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Notes to Accounts of Sobha Ltd.

Mar 31, 2023

a. The investment property is constructed/ developed on a leasehold land where the company is the lessee and the lease agreement is duly executed in favour of the lessee. As the Right-of-use assets meet the definition of investment property, and hence presented within ''investment property

b. Investment property comprises of commercial property and various clubhouses, that is leased to third parties. Each of the leases contains an initial non-cancellable period of 2-3 years. The Company has no restrictions on the realisability of its investment property.

c. Fair value of investment property

The fair value of Investment property is ? 5,878.10 (31 March 2022: ? 4,432). The valuations is based on valuation performed by an accredited independent valuer and is a registered valuer as defined under Rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair value of the Company''s investment properties have been arrived at using discounted cash flow method, direct comparison approach, and depreciated replacement cost method. Under discounted cash flow method, cash flow projections based on reliable estimates of cash flow are discounted. The main inputs used are rental growth rate, expected vacancy rates, discount rates, and transacted values of similar properties which are based on comparable transactions and industry data. The fair value measurement of the investment property has been categorised as a Level 3 fair value (discounted cash flow method) and level 2 fair value (direct comparison and depreciated replacement cost method) based on the inputs to the valuation technique used (Refer Note 40b)

d. Investment property pledged as security

Refer Note.43 for details of investment property pledged as security for borrowings.

(b) Terms/rights attached to equity shares

The Company has issued only one class of equity shares having a par value of no per share (in f) fully paid up. 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 the 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.

Nature and purpose of reserve

(a) Capital redemption reserve

The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital redemption reserve.

(b) Securities premium

Securities premium reserve is used to record the premium received on issue of shares by the Company. The reserve can be utilised in accordance with the provision of Section 52(2) of Companies Act, 2013.

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to profit and loss.

(d) Retained earnings

The cumulative gain or loss arising from the operations which is retained by the Company is recognised and accumulated under surplus in the statement of profit and loss.

Basis of segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Managing Director (MD) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Company''s strategic business units. These business units offer different products and services, and are managed separately because they require different marketing strategies. For each of the business units, the Company''s MD reviews internal management reports on at least a quarterly basis.

The MD 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:

a) Real estate segment;

b) Contractual and manufacturing segment.

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

The operation of the Contractual and Manufacturing segment (CM) comprises 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.

Defined benefit plan

The Company has gratuity as defined benefit retirement plans for its employees. The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity at the rate of 15 days basic salary for each year of service until the retirement age. As at 31 March 2023 and 31 March 2022 the plan assets were invested in insurer managed funds.

It is exposed to the following types of risks:

Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan''s liability.

Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance companyâ

The Company has leases for building, vehicles and plant and machinery. With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability except for lease on buildings for which it was agreed that the company shall pay a security deposit which shall be adjusted to the minimum lease payments and due to which no lease liability in the same was created and the amount given as security deposit is treated as Right of use asset depreciated on a straight line basis over the lease period. Variable lease payments which do not depend on an index or a rate are excluded from the initial measurement of the lease liability and right of use assets. The Company has presented its right-of-use assets in the balance sheet separately from other assets.

Lease arrangements for vehicles contain an option to extend the lease for a further term till the vehicle is handed over to the lessor after the end of lease term as per agreement or for a fixed tenure of 3 to 9 months as the case may be as per the requirement of Lessee.The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over Factory buildings, the Company must repair and maintain those properties in a good state and return the properties with all connections, sanitary, water and drainage fittings and fixtures as it may exist on the relevant date.

39	Contingent liabilities and commitments
a	Contingent liabilities (to the extent not provided for)
	Particulars	31 March 2023	31 March 2022
i	Income tax matters in dispute (Refer note 1)	-	-
ii iii iv	Value added tax, Service tax and customs matters in dispute (Refer note 2) Customer related cases and complaints (Refer note 3) Matters before prevention of money laundering adjudicating authority (refer note 4)	1,288.38 2.00 2,016.00	1,528.94
		3,306.38	1,528.94

Note - Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/ decisions pending with various forums/authorities.

The Company does not expect the outcome of these proceeding to have a material adverse effect on its financial position. The Company does not expect any reimbursement in respect of above contingent liability.

1 The Income Tax Authorities have disputed the tax computation for certain years, which are pending before various forums. Based on the grounds of the appeals, the management believes that there is a reasonably strong likelihood of obtaining a favourable order. Any income, which may arise out of such litigations will be recognised only on the receipt basis/ or where right to receive such income is clearly established. Pending the final decisions on the above matter, no adjustment has been made in these standalone financial statements.

