segment reporting
The Company is engaged in the business of real estate development in
India. Since, the Company's business activity primarily falls within a
single business and geographical segment, no further disclosures are
required, other than those already given in the financial statements.
4. Employee benefits
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets gratuity on departure at
15 days basic salary (last drawn salary) for each completed year of
service subject to maximum of Rs. 1,000,000. The scheme is unfunded and
hence the disclosures with respect to plan assets as per AS-15 are not
applicable to the Company.
The following tables summaries the components of net benefit expense
recognised in the profit and loss account and the funded , status and
amounts recognised in the balance sheet for gratuity benefit.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
5. Deferred tax
The Company has tax losses during the year ended March 31,2011 and has
deferred tax assets as at March 31,2011, the break-up of which is as
below. The management is reasonably confident of realization of deferred
tax assets based on the future taxable income and ultimate outcome of
ongoing and proposed projects.
6. Quantitative Information
On account of the nature of business carried on by the Company, the
management is of the view that it is not practicable to give
quantitative information.
7. On September 24, 2009, NEL invested a sum of Rs.49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
('NHDPL'), a subsidiary of NEL Subsequently, on September 25,2009, NEL
sold 10.1 % of its investment in NHDPL to another party ('the Buyer').
As at March 31,2011, NEL holds89.9% of the equity share capital of
NHDPL
On September 25,2009, NEL, NHDPL, the Buyer and Mr Nitesh Shetty have
entered into an agreement whereby NHDPL would issue and allot to the
Buyer, 6,200,000 Debentures of Rs.100 each aggregating to
Rs.620,000,000.The Debentures and interest thereon are secured by way
of pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr Nitesh Shetty in NEL, equitable mortgage of project
specific properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr Nitesh Shetty. Further, the Buyer has a put option to
require Mr Nitesh Shetty to buy the 505,000 shares purchased from NEL
under the terms of the agreement. The Buyer has the option to exercise
conversion of such Debentures into preference shares of NHDPL after
August 31,2010 or secure the redemption of the same by NHDPL anytime on
or after September 5,2010 and no later than September 20,2012.
Further, NHDPL had the option to redeem the Debentures to the extent of
Rs.500,000,000 on or before March 31,2011, which has not been exercised
by NHDPL. NHDPL had the obligation to redeem all the Debentures on
September 20, 2012. The Debentures are redeemable at a price that shall
entitle the Buyer to a pre-tax IRR of 18% p.a. on the subscribed amount
if on such date of redemption NEL has not completed its initial public
offering ('IPO'), or a post-tax IRR of 25% p.a., if on the date of
redemption NEL has completed its IPO. NHDPL has issued Debentures
amounting to Rs.620,000,000as at March 31,2011.
On May 15, 2010, certain terms of Debenture agreement have been amended
and the Debentures have been converted from 'Redeemable Optionally
Convertible Debentures' to 'Compulsorily Convertible Debentures', which
will be later converted to 'Redeemable Non-convertible Preference
Shares'anytime on or after September 5,2010 and no later than September
20,2012. Such Redeemable Non-convertible Preference Shares are to be
redeemed at an IRR to the Buyer as discussed above.
8. Inventory as at March 31,2011 includes Rs.193,090,461 (Previous
year: Rs.193,090,461) cost of land held by the Company and other
project costs incurred thereto. The land is to be developed under a
joint arrangement with another party ('the Other Party') along with the
adjoining parcel of land owned by the Other Party. As per the joint
arrangement, the Company was required to commence the project by May
18, 2010, failing which the Other Party is entitled to terminate the
joint arrangement. The Other Party has not exercised the right to
terminate and the Company is in negotiation with the Other Party on
various matters relating to structuring the arrangement, including
revised timelines for commencement of the project. The Company is
reasonably confident of finalizing the arrangement with the Other
Party.
9. Advance against property as at March 31, 2011 includes
Rs.215,000,000 paid to an intermediary party for purchase of land and
consequently, the intermediary party entered into an agreement with the
landlord for purchase of land. Subsequently, at the request of the
Company, the intermediary party assigned its rights and obligations
under the agreement with the landlord to the Company. There is no
specific confirmation from the landlord in acceptance of the aforesaid
assignment. The Company continues to deal with the intermediary party
on another project. Further, based on the advice of the Company's
external legal counsel, the Company is reasonably confident of the
enforceability of the assignment agreement. The Company is in
discussion with the landlord and the intermediary and is reasonably
confident of finalizing the arrangement with the landlord. Pending
conclusion of the arrangement, the management is of the view that no
adjustment is required to be made in respect of the carrying value of
the advance against property as at March 31,2011.
