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Notes to Accounts of Sobha Ltd.

Mar 31, 2017

1. During the year ended March 31, 2017, the Company has affected the buyback of 1,759,192 fully paid up equity shares of the Company of face value of Rs. 10 each at a price of Rs. 330 per equity share on proportionate basis, aggregating to Rs. 580.53 million. The premium has been adjusted against the free reserves. In order to comply with Section 69 of the Companies Act, 2013, the Company has transferred nominal value of the shares bought back to capital redemption reserve.

2. The Company has issued redeemable non-convertible debentures. Accordingly, the Companies (Share capital and Debentures) Rules, 2014 (as amended), require the Company to create Debenture Redemption Reserve (DRR) out of profits of the Company available for payment of dividend. DRR is required to be created for an amount which is equal to 25% of the value of debentures issued. The Company has created the DRR of Rs. 311.54 million (March 31, 2016 - Rs. 117.14 million; April 1, 2015 - Rs. Nil).

3. Related party transactions

4. The following table provides the name of the related party and the nature of its relationship with the Company:

Subsidiaries

Direct Subsidiaries Sobha City

Sobha Highrise Ventures Private Limited [from January 31, 2017]

Sobha Developers (Pune) Limited Sobha Assets Private Limited Sobha Tambaram Developers Limited Sobha Nandambakkam Developers Limited Subsidiaries of Sobha City

Vayaloor Properties Private Limited Vayaloor Builders Private Limited Vayaloor Developers Private Limited Vayaloor Real Estate Private Limited Vayaloor Realtors Private Limited Valasai Vettikadu Realtors Private Limited

Joint Venture

Sobha Highrise Ventures Private Limited [upto January 30, 2017]

Key Shareholder

Mr. P. N. C. Menon [ Refer note 14(c)]

Mrs. Sobha Menon [ Refer note 14(c)]

Key Management Personnel (‘KMP’)

Mr. Ravi PNC Menon - Chairman

Mr. J. C. Sharma - Vice Chairman and Managing Director

Mr. P. Ramakrishnan - Executive Director

Additional related parties (‘KMP’s) as per Companies Act, 2013 with whom transactions have taken place during the year

Mr. Subhash Bhat - Chief Financial Officer

Mr. Kishore Kayarat - Company Secretary (upto September 10, 2016)

Mr. Vighneshwar G Bhat - Company Secretary (from September 10, 2016)

Other Directors

Mr. Anup Shah

Mr. S K Gupta

Mr. R V S Rao

Dr. Punita Kumar Sinha

Mr. M. Damodaran

Relatives of key management personnel

Mrs. Sudha Menon

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

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Divyakaushal Properties LLP

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Mapedu Real Estates Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

PNC Lighting Solution Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Engineering and Contracting LLC, Dubai

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Hitech City Developers Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited Sri Kanakadurga Property Developers Private Limited Sri Kurumba Trust

Sri Parvathy Land Developers Private Limited Sunbeam Projects Private Limited Technobuild Developers Private Limited Thakazhi Developers Private Limited Thakazhi Realtors Private Limited Tirur Cyber Real Estates Private Limited

5. Also, refer note 17 as regards guarantees received from key management personnel and relative of key management personnel and collateral securities offered by related companies in respect of loans availed by the Company.

6. Segment Information

The Chief Financial Officer monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Accordingly, the Company has identified following as its reportable segment for the purpose of Ind AS 108:

7. Real estate segment;

8. Contractual and manufacturing segment.

Real Estate segment (RE) is into development, sale, management and operation of all or any part of townships, housing projects, also includes leasing of self owned commercial premises.

Contractual and Manufacturing Segment (CM) is into development of commercial premises and other related activities, also includes manufacturing activities related to interiors, glazing and metal works and concrete products.

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Also, the Company''s financing (including finance costs and finance income) and income taxes are managed on a overall basis and are not allocated to operating segments.

Transfer prices between operating segments are on an arm''s length basis in a manner similar to transactions with third parties.

The following tables present revenue and profit information for the Company''s operating segments for the year ended March 31, 2017 and March 31, 2016 respectively.

9. Commitments

10. The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs. 57.20 million (March 31, 2016 - Rs.100.92 million; April 1, 2015 - Rs. 526.46 million).