2 There are various disputes pending with the authorities of customs, service tax and value added tax. The Company is contesting these demands raised by authorities and are pending at various appellate authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its seperate financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.

3 There are various litigations going on/ complaints filed against the Company primarily in Consumer Redressal Forum and under the real estate regulation act 2016. The Company is contesting such litigations with the respective appellate authorities. The management has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required in its seperate financial statements. For most number of litigations/ complaints, based on the grounds of the appeals, the management believes that there is a reasonably strong likelihood of succeeding before these authorities and hence, pending the final decisions on the above matters, no adjustment has been made in these standalone financial statements.

4 The Company had entered into a Joint Development Arrangement with certain land owners in Gurugram, Haryana, in earlier years. In respect of this transaction, the Enforcement Directorate (âED'') after due investigation has filed a complaint with Adjudicating Authority, Prevention of Money Laundering (âAA-PML''), alleging certain irregularities in respect of the manner of allotment and pricing of certain plots under this project or payment of applicable fees and charges by the Company or the landowners, with respect to the terms and conditions mentioned in the development policy of Haryana Development and Regulation of Urban Areas Act (HDRUAA), 1975 and the bilateral agreement between the land owners and Directorate of Town and Country Planning, Haryana (DTCP) resulting in provisional attachment under the Prevention of Money Laundering Act, 2002 (âPMLA'') of land parcels with value of ? 2,016 disclosed under "Other non-current assetsâ in the accompanying standalone financial statements, held by Technobuild Developers Private Limited (âTDPL''). The Company has entered into a Memorandum of Understanding (âMoU'') with TDPL for acquiring land parcels using advances extended by the Company. As per the MoU, TDPL and its affiliates cannot transfer land parcels without prior approval of the Company and the Company has absolute rights over land parcels acquired by TDPL and its affiliates acquired from such advance given by the Company

As part of the inquiry process, the Company and its officers have been asked to provide contracts, documents and justification in respect of this transaction by the concerned authorities. The Company and its officers have been responding to the queries raised / documents sought from time to time. During the current quarter, the Company is in receipt of Show Cause Notice (SCN) under the PMLA from AA-PML and the Company has duly filed detailed responses to allegations made in SCN and the Company is yet to receive the response from AA-PML.

The management, based on its overall assessment and independent legal opinion obtained, believes that these transactions have been carried out in accordance with all the applicable laws and regulations and the said bilateral agreement and has not identified any adverse material impact to the standalone financial statements as at 31 March 2023 or for earlier periods including the recoverability of land advance given against such provisionally attached ? 2,016 land parcels held through TDPL.

5 The Income Tax Department ("the Departmentâ) conducted a Search activity ("the searchâ) under Section 132 of the Income Tax Act ("the Searchâ) at various premises of the Company and certain group companies during March 2023. The Company has provided all the necessary support and cooperation to the Income-tax officials during the search and provided all the necessary information including documents and data sought by the Department. As on the date of issuance of these financial results, the Company has only received a notice u/s148 requiring the management to re-file the Income Tax return for AY 2016-17.

While the uncertainty exist regarding the outcomes of the proceedings by the Department, the Company and certain group companies after considering all available records and facts known to it, has not identified any adjustments to the current or prior period standalone financial results at this stage.

6 During the current year, one of the customers of Sobha Assets Private Limited (SAPL), a wholly owned subsidiary of the company has terminated a project development contract entered by it and demanded compensation of ?2,956 in addition to forfeiture of a ?227 performance guarantee and ?26 of deposits alleging that SAPL has not commenced the contract work. The carrying value of aforesaid project related assets/receivables as at 31 March 2023 in the books of the Company and SAPL is ?24 and ?330 respectively. SAPL has filed a petition with the court of jurisdiction challenging the termination and its grounds, and also filed a counter claim from the customer towards business losses and other receivables. The Company based on its overall assessment and independent legal opinion, believes that the aforesaid termination is illegal and will not have any adverse impact to the financial results and accordingly no provision has been made.

7 In the earlier year, the renewal of Fire Department âno objection certificate'' for one of the project procured by an entrusted person, was found to be defective. On becoming aware of this fact, the Company immediately took remedial steps and obtained renewed approvals, which were then re-submitted with the local body for regularization. During the current year, the local body has cancelled the Occupancy Certificate (OC), against which the Company has filed an appeal with Karnataka Appellate Tribunal challenging the cancellation of OC. The Karnataka Appellate Tribunal has ordered stay on such cancellation order of the OC. The Company is working with the local body for resolution of the aforesaid matter. The management is of the view that the aforementioned event shall not have a material impact on the standalone financial statements of the Company.