10. Initial Public Offer
During the year, the Company launched its Initial Public Offer ('IPO')
of 75,000,000 equity shares of Rs 10 each for cash at a price of Rs.54
each and raised capital of Rs.4,050,000,000.The premium of Rs.44 per
share, amounting to Rs.3,300,000,000 from the allotment has been
credited to Securities Premium Account. The Share issue expenses
incurred by the Company amounting to Rs.313,662,446 have been adjusted
against Securities Premium Account. The details of utilization of
proceeds raised through IPO are as below.
11. Based on the information available with the Company, there are no
suppliers who are registered as micro, small and medium enterprises
under The Micro, Small and Medium Enterprises Development Act, 2006.
12. During the year ended March 31, 2011, the Company purchased
services amounting to Rs.11,676,140 from private limited companies,
covered under Section 297 of the Companies Act, 1956 in respect of
which no prior approval of Central Government as required under Section
297 of the Companies Act, 1956 was obtained. The Company has applied to
the Company Law Board ('CLB') under section 621A of the Companies Act,
1956 for compounding of the above non-compliance, which is under review
by the CLB. Pending such approval, no adjustments have been made to
the financial statements for the year ended March 31,2011.
13. As at March31, 2011, the Company has an investment of Rs.
1,484,722,764 (Previous year: Rs. 244,920,181 Jin the equity shares /
towards share capital of Nitesh Indiranagar Retail Private Limited
('NIRPL'), a wholly owned subsidiary of the Company. Further, the
Company has given guarantee of Rs.Nil (Previous year: Rs.632,191,180)
for loan (including interest thereon) taken by NIRPL. Capital work in
progress of NIRPL includes a non-refundable deposit of Rs.855,000,000
(Previous year: Rs.355,000,000) paid to the landowner under a Joint
Development Agreement ('JDA') and other project specific payments
amounting to Rs.629,604,666 (Previous year:Rs.528,012,141). As per the
aforesaid JDA, NIRPL is required to adhere to all the terms of the JDA
including the specified project timelines, failing which the other
party is entitled to forfeit the aforesaid nonrefundable deposit and
not continue with the joint development arrangement. Management is
reasonably confident of NIRPL adhering to all the terms of the
aforesaid JDA including - the specified project timelines.
14. Previous year's figures have been regrouped wherever necessary to
conform to this year's classification.
Mar 31, 2010
1. Background
Nitesh Estates Limited (formerly Nitesh Estates Private Limited) (the
Company or NEL) was incorporated on February 20, 2004. NEL is a real
estate developer engaged in the business of development, sale,
management and operation of all or any part of housing and hotel
projects, commercial premises and other related activities.
At the extra-ordinary general meeting of the shareholders held on
October 9, 2009, the shareholders approved the conversion of the
company from a private limited company to a public limited company, and
approved the change in the name of the Company from Nitesh Estates
Private Limited to Nitesh Estates Limited. The Company has received a
fresh certificate of incorporation from the Registrar of Companies
incorporating the change in the name of the Company effective November
3, 2009.
On April 23, 2010, the Company launched its Initial Public Offer (IPO)
of 75,000,000 equity shares of Rs. 10 each for cash at a price of Rs.
54 each and raised capital of Rs..4,050,000,000. Pursuant to the IPO,
shares of the Company are listed on The National Stock Exchange and The
Bombay Stock Exchange effective May 13, 2010.