11. At March 31, 2017, the Company has given Rs. 15,989.99 million (March 31, 2016 - Rs. 17,230.64 million; April 1, 2015 - Rs. 16,445.06 million) as advances for purchase of land. Under the agreements executed with the land owners, the Company is required to make further payments under the agreements based on the terms/ milestones stipulated under the agreement.

12. The Company has entered into joint development agreements with owners of land for its construction and development. Under the agreements the Company is required to pay deposits to the owners of the land and share in area/ revenue from such development in exchange of undivided share in land as stipulated under the agreements. As of March 31, 2017 the Company has paid Rs. 5,087.99 million (March 31, 2016 - Rs. 3,983.18 million; April 1, 2015 - Rs. 3,059.14 million) as refundable deposit against the joint development agreements.

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

Other litigations

14. Claims have been levied on the Company by Bruhat Bengaluru Mahanagara Palike (''BBMP'') towards certain statutory charges which includes betterment charges, ground rent charges, etc. on certain real estate projects undertaken by the Company, the impact of which is not quantifiable. These claims are pending with various courts and are scheduled for hearings. Based on internal assessment, the management is confident that the matter would be decided in its favour, accordingly no provisions has made in this regard.

15. The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business, including certain litigation for lands acquired by it for construction purposes, either through joint development agreements or through outright purchases, the impact of which is not quantifiable. These cases are pending with various courts and are scheduled for hearings. After considering the circumstances and legal advice received, management believes that these cases will not adversely affect its financial statements. Service tax matters in dispute includes demands raised for joint development agreements, the tax impact of which for future years is not ascertainable. The Company has evaluated such arrangements for tax compliance and based on experts opinion, the management is of the view that the tax positions are appropriate.

16. Based on the information available with the Company, there are no suppliers who are registered as § = micro, small or medium enterprises under “The Micro, Small and Medium Enterprises Development Act, 2006” as at March 31, 2017.

17. Capitalization of expenditure

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

18. Financial risk management objectives and policies

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

The Company is exposed to market risk, credit risk and liquidity risk. 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 summarized below.

19. Market risk

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

The sensitivity analysis in the following sections relate to the position as at March 31, 2017 and March 31, 2016. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating interest rates of the debt.

The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post retirement obligations; provisions.

The below assumption has been made in calculating the sensitivity analysis:

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 March 31, 2017 and March 31, 2016.

20. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s long-term debt obligations with floating interest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company does not enter into any interest rate swaps.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant,

21. Credit risk

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

Trade receivables

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

23. Receivables resulting from other than sale of properties: Credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company''s credit period generally ranges from 30-60 days.

Financial Instrument and cash deposits

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 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 minimize 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 2017 and 2016 is the carrying amounts.

24. Liquidity risk

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

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

25. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to maximize 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

26. First-time adoption of Ind AS

These financial statements, for the year ended March 31, 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS.

Exemptions applied

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

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

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

27. Financial assets at amortized cost

Under Indian GAAP, there are certain security 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 recognizes difference between deposit fair value and nominal value as deferred lease expenses and same is being recognized as lease expenses on straight line basis over the lease period. Further, Company recognizes notional interest income on these deposit over the lease term. In case of refundable deposits for joint development arrangement, difference between nominal value and fair value of deposit is treated as land cost and interest income recognized over the period of deposit is reduced from construction cost.

28. Financial liabilities at amortized cost

Under Indian GAAP, there are certain payable to related parties which are carried at nominal value. Ind AS requires to measure these payables at fair value on inception. At inception date, Company recognizes difference between fair value and nominal value as deferred income and same is being recognized on straight line basis over the period. Further, Company also recognizes notional interest income on payables over the term.

29. Gross accounting for joint development arrangements

Company has entered into certain joint development arrangements. In such a situation, revenue is recognized on gross basis. Since the goods exchanged under joint development arrangement i.e. land with flats are in 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 recognized land with corresponding credit to "land cost payable" to account for land received under Joint development arrangement.

30. Proposed dividend

Under Indian GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of financial statements were considered as adjusting events. Accordingly provision for proposed dividend was recognized as a liability. Under Ind AS such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend has been reversed with corresponding adjustment to retained earnings. Consequently the total equity increased by an equivalent amount.