8 The Company is involved in certain litigations for lands being developed/ acquired by it for construction purposes, either through a Joint Development Agreement or through outright purchases. These cases are pending with the Civil Courts and scheduled for hearings. After considering the facts and circumstances of each case in detail, and post consideration of the opinions of the in-house legal council, management believes that these litigations will not have a material effect on the standalone financial statements.

9 Certain litigations have been filed on the Company by the forest department, Bangalore water supply and sewage board (BWSSB) on certain real estate projects undertaken by the Company. Also, certain claims have been laid upon the company under the Land acquisition act, against which the Company has filed various writ petitions and obtained stay orders from the honorable high court. The impact of all such litigations and claims is not quantifiable. These litigation/ claims are pending with various courts and are scheduled for hearings. Based on internal assessment, and post consideration of the opinion of its in-house legal council, the management is confident that the matter would be decided in its favour, accordingly no adjustment has been made in these standalone financial statements.

b. Commitments

(a) The contractual commitments pending for the acquisition of property, plant and equipment as at 31 March 2023 is ? 250.03 (31 March 2022: ? 146.80)

(b) 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. During the year ended 31 March 2023, the Company incurred ? 129.37 (31 March 2022 - ? 110.57) towards aircraft usage as per the agreement.

The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The risk management 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.

A Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and other price risk, such as equity price risk and commodity/ real estate risk. The Company does not have a material foreign currency exposure as at balance sheet date and hence, this risk is not applicable.

The sensitivity analysis in the following sections relate to the position as at 31 March 2023 and 31 March 2022. 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 31 March 2023 and 31 March 2022.

(i) 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 of borrowings. The Company does not enter into any interest rate swaps.

(ii) Price risk

The Company''s exposure to price risk arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit or loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets. There are no investments held by the company which are measured at fair value either through profit and loss or fair value through other comprehensive income, hence the Company is not exposed to price risk.

B. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk primarily from trade receivables (net of advances/ payables), refundable joint development deposits, security deposits, loans and other financial assets measured at amortised cost. The Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. The carrying amounts of financial assets, unbilled revenue and contract assets represent the maximum credit exposure.

The Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial/ contract assets based on the assumptions, inputs and factors specific to the class of financial/ contract assets.

(a) Low credit risk

(b) Medium credit risk

Based on business environment in which the Company operates, a default on a financial asset is considered when the counter party fails to make payments within the agreed time period as per contract. Loss rates reflecting defaults are based on actual credit loss experience and considering differences between current and historical economic conditions.

i. Cash and cash equivalents and bank deposits

Credit risk related to cash and cash equivalents and bank deposits is managed by only selecting highly rated banks and diversifying bank deposits and accounts in different banks across the country.

ii. Trade receivables

The Company divides its receivables in the following categories based on the credit risk associated with such categories

Category A - Receivables resulting from sale of properties: Customer credit risk is managed by requiring customers to pay advances before transfer of ownership, therefore, substantially eliminating the Company''s credit risk in this respect. Company recognises impairment on a specific identification basis for debtors where no security exists.

Category B - Receivables from related parties: The Company has performs construction services for its subsidiaries which have individual real estate projects. Credit risk in such cases is managed as control is established; Also, such subsidiaries manage their credit risks by requiring their customers to pay in advance, before transfer of ownership. For other related parties, the Company actively manages such credit risk by an established process of inter-party reconciliations, follow ups and active business at an arms length price.

Category C - Receivables resulting from other than sale of properties: Credit risk is managed by each business unit (primarily pertaining to the contractual and manufacturing business subdivisions) 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, who have a history of prompt payment for more than 5 years with the Company. For other customers, impairment is tested collectively based on the business sub-segment in which they operate. 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 30-90 days.

No single customer individually accounted for more than 10% of the trade receivable balance or more than 10% of the revenue of the company as at 31 March 2023 and 31 March 2022.

iii. Other financial assets measured at amortised cost

Other financial assets measured at amortised cost includes refundable deposits paid under joint development arrangements, security deposits, loans to related parties, and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system are in place ensure the amounts are within defined limits.

a. Recognition of Expected credit losses

i. Financial assets with credit risk classified as âlowâ/ âmediumâ

Company provides for expected credit losses on financial assets other than trade receivables by assessing individual financial instruments for expectation of any credit losses.