2. Related party information
a) List of Related parties
Key managerial personnel (KMP) Mr. Nitesh Shetty [Managing Director
and substantial shareholder]
Mr. L.S.Vaidyanathan [Executive
Director and Chief Financial Officer]
Subsidiary companies Nitesh Indiranagar Retail Private
Limited
Nitesh Housing Developers Private
Limited
Associate company Nitesh Residency Hotels Private
Limited
Joint venture enterprise Nitesh Estates - Whitefield
[Association of persons]
Enterprises owned or
significantly Globosport India Private Limited
influenced by KMP Lob Media Private Limited
Madison Developers Private Limited
Nisco Ventures Private Limited
Nitesh Agrico Private Limited
Nitesh Airways Private Limited
Nitesh Boat Club Development
Private Limited
Nitesh Devanahalli Township
Private Limited
Nitesh Energy Private Limited
Nitesh Estates Projects
Private Limited
Nitesh Healthcare Private Limited
Nitesh Hospitals Private Limited
Nitesh Industries Private Limited
Nitesh Infrastructure Private Limited
Nitesh Kochi Projects and Developers
Private Limited
Nitesh Land Holdings Private Limited
Nitesh Media Private Limited
Nitesh Mylapore Developers
Private Limited
Nitesh Pharmacy Private Limited
Nitesh Publishers Private Limited
Nitstone Environment Private Limited
Nitstone Wastemanagement
Private Limited
Nitesh Telecom Private Limited
Nitesh Warehousing Private Limited
Serve & Volley Holdings
Private Limited
Grass Outdoor Media Private
Limited (formerly Serve & Volley
Media Private Limited)
Serve & Volley Outdoor Advertising
Private Limited
Serve & Volley Signages
Private Limited
Nitesh Healthcare
Richmond Trading Enterprises
Nitesh Infrastructure and
Construction
Nitesh Realty Fund GP Limited
Shareholder holding
substantial interest AMIF I Limited
Notes:
a. During the year ended March 31, 2009, the Company sold 25% of its
development rights under a joint venture to Nitesh Estates Projects
Private Limited (NEPPL) for a consideration of Rs..270,000,000, The
Company had incurred cost (on pro-rata basis) of Rs. 115,862,027
towards land and other development costs as at the date of sale.
b. On September 30, 2009 and October 21, 2009, the Company assigned to
Nitesh Housing Developers Private Limited, a subsidiary of the Company
(NHDPL), its rights to joint development arrangements with the owners
of land parcels. The Company had paid an advance of Rs. 218,606,995
under such arrangements, which has now been recovered from NHDPL
consequent upon the assignment of rights. The Company charged NHDPL an
assignment fee of Rs. 76,000,000 in respect of the aforesaid assignment
of rights.
c. On November 24, 2009, the Company purchased a developed property
(apartment) from NEPPL for a consideration of Rs. 48,000,000 and sold
the same to a third party for a consideration of Rs.70,000,000 on
December 29, 2009. The Company incurred other incidental costs of Rs.
2,000,000 towards purchase of the said apartment.
d. Pursuant to the Share Subscription Agreement (SSA) entered into
between AMIF I Limited (Investors), Pushpalatha V Shetty, Nitesh
Shetty, Nitesh Industries Private Limited and the Company, common costs
i.e. the salaries, general and administrative and selling overheads
incurred by the Company are being shared by NEPPL and the Company in
the ratio of their project expenses.
Accordingly, the Company has crossed charged NEPPL expenses amounting
to Rs. 41,106,649 for the year ended March 31, 2009 and Rs. 29,575,632
for the year ended March 31, 2010. Although, the SSA has been
terminated effective October 9, 2009, the Company and NEPPL continue to
share common costs in the ratio of their project expenses.
e. During the year, the Company invested a sum of Rs. 104,000,000
towards additional 10,400,000 Class A equity shares of Nitesh Residency
Hotels Private Limited (NRHPL). Further, on October 30, 2009, the
0.01% Optionally Convertible Redeemable Non-cumulative preference
shares were converted into 1,591,252 Class A equity shares of Rs. 10
each. Further, NRHPL issued 14,321,268 Class A equity shares as fully
paid bonus shares of Rs. 10 each. The aforesaid shares held by the
Company in NRHPL have certain transfer restrictions (including consent
of another investor) under the Shareholders Agreement entered into
with the other investors in NRHPL. As part of the loan arrangement
entered into by NRHPL for funding the hotel project, the Company has
provided an undertaking to such lenders not to divest its shares in
NRHPL. The aforesaid Class A shares have similar voting rights to the
Class B shares held by another investor but have different dividend
rights in terms of the shareholders agreement. Effective October 30,
2009, NRHPL became an associate of the Company. The Company has a
commitment to invest additional share capital in NRHPL alongwith the
other investors. The Companys share of such additional investment as
at March 31, 2010 is estimated to be Rs. 460 Million.
f. Refer notes to Schedule 3 for loans personally guaranteed by
certain directors of the Company. 4. Commitments and Contingent
liabilities not provided for
(a) Guarantees given
i. Corporate guarantee in respect of debentures as discussed in Note
16 below ii. Other guarantees - Rs. 225,950,000 (Previous year: Rs.