31. Defined benefit liabilities

Both under Indian GAAP and Ind AS, the Company has recognized costs related to its postemployment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re-measurements [comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability] are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

32. Deferred tax

Indian GAAP required deferred tax accounting using the income statement approach, which focuses 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 focuses 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 recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

33. Other comprehensive income

Under Indian GAAP, the Company has not presented other comprehensive income (OCI) separately.

Hence, it has reconciled Indian GAAP profit/loss to profit/loss as per Ind AS. Further, Indian GAAP profit/loss is reconciled to total comprehensive income as per Ind AS.

34. Standards issued but not effective

The standards issued, but not effective up to the date of issuance of the financial statements is disclosed below. In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7,‘Statement of cash flows'' and Ind AS 102, ‘Share-based payment.'' The Company intends to adopt this standard and amendments when it becomes effective.

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 was issued in February 2016 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This standard will come into force from accounting period commencing on or after April 1, 2018.

The Company will adopt the new standard on the required effective date. The directors of the Company anticipate that the application of the standard will be applicable only to certain streams of revenue and will not have a material impact on the financial statements.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The amendments are effective for annual reporting periods beginning on or after April 1, 2017.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ‘fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The amendments are effective for annual reporting periods beginning on or after April 1, 2017. The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

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

36. Transfer pricing

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

37. Prior year comparatives

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


Mar 31, 2016

1 Corporate Information

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

2 Basis of preparation

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

3.Related party disclosure

a List of related parties Subsidiaries

Direct Subsidiaries

Sobha City

Sobha Highrise Ventures Private Limited

[Subsidiary Company under Accounting Standards notified by Companies (Accounting

Standards) Rules, 2006 (as amended)]

Sobha Developers (Pune) Limited

Sobha Assets Private Limited

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

[from March 16,2015]

Sobha Nandambakkam Developers Limited (Formerly Tirur Cybercity Developers Private

Limited) [from March 16, 2015]

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Shareholder

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

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

Key Management Personnel

Mr. Ravi PNC Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

Mr. Ganesh Venkataraman [upto February 16, 2015]

Mr. Subhash Bhat [from February 16, 2015]

Mr. Kishore Kayarat

Relatives of key management personnel

Mrs. Sudha Menon

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

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Divyakaushal Properties LLP

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Mapedu Real Estates Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Engineering and Contracting LLC, Dubai

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

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

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

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

[upto March 15, 2015]

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sri Parvathy Land Developers Private Limited

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber Real Estates Private Limited

4. Leases

(a) Finance lease: Company as lessee

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

(b) Operating lease: Company as lessee

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

5. Commitments

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

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

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

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

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

6. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs. 1,000,000. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for gratuity benefit.

7. Segment reporting

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

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

9. Capitalization of expenditure

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

10. Corporate Social Responsibility (CSR)

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

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

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

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

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

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

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

15. Transfer pricing

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

16.Prior year comparatives

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


Mar 31, 2013

1 Corporate Information

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

2 Basis of preparation

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

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share.

Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in ensuing Annual General Meeting. In event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3 Related party disclosure

a List of related parties Subsidiaries

Direct Subsidiaries

Sobha City

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

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

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

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Management Personnel

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

Mr. Ravi PNC Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

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

Mr. Ganesh Venkataraman [from January 31, 2013]

Mr. Kishore Kayarat

Relatives of key management personnel

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

Mrs. Sudha Menon

Mr. P. N. Haridas

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

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Megatech Software Private Limited

Mapedu Real Estates Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited.

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Engineering and Contracting LLC, Dubai

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha InnercityTechnopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sri Parvathy Land Developers Private Limited

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber City Developers Private Limited

Tirur Cyber Real Estates Private Limited

4 Leases

(a) Finance lease: Company as lessee

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

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

Note:

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

ii. Commitments

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

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

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

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

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

5 Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum ofRs. 1,000,000. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for gratuity benefit.