For cash & cash equivalents, other bank balances and derivative financial instruments - Since the Company deals with only high-rated banks and financial institutions, credit risk in respect of cash and cash equivalents, derivative financial instruments, other bank balances and bank deposits is evaluated as very low.

For refundable deposits (RD) under joint development arrangements (JDA) and security deposits - Credit risk is considered low because the Company is in possession of the underlying asset.

For trade receivables (category A and B) and other financial assets - Credit risk is evaluated based on Company knowledge of the credit worthiness of those parties and loss allowance is measured. For such financial assets, the Company policy is to provide for 12 month expected credit losses upon initial recognition and provide for lifetime expected credit losses/ specific allowance upon significant increase in credit risk.

ii. Financial assets with credit risk classified as âhighâ

For trade receivables (Category C) - The Company uses an allowance matrix to measure the expected credit losses of such trade and finance receivables. The measurement is made collectively based on the business subsegment in which the respective customers operate. Loss rates are separately measured for customers which have a history of prompt payment, and are not significantly past due from payment. Based on the industry practices and the business environment in which the entity operates, management considers that the trade receivables and loans are in default (credit impaired) if the payments are more than 730 days past due (Net of advances/ payables). Loss rates are based on actual credit loss experience over the past eleven quarters. In the current year, the Company has revised its estimation of loss rates.

Financial instruments 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 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 2023 and 31 March 2022 is the carrying amounts.

C. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The Company has an established liquidity risk management framework for managing its short term, medium term and long term funding and liquidity management requirements. The Company''s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Company manages the liquidity risk by maintaining adequate funds in cash and cash equivalents. The Company also has adequate credit facilities agreed with banks to ensure that there is sufficient cash to meet all its normal operating commitments in a timely and cost-effective manner

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 summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

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 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 includes within net debt, interest bearing borrowings.

In order to achieve this overall objective, the Companyâs 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. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2023 and 31 March 2022.

The financial statements for the previous reporting years were restated for correction of certain items in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors which are described in more detailed as below:

(i) The Company had accrued for notional interest on advance from customers involving sale of real estate unit and had capitalised such interest to project cost. However, the Company received such consideration in accordance with the terms of the contract in proportion to the completion of such real estate project and accordingly does not involve any significant financing element.

(ii) The Company has restated the accounting for revenue from the development and transfer of constructed area/revenue sharing arrangement in exchange of such development rights acquired under Joint Development Arrangement (JDAs) [not being jointly controlled operations] on gross basis in accordance with guidance on ânon-cash consideration'' under Ind AS 115, Revenue from Contract with Customer.

(iii) The Company has restated the capitalisation of borrowing cost on lands and land advances wherein no significant development activity had commenced and projects wherein substantially all activities necessary for their sale had been completed to capitalise appropriate borrowing cost and other directly attributable project cost to projects under construction in accordance with relevant Ind AS.

(iv) rectification of certain other items pertaining to (a) accounting of construction contracts, other operating income and expense (b) right of use asset (c) discounting of retention money and (d) reclassification of borrowings. Consequential impact of deferred tax has been recorded on these adjustments.

47 Additional regulatory information pursuant to the requirement in Division II of Schedule III to the Companies Act 2013

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off.

(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(v) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

(vi) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year

(vii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

48 As the Company is engaged in providing infrastructural facilities as specified in Schedule VI of the Act, provisions of section 186 except sub-section (1) of the Act are not applicable to the Company.

49 No material events have occurred between the Balance Sheet date to the date of issue of these standalone financial statements that could affect the values stated in the financial statements as at 31 March, 2023.

Mar 31, 2022

Nature and purpose of reserve

(a) Capital redemption reserve

The Company recognises profit and loss on purchase, sale, issue or cancellation of the Company''s own equity instruments to capital reserve.

(b) Securities premium

c) General reserve

(d) Surplus in the statement of profit and loss

The cumulative gain or loss arising from the operations which is retained by the Company is recognised and accumulated under surplus in the statement of profit and loss.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

During the year ended 31 March 2022 and 31 March 2021, the Company has paid dividend to its shareholders. This has resulted in payment of DDT to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.

d) Terms and conditions of transactions with related parties

The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. The above related party transactions have been approved by the Board of Directors. Outstanding balances at the year-end are unsecured and interest free (except for loans taken mentioned in (d) and investment in debentures of subsidiaries) and settlement occurs in cash. For the year ended 31 March 2022, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2021 - ?Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

*As the liability for gratuity and leave encashment is provided on actuarial basis for the Company as whole, the amount pertaining to the directors are not included above.