275,875,000).
(b) Claims not acknowledged as debts in respect of sales tax - Rs.
928,560 (Previous year: Rs. 928,560) and income tax - Rs. 418,536
(Previous year: Rs. Nil)
(c) The Company has entered into share subscription and shareholders
agreement dated October 21, 2007 with Sagar Nitesh Projects Private
Limited (SNPPL) and its promoters. Pursuant to the agreement, the
Company had made an initial payment of Rs. 50,000,000, towards the
Companys obligation to subscribe upto 20% of the paid up capital of
SNPPL amounting to Rs. 354,125,000 upon fulfillment of certain
conditions by the parties to the agreement. The Company, in
consultation with its legal counsel is of the opinion that there has
been a breach in fulfillment of the aforesaid conditions on the part of
the promoters of SNPPL and accordingly, the Company has initiated
arbitration proceedings with respect to refund of share application
money. Based on the advice of the Companys external legal counsel and
based on an opinion from an independent lawyer, the Company is
confident that the arbitration proceedings would be in the favour of
the Company and the realisable value will be atleast equal to its
carrying value. Accordingly, the management is of the view that no
provision is required to be made in respect of the carrying value of
the aforesaid share application money as at March 31, 2010.
(d) The estimated amount of contracts, net of advances remaining to be
executed on capital account is Rs. 865,528 (Previous year Rs. Nil).
3. Employee benefits
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets gratuity on departure at
15 days basic salary (last drawn salary) for each completed year of
service subject to maximum of Rs. 1,000,000. The scheme is unfunded and
hence the disclosures with respect to plan assets as per AS-15 are not
applicable to the Company.
4. Segment reporting
The Company is engaged in the business of real estate development in
India. Since, the Companys business activity primarily falls within a
single business and geographical segment, no further disclosures are
required, other than those already given in the financial statements.
5. Leases
The Company has taken office, vehicles and other facilities under
cancelable and non-cancelable operating leases, which are renewable on
a periodic basis. The total lease expense for such leases recognised in
the Profit and Loss Account is Rs. 12,170,045 (Previous year: Rs.
17,697,030).
6. Quantitative Information
On account of the nature of business carried on by the Company, the
management is of the view that it is not practicable to give
quantitative information.
Note: At the extra-ordinary general meeting of the shareholders held on
October 9, 2009, the Company has issued 62,804,790 equity shares as
bonus shares to the existing shareholders by way of capitalization of
securities premium and balance in profit and loss account in the ratio
of nine equity shares for every one equity share held.
In accordance with the Accounting Standard - 20 Earnings Per Share,
notified by Companies (Accounting Standards) Rules, 2006 (as amended),
the share data has been adjusted for the aforesaid bonus shares in
computation of the earnings per share for the year ended March 31,
2009.
7. On September 24, 2009, NEL invested a sum of Rs. 49,999,000 in the
equity shares (99.9%) of Nitesh Housing Developers Private Limited
(NHDPL), a subsidiary of NEL. Subsequently, on September 25, 2009,
NEL sold 10.1% of its investment in NHDPL to another party (the
Buyer). As at March 31, 2010, NEL holds 89.9% of the equity share
capital of NHDPL.
On September 25, 2009, NEL, NHDPL, the Buyer and Mr Nitesh Shetty have
entered into an agreement whereby NHDPL would issue and allot to the
Buyer, 6,200,000 Debentures of Rs. 100 each aggregating to Rs.