6 Segment reporting

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

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

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

9 Transfer pricing

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

10 Prior year comparatives

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


Mar 31, 2012

1. Corporate Information

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

2. Basis of preparation

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

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

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

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

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

3. Related party disclosure

a. List of related parties

Subsidiaries

Direct Subsidiaries

Sobha City

Sobha Developers (Pune) Private Limited

[With effect from July 1, 2011 Sobha

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

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

Subsidiaries of Sobha City

Vayaloor Properties Private Limited

Vayaloor Builders Private Limited

Vayaloor Developers Private Limited

Vayaloor Real Estate Private Limited

Vayaloor Realtors Private Limited

Valasai Vettikadu Realtors Private Limited

Key Management Personnel

Mr. P. N. C. Menon

Mr. Ravi Menon

Mr. J. C. Sharma

Mr. P. Ramakrishnan

Mr. S. Baaskaran

Mr. Kishore Kayarat

Relatives of key management personnel

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

Mrs. Sudha Menon

Mr. P. N. Haridas

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

Al Barakah Financial Services Limited

Allapuzha Fine Real Estate Private Limited

Architectural Metal Works FZCO

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chikmangaloor Realtors Private Limited

Chikmangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Mannur Real Estate Private Limited

Mapedu Real Estates Private Limited

Mapedu Realtors Private Limited

Megatech Software Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited.

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

PNC Technologies Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Fine Builders Private Limited

Rusoh Marina Properties Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC (Dubai)

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Maple Tree Developers Private Limited

Sobha Projects & Trade Private Limited

Sobha Puravankara Aviation Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sobha Ventures Limited

Sri Durga Devi Property Management Private Limited

Sri Kanakadurga Property Developers Private Limited

Sri Kurumba Trust

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Thakazhi Developers Private Limited

Thakazhi Realtors Private Limited

Tirur Cyber City Developers Private Limited

Tirur Cyber Real Estates Private Limited

4. Leases

a. Finance lease: Company as lessee

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

b. Operating lease: Company as lessee

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

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

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

Note:

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

ii. Commitments

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

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

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

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

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

5. Employee benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rs1,000,000. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for gratuity benefit.

Notes:

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

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

6. Segment reporting

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

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

8. Prior year comparatives

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


Mar 31, 2011

1. Background

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

2. RELATED PARTY DISCLOSURE

a. List of related parties Subsidiaries

Direct Subsidiaries Sobha City

Subsidiaries of Sobha City Vayaloor Properties Private Limited Vayaloor Builders Private Limited Vayaloor Developers Private Limited Vayaloor Real Estate Private Limited Vayaloor Realtors Private Limited Valasai Vettikadu Realtors Private Limited

Key management personnel Mr. P. N. C. Menon Mr. Ravi Menon Mr. J. C. Sharma Mr. P. Ramakrishnan [from January 29, 2010] Mr. S. Baaskaran Mr. N. Venkatramani [upto July 29, 2009] Mr. Kishore Kayarat [from July 29, 2009]

Relatives of key management personnel Mrs. Sobha Menon Mr. P. N. Haridasx

Al Barakah Financial Services Limited Allapuzha Fine Real Estate Private Limited Architectural Metal Works FZCO Bikasa Properties Private Limited Bikasa Realtors Private Limited Chauma Properties and Construction Private Limited Chikmangaloor Realtors Private Limited Chimangaloor Properties Private Limited Cochin Cyber City Private Limited Cochin Cyber Golden Properties Private Limited Cochin Cyber Value Added Properties Private Limited Cochin Super City Developers Private Limited Daram Cyber Developers Private Limited Daram Cyber Properties Private Limited Daram Land Real Estate Private Limited Greater Cochin Cyber City Private Limited Greater Cochin Developers Private Limited Greater Cochin Properties Private Limited Greater Cochin Realtors Private Limited HBR Consultants Private Limited Hill and Menon Securities Private Limited Kilai Builders Private Limited Kilai Properties Private Limited Kilai Super Developers Private Limited Kuthavakkam Developers Private Limited Kuthavakkam Properties Private Limited Mannur Real Estate Private Limited Mapedu Realtors Private Limited Megatech Software Private Limited Mepedu Real Estates Private Limited Moolamcode Traders Private Limited Oman Builders Private Limited. Padmalochana Enterprises Private Limited Pallavur Projects Private Limited Perambakkam Builders Private Limited PNC Technologies Private Limited Punkunnam Builders and Developers Private Limited Puzhakkal Developers Private Limited Red Lotus Realtors Private Limited Royal Interiors Private Limited Rusoh Fine Builders Private Limited Rusoh Marina Properties Private Limited Rusoh Modern Properties Private Limited SBG Housing Private Limited Sengadu Builders Private Limited Sengadu Developers Private Limited Sengadu Properties Private Limited Services and Trading Co. LLC Sobha Aviation and Engineering Services Private Limited Sobha Contracting LLC (Dubai) Sobha Developers (Pune) Private Limited (An associate of the Company under AS 18) Sobha Electro Mechanical Private Limited Sobha Glazing & Metal Works Private Limited Sobha Innercity Technopolis Private Limited Sobha Interiors Private Limited Sobha Jewellery Private Limited Sobha Projects & Trade Private Limited Sobha Puravankara Aviation Private Limited Sobha Renaissance Information Technology Private Limited Sobha Space Private Limited Sobha Technocity Private Limited Sri Durga Devi Property Management Private Limited Sri Kanakadurga Property Developers Private Limited Sri Kurumba Trust Sunbeam Projects Private Limited Technobuild Developers Private Limited Thakazhi Developers Private Limited Thakazhi Realtors Private Limited Tirur Cyber City Developers Private Limited Tirur Cyber Real Estates Private Limited