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

f) Also, refer note 18 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.

36 Segment information

Basis of segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chief Executive Officer (CEO) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Company''s strategic business units. These business units offer different products and services, and are managed separately because they require different marketing strategies. For each of the business units, the Company''s CEO reviews internal management reports on at least a quarterly basis.

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

a) Real estate segment;

b) Contractual and manufacturing segment.

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

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 31 March 2022 and 31 March 2021 respectively:

The Company has a defined benefit gratuity plan in India (âthe Plan''), governed by the Payment of Gratuity Act, 1972. The Plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days on salary for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee concerned.

The defined benefit plan for gratuity is administered by a single gratuity fund that is legally separate from the Company. The board of the gratuity fund comprises three employees. The board of the gratuity fund is required by law to act in the best interests of the plan participants and is responsible for setting certain policies (e.g. investment and contribution policies) of the fund.

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 the respective plans:

38 Earnings per share [âEPSâ]

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:

39 Leases

Operating lease - Company as lessor

The Company has entered into commercial property leases on its property, plant and equipment. These operating leases have variable terms ranging from 12 months to 36 months up to eleven years. All leases include a clause to enable upward revision of the lease rental on periodical basis and includes variable rent determined based on percentage of sales of lessee.

Operating lease - Company as lessee

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

The Company has paid ?169.43 million (31 March 2021 - ?176.47 million) during the year towards minimum lease payments.

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position. The Company does not expect any reimbursements in respect of the above contingent liabilities.

Regulatory Matters

a. In respect of matters relating to certain transactions entered into by the Company in earlier years, the Company was asked to provide contracts, documents, correspondences, business rationale and justification for these transactions by regulatory authorities, the Company has been responding to the same from time to time. Securities and Exchange Board of India (SEBI) had further summoned the Company under section 11(2), and 11C(2), 11C(3) of the SEBI Act, 1992 for production of documents and responses in respect of the aforesaid transactions. The Company has duly responded to the e-mail queries and the Summons within the time allotted.

During the current year, the Company has agreed, with the other parties, for a manner of settlement of the dues amounting to ?578 million. Based on this, ?278 million has been settled by transfer of other parties'' units of an ongoing launched project (Project 1). The Company has sold these units in its normal course of business during the current year, so transferred, and realise the amount. The realization terms of the balance, i.e.?300 million has been renegotiated and agreed to be settled through the landowners'' revenue share in sales proceeds of another project (Project 2), which is expected to be launched by next year. The Company has a consent / confirmation from the other party for appropriation of the landowners'' revenue share in sales proceeds of another project (Project 2), settlement of this due which is supported by a legal advise on its enforceability. Based on the best estimate of the management, this will be realized over a period of 2 - 4 years.

Also, during the current year, the Company has received a show cause notice (SCN) from SEBI for alleged violation of certain provisions of the SEBI Act, 1992 and Regulations issued by SEBI thereunder, thus, initiating adjudication proceedings in the above matter. The Company, in consultation with its external legal counsel, has responded to the charges made in the SCN and has filed a settlement application under the SEBI (Settlement Proceedings) Regulation, 2018, without admitting or denying the finding of fact and conclusions of law.

Further, the Company, based on its discussion with SEBI and in consultation with it''s external counsel, has agreed for the settlement amount, vide letter to SEBI dated 25 April 2022. The response from SEBI is currently awaited.

Based on the Company''s overall assessment including legal advice on enforceability of the manner of settlement, the outstanding amounts are considered fully recoverable and the terms of the aforesaid transactions are not prejudicial to the interests of the Company. The Company has not identified any adverse material impact to the financial statements of the Company as at 31 March 2022 or for earlier periods.

b. The Company had entered into a joint development arrangement with certain Land Owners in Gurugram, Haryana, in earlier years. In respect of this transaction, the concerned authorities are examining if there were irregularities in respect of the manner of allotment and pricing of certain plots under this project or payment of applicable fees and charges by the Company or the landowners, with respect to the terms and conditions mentioned in the development policy of Haryana Development and Regulation of Urban Areas Act (HDRUAA), 1975 and the bilateral agreement between the land owners and Directorate of Town and Country Planning, Haryana (DTCP).

As part of the inquiry, the Company and its officers have been asked to provide contracts, documents and justification in respect of this transaction by the concerned authorities and the proceedings on this matter are in progress. The Company and its officers have been responding to the queries raised / documents sought from time to time.