620,000,000. The Debentures and interest thereon are secured by way of
pledge of the entire shareholding of NEL in NHDPL and a part of
shareholding of Mr Nitesh Shetty in NEL, equitable mortgage of project
specific properties and hypothecation of receivables of such projects
and further secured by corporate guarantee of NEL and personal
guarantee of Mr Nitesh Shetty. Further, the Buyer has a put option to
require Mr Nitesh Shetty to buy the 505,000 shares purchased from NEL
under the terms of the agreement. The Buyer has the option to exercise
conversion of such Debentures into preference shares of NHDPL after
August 31, 2010 or secure the redemption of the same by NHDPL anytime
on or after September 5, 2010 and no later than September 20, 2012.
Further, NHDPL had the option to redeem the Debentures to the extent of
Rs. 500,000,000 on or before March 31, 2010, which has not been
exercised by NHDPL. NHDPL had the obligation to redeem all the
Debentures on September 20, 2012. The Debentures are redeemable at a
price that shall entitle the Buyer to a pre-tax IRR of 18% p.a. on the
subscribed amount if on such date of redemption NEL has not completed
its initial public offering (IPO), or a post-tax IRR of 25% p.a., if
on the date of redemption NEL has completed its IPO. NHDPL has issued
Debentures amounting to Rs. 620,000,000 as at March 31, 2010.
On May 15, 2010, certain terms of Debenture agreement have been amended
and the Debentures have been converted from Redeemable Optionally
Convertible Debentures to Compulsorily Convertible Debentures, which
will be later converted to Redeemable Non-convertible Preference
Shares anytime on or after September 5, 2010 and no later than
September 20, 2012. Such Redeemable Non-convertible Preference Shares
are to be redeemed at an IRR to the Buyer as discussed above.
8. Inventory as at March 31, 2010 represents cost of land held by the
Company and other project costs incurred thereto. The land is to be
developed under a joint arrangement with another party (the Other
Party) along with the adjoining parcel of land owned by the Other
Party. As per the joint arrangement, the Company was required to
commence the project by May 18, 2010, failing which the Other Party is
entitled to terminate the joint arrangement. The Other Party has not
exercised the right to terminate and the Company is in negotiation with
the Other Party on various matters relating to structuring the
arrangement, including revised timelines for commencement of the
project. The Company is confident of finalizing the arrangement with
the Other Party shortly. Pending outcome of the joint arrangement, the
management is of the view that no adjustment is required to be made in
respect of the carrying value of the inventory as at March 31, 2010
9. As at March 31, 2010, the Company has paid a sum of Rs. 88,443,596
towards expenses in connection with the IPO. This amount shall be
adjusted against securities premium arising from the proposed issue of
equity shares, as permitted under section 78 of the Companies Act,
1956. This amount has been carried forward and disclosed under the head
"Advances recoverable in cash or kind or for value to be received"
under "Loans and Advances" in the Balance Sheet.
10. Prior period item for the year ended March 31, 2009 represents
advertisement related expenses amounting to Rs. 934,028, which was
inadvertently not recognized in the preceding previous year.
11. Based on the information available with the Company, there are no
suppliers who are registered as micro, small and medium enterprises
under The Micro, Small and Medium Enterprises Development Act, 2006.
12. As at March 31, 2010, the Company has an investment of Rs.
244,920,181 in the equity shares/towards share capital of Nitesh
Indiranagar Retail Private Limited (NIRPL), a wholly owned subsidiary
of the Company. NIRPL has paid a non-refundable deposit of Rs.
355,000,000 paid to the landowner under a Memorandum of Understanding
(MOU) and has incurred other project specific expenses amounting to
Rs. 242,012,142. Under the terms of the aforesaid MOU, a joint
development agreement (JDA) was to be executed by NIRPL on or before
June 30, 2010, failing which the other party is entitled to forfeit the
aforesaid non-refundable deposit and not continue with the joint
development arrangement. However, NIRPL and the other party have been
and are in active discussions to finalise the terms of the JDA and the
Other Party has not forfeited the aforesaid deposit. Management is
reasonably confident of NIRPL executing the JDA at the earliest.
Accordingly, Management is of the view that no adjustments are required
to be made in this regard to the financial statements of the Company as
at March 31, 2010.
13. Previous years figures have been regrouped wherever necessary to
conform to this years classification.
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- Audited Results
- Cash Flow
- Balance Sheet
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Satchmo Holdings Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
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Satchmo Holdings Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
- Change of Name