3. Leases

a. Assets taken on lease

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

4. Contingent liabilities not provided for

(Rs. in Million)

Particulars March 31, 2011 March 31, 2010

i. Guarantees and counter guarantees given by the Company 1,193.39 677.09

ii. Claims against the Company, not acknowledged as debts* 846.72 -

iii. ncome tax matters in dispute 209.63 226.94

iv. Sales tax matters in dispute 125.06 60.51

v. Service tax matters in dispute 1,078.06 939.59

3,452.86 1,904.13

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

Note:

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

5. Employee benefits

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

Notes:

i. The Company expects to contribute Rs. 5 million (Previous year - Rs. 7 million) to the trust towards gratuity fund in 2011-12.

ii. A limited revision to AS 15 (revised) allows an entity to make disclosures required by paragraph 120(n) of AS 15 (revised) prospectively from the transition date.

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

6. Segment reporting

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

7. In respect of manufacturing activities of interiors, glazing and block making unit, on account of the nature of the business carried on by the Company and since the turnover, purchase and consumption of raw material of each item is less than 10%, the management is of the view that it is exempt from disclosing the quantitative information under Paragraphs 3(i)(a) and 3(ii)(b) of Part II of Schedule VI of the Companies Act, 1956 granted vide Notifi cation S.O 301(E) dated February 8, 2011 issued by the Ministry of Corporate Affairs.

8. Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act, 2006" as at March 31, 2011.

9. Excise duty on sales amounting to Rs. 32.36 million (Previous year - Rs. 33.91 million) has been reduced from Income from operations in profit and loss account and excise duty on decrease in inventory of finished goods amounting to Rs. 0.53 million (Previous year - increase in inventory of finished goods amounting to Rs. 0.15 million) has been accounted in the profit and loss account under the head `Cost of sales.

10. The Company has entered into certain transactions for purchase of material and services in the prior years from private limited companies/ firms, covered under section 297 of the Act, which require prior approval of the Central Government under proviso to Section 297(1) of the Act. In this regard, the Company has filed an application for composition of the offence and obtaining approval from the Company Law Board under Section 621A of the Act. The Company is confi dent of obtaining the approvals, and pending obtaining such approvals, no adjustments have been made in the financial statements.

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


Mar 31, 2010

1. Background

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

2. Related party disclosure

a. List of related parties Subsidiaries

Direct Subsidiaries

Sobha City

Subsidiaries of Sobha City Vayaloor Properties Private Limited Vayaloor Builders Private Limited Vayaloor Developers Private Limited Vayaloor Real Estate Private Limited Vayaloor Realtors Private Limited Valasai Vettikadu Realtors Private Limited

Key management personnel

Mr. P. N. C. Menon

Mr. Ravi Menon

Mr. J. C. Sharma

Mr. Ramakrishnan P [from January 29, 2010]

Mr. S. Baaskaran

Mr. N. Venkatramani [upto July 29, 2009]

Mr. Kishore Kayarat [from July 29, 2009]

Mr. P. Kanodia [upto June 14, 2008]

Mr. K. Suresh [upto August 2, 2008]

Mr. Sumit Keshan [from July 11, 2008 to

December 12, 2008]

Mrs. Sobha Menon [upto January 31, 2009]