The Company, based on its overall assessment and independent legal opinion obtained, believes that these transactions have been carried out in accordance with all the applicable laws and regulations and the said bilateral agreement. The Company has not identified any adverse material impact to the financial statements of the Company as at 31 March 2022 or for earlier periods.

41 Commitments and other litigations

a. Commitments

(a) The estimated amount of contracts, net of advances remaining to be executed on capital account is ?Nil million (31 March 2021 - TO.07 million).

(b) At 31 March 2022, the Company has given ?12,492.57 million (31 March 2021 - ?13,778.18 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 agreements.

(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 31 March 2022, the Company has paid ?4,080.06 million (31 March 2021 - ?4,829.98 million) as refundable deposit (undiscounted) 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. During the year ended 31 March 2022, the Company incurred ?109.63 million (31 March 2021 - ?61.38 million) towards aircraft usage as per the agreement.

b. Other litigations

(a) Claims have been levied on the Company by Bruhat Bengaluru Mahanagara Palike (âBBMP'') 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.

(b) 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 effect 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.

Details of dues to Micro and Small Enterprises as per Micro, Small and Medium Enterprises Development Act, 2006

Under the Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED'') which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis or the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small mid Medium Enterprises Development Act, 2006 except as set out in the following disclosures.

The disclosure in respect of the amount payable to enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006 has been made in the standalone financial statement as at 31 March 2022 and 31 March 2021 based on the information received and available with the Company.

48 Financial risk management objectives and policies

The Company''s principal financial liabilities comprise borrowings, trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance and support Company''s operations. The Company''s principal financial assets include instruments, trade and other receivables, cash and bank balances, 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 risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The risk management 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.

A. Market risk

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

The sensitivity analysis in the following sections relate to the position as at 31 March 2022 and 31 March 2021. 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:

Interest rate risk

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

B. Credit risk

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

Trade receivables

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

(b) Receivables resulting from other than sale of properties: 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.

(c) Revenue from one customer individually accounted for more than 10% of the company''s revenue for the year ended 31 March 2022 and 31 March 2021. No single customer individually accounted for more than 10% of the trade receivable balance of the company as at 31 March 2022 and 31 March 2021.

Financial instruments and cash deposits

C. Liquidity risk

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

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

49 Capital management

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.

There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2022 and 31 March 2021.

53 Disclosure required for Borrowing based on security of current Assets

The Company has been sanctioned borrowings amounting to ?4,000 million, in aggregate, from banks or financial institutions on the basis of security of current assets. The Company has filed quarterly returns or statements with such banks or financial institutions which are in agreement with books of account of the Company.

54 Disclosure of Struck off companies

The Company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

55 Other Statutory Information

a) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

b) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

c) The company is not declared as wilful defaulter by any bank of financial institution or other lenders.

d) The Company does not have any approved schemes of arrangements during the year.

e) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or,

ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

f) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or,

No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:

a) Crypto currency or Virtual Currency.

b) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

56 Impact due to outbreak of COVID-19

The management has assessed and determined that considering the nature of its operations and overall revenue model, the second and the third wave of COVID-19 have not had any material impact on the Company''s financial position as at 31 March 2022, its financial performance for the year then ended and its internal control over financial reporting as at 31 March 2022. Due to the nature of the pandemic, the Company will continue to monitor developments to identify significant uncertainties in future periods, if any.

57 Prior year comparatives

The previous period / year figures have been regrouped / reclassified, wherever necessary, to conform to the current quarter presentation in order to comply with the requirements of the amended Schedule III to the Companies Act, 2013.

Mar 31, 2018

1 Corporate information

Sobha Limited (âCompanyâor âSLâ) was incorporated on 7 August 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 SLâs turnkey projects.

The Company is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The registered office is located at Bangalore. The Companyâs shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

The standalone financial statements are approved for issue by the Companyâs Board of Directors on 19 May 2018.

2 Significant accounting policies

2.1 Basis of preparation

These financial statements are separate financial statements prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relavant provision of the Act.

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

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)

The standalone financial statements are presented in âand all values are rounded to the nearest millions, except when otherwise indicated.