Relatives of key management personnel

Mrs. Sobha Menon Mr. Shine V. Nair Mr. P. N. Haridas Mr. P. N. K. Mani

Allapuzha Fine Real Estate Private Limited

Bikasa Properties Private Limited

Bikasa Realtors Private Limited

Chauma Properties and Construction Private Limited

Chikamangaloor Properties Private Limited

Cochin Cyber City Private Limited

Cochin Cyber Golden Properties Private Limited

Cochin Cyber Value Added Properties Private Limited

Cochin Super City Developers Private Limited

Daram Cyber Developers Private Limited

Daram Cyber Properties Private Limited

Daram Land Real Estate Private Limited

Furniture Makers Limited Company, LLC

Greater Cochin Cyber City Private Limited

Greater Cochin Developers Private Limited

Greater Cochin Properties Private Limited

Greater Cochin Realtors Private Limited

HBR Consultants Private Limited

Hill and Menon Securities Private Limited

Indeset Building Materials LLC

Indeset Trading and Decorations Services LLC

Kilai Builders Private Limited

Kilai Properties Private Limited

Kilai Super Developers Private Limited

Kuthavakkam Developers Private Limited

Kuthavakkam Properties Private Limited

Lotus Manpower Consultants Services Private Limited [upto

September 30, 2008]

Lotus Manpower Services [upto September 30, 2008]

Mannur Real Estate Private Limited

Mapedu Realtors Private Limited

Megatech Software Private Limited

Moolamcode Traders Private Limited

Oman Builders Private Limited.

Padmalochana Enterprises Private Limited

Pallavur Projects Private Limited

Perambakkam Builders Private Limited

Puzhakkal Developers Private Limited

Red Lotus Facility Services Private Limited [upto September 30,

2008]

Red Lotus Metal Works Facilities & Services Private Limited

[upto September 30, 2008]

Red Lotus Realtors Private Limited

Royal Interiors Private Limited

Rusoh Modern Properties Private Limited

SBG Housing Private Limited

Sengadu Builders Private Limited

Sengadu Developers Private Limited

Sengadu Properties Private Limited

Services and Trading Co. LLC

Sobha Applied DSP Private Limited

Sobha Contracting LLC (Dubai)

Sobha Contracting Private Limited [upto September 30, 2008]

Sobha Developers (Pune) Private Limited [associate w.e.f June 26,

2008 and 19% holding w.e.f December 28, 2008]

Sobha Electro Mechanical Private Limited

Sobha Glazing & Metal Works Private Limited

Sobha Innercity Technopolis Private Limited

Sobha Interiors Private Limited

Sobha Jewellery Private Limited

Sobha Projects & Trade Private Limited

Sobha Renaissance Information Technology Private Limited

Sobha Space Private Limited

Sobha Technocity Private Limited

Sri Kurumba Trust

Sunbeam Projects Private Limited

Technobuild Developers Private Limited

Takazhi Developers Private Limited

Takazhi Realtors Private Limited

Tirur Cyber City Developers Private Limited

Tirur Cyber Real Estates Private Limited

3. Leases

a. Assets taken on lease

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

4. Provisions and contingencies

b. Contingent liabilities not provided for

(Rs. in Million)

Particulars March 31, 2010 March 31, 2009

i. Guarantees and counter guarantees given by the Company 677.09 442.71

ii. Income tax matters in dispute 226.94 99.17

iii. Sales tax matters in dispute 60.51 81.60

iv. Service tax matters in dispute 939.59 741.78

1,904.13 1,365.26

Note:

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

5. Employee benefits

The following tables summarise 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

6. Segment reporting

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

7. Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under “Te Micro, Small and Medium Enterprises Development Act, 2006” as at March 31, 2010.

8. Excise duty on sales amounting to Rs.33.91 million (Previous year - Rs.91.34 million) has been reduced from Income from operations in profit and loss account and excise duty on increase in inventory of finished goods amounting to Rs.0.15 million (Previous year - Rs.1.53 million) has been accounted in the profit and loss account under the head ‘Cost of sales’.

9. The Company has entered into certain transactions for purchase of material and services in the prior years from private limited companies/ firms, covered under section 297 of the Act, which require prior approval of the Central Government under proviso to Section 297(1) of the Act. In this regard, the Company has fled an application for composition of the offence and obtaining approval from the Company Law Board under Section 621A of the Act. The Company is confident of obtaining the approvals, and pending obtaining such approvals, no adjustments have been made in the financial statements.

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

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