3 Significant accounting judgements, estimates and assumptions

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

a) Judgements

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

i) Classification of property

The Company determines whether a property is classified as investment property or inventory property:

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

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

b) Estimates and assumptions

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

i) Revenue recognition, contract costs and valuation of unbilled revenue

The Company uses the percentage-of-completion method for recognition of revenue, accounting for unbilled revenue and contract cost thereon for its real estate and contractual projects. The percentage of completion is measured by reference to the stage of the projects and contracts determined based on the proportion of contract costs incurred for work performed to date bear to the estimated total contract costs. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Significant assumptions are required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract revenue and contract cost and the recoverability of the contracts. These estimates are based on events existing at the end of each reporting date.

ii) Accounting for revenue and land cost for projects executed through Joint Development Arrangements (âJDAâ)

For projects executed through joint development arrangements, as explained in note 2.2(a) under significant accounting policies, the revenue from the development and transfer of constructed area/ revenue sharing arrangement and the corresponding land/ development rights received under JDA is measured at the fair value of the estimated construction service rendered to the land owner and the same is accounted on launch of the project. The fair value is estimated with reference to the terms of the JDA (whether revenue share or area share) and the related cost that is allocated to discharge the obligation of the Company under the JDA. Fair value of the construction is considered to be the representative fair value of the revenue transaction and land so obtained. Such assessment is carried out at the launch of the real estate project and is not reassessed at each reporting period. The Management is of the view that the fair value method and estimates are reflective of the current market condition.

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

Inventory property is stated at the lower of cost and net realisable value (NRV). NRV for completed inventory property is assessed by reference to market conditions and prices existing at the reporting date and is determined by the Company, based on comparable transactions identified by the Company for properties in the same geographical market serving the same real estate segment.

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

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

Margin money deposits given as security

Margin money deposits with a carrying amount of Rs.51.10 million (31 March 2017 - Rs.55.74 million) are subject to first charge to secure the Companyâs borrowings.

Short-term deposits are made for varying periods of between seven day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

(b) 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.

Note : 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.

(a) During the year ended 31 March 2018, the Company has effected the buyback of 1,458,823 (31 March 2017 - Rs.1,759,192) fully paid up equity shares of the Company of face value of Rs.10 each at a price of Rs.425 (31 March 2017 - Rs.330) per equity share on proportionate basis, aggregating to Rs.620 (31 March 2017 - 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.

(b) 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.225.99 million (31 March 2017 - Rs.311.54 million).

During the year ended 31 March 2018 and 31 March 2017, the Company has paid dividend to its shareholders. This has resulted in payment of DDT to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.

Sale of products/ finished goods includes excise duty collected from customers of Rs.39.67 million (31 March 2017- Rs.170.85 million). Sale of products/ finished goods net of excise duty is Rs.21,023.94 million (31 March 2017- Rs.15,842.93 million).

Excise duty on (Increase)/decrease in inventory of finished goods amounting to Rs.Nil million (31 March 2017 - Rs.1.51 million) has been considered as (income)/expense in note 30 of financial statements.

4 Related party disclosures

a) Name of the related parties and the nature of its relationship with the Companyâs as below

Subsidiaries

Direct Subsidiaries Sobha City

Sobha Highrise Ventures Private Limited 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

Subsidiaries of Sobha Highrise Ventures Private Limited Sobha Contracting Pvt Ltd

Joint Venture

Kondhwa Projects LLP (with effect from 16 September 2017)

Key Shareholder

Mr. P. N. C. Menon Mrs. Sobha Menon

Key Management Personnel (âKMPâ)

Mr. Ravi PNC Menon - Chairman

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

Mr. P. Ramakrishnan - Executive Director (Upto 7 April 2017)

Additional related parties (âKMPâs) as per Companies Act, 2013 with whom transactions have taken place

Mr. Subhash Bhat - Chief Financial Officer

Mr. Vighneshwar G Bhat - Company Secretary

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

Other Directors

Mr. Anup Shah

Dr. S K Gupta

Mr. R V S Rao

Dr. Punita Kumar Sinha

Mr. M Damodaran (Upto 12 September 2016)

Relatives of key management personnel

Mrs. Sudha Menon

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

Divyakaushal Properties LLP

Mannur Properties Private Limited

Mannur Real Estate Private Limited

Punkunnam Builders and Developers Private Limited

Puzhakkal Developers Private Limited

SBG Housing Private Limited

Sobha Aviation and Engineering Services Private Limited

Sobha Contracting LLC, Dubai

Sobha Glazing & Metal Works Private Limited

Sobha Interiors 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 Educational and Charitable Trust

Sri Parvathy Land Developers Private Limited

Technobuild Developers Private Limited

e) Terms and conditions of transactions with related parties

The transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances at the year-end are unsecured and interest free (except for loans taken mentioned in (d) and investment in debentures of subsidiaries) and settlement occurs in cash. For the year ended 31 March 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (31 March 2017 - Rs.Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

*As the liability for gratuity and leave encashment is provided on actuarial basis for the Company as whole, the amount pertaining to the directors are not included above.

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

g) 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.

5 Segment Information

Basis of segmentation

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Companyâs other components, and for which discrete financial information is available. All operating segmentsâoperating results are reviewed regularly by the Companyâs Chief Executive Officer (CEO) to make decisions about resources to be allocated to the segments and assess their performance.

The Company has two reportable segments, as described below, which are the Companyâs strategic business units. These business units offer different products and services, and are managed separately because they require different marketing strategies. For each of the business units, the Companyâs CEO reviews internal management reports on at least a quarterly basis.

a) Real estate segment;

b) Contractual and manufacturing segment.

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

Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. Also, the Companyâs 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 armâs length basis in a manner similar to transactions with third parties.

The following tables present revenue and profit information for the Companyâs operating segments for the year ended 31 March 2018 and 31 March 2017 respectively:

Capital expenditure consists of additions of property, plant and equipment, intangible assets and capital work-in-progress.

Information of revenue and non-current operating assets based on location cannot be furnished since there are no revenue generated from business activities outside India and there are no non-current operating assets held by the Company outside India.

The Company has a defined benefit gratuity plan in India (âthe Planâ), governed by the Payment of Gratuity Act, 1972. The Plan entitles an employee, who has rendered at least five years of continuous service, to gratuity at the rate of fifteen days wages for every completed year of service or part thereof in excess of six months, based on the rate of wages last drawn by the employee concerned.

Assumptions regarding future mortality are based on Indian Assured Lives Mortality (2006-08)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

The sensitivity analyses above have been determined based on a method that extrapolates the impact on projected benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The following payments are expected contributions to the projected benefit plan in future years:

6 Earnings per share [âEPSâ]

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:

7 Leases

Operating lease - Company as lessee

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

The Company has paid Rs.265.98 million (31 March 2017 - Rs.289.41 million) during the year towards minimum lease payments.

Future minimum rentals payable under non-cancellable operating lease are as follows:

8 Contingent liabilities and commitments

a. Contingent liabilities (to the extent not provided for)

The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position. The Group does not expect any reimbursements in respect of the above contingent liabilities.

b. Commitments

(a) The estimated amount of contracts, net of advances remaining to be executed on capital account is Rs.83.78 million (31 March 2017 - Rs.57.20 million).

(b) At 31 March 2018, the Company has given Rs.17,350.75 million (31 March 2017 - Rs.15,989.99 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 31 March 2018 the Company has paid Rs.5,067.44 million (31 March 2017 - Rs.5,087.99 million) as refundable deposit (undiscounted) 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. During the year ended 31 March 2018 the company incurred Rs.116.89 million (31 March 2017 - Rs.119.33 million) towards aircraft usage as per agreement.

c. Other litigations

(a) Claims have been levied on the Company by Bruhat Bengaluru Mahanagara Palike (âBBMPâ) 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.

9 Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under âThe Micro, Small and Medium Enterprises Development Act, 2006â as at 31 March 2018.

10 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.

11 Financial risk management objectives and policies

The Companyâs principal financial liabilities comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Companyâs operations. The Companyâs principal financial assets include instruments, 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 Companyâs senior management oversees the management of these risks. The Companyâs senior management is supported by a risk management committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The risk management committee provides assurance to the Companyâs senior management that the Companyâs financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Companyâs policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

A. Market risk

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

The sensitivity analysis 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 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:

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 Companyâs exposure to the risk of changes in market interest rates relates primarily to the Companyâs 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 of 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 borrowings affected. With all other variables held constant, the Companyâs profit before tax is affected through the impact on floating rate borrowings, as follows:

* determined on gross basis i.e. without considering inventorisation of such borrowing cost.

B. Credit risk

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

Trade receivables

(b) Receivables resulting from other than sale of properties: Credit risk is managed by each business unit subject to the Companyâs 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 Companyâs credit period generally ranges from 30-60 days.

(c) Revenue from one customer individually accounted for more than 10% of the companyâs revenue for the year ended 31 March 2018 and 31 March 2017. No single customer individually accounted for more than 10% of the trade receivable balance of the company as at 31 March 2018 and 31 March 2017.

Financial Instrument and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Companyâs treasury department in accordance with the Companyâs 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 Companyâs Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Companyâs Finance Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through a counterpartyâs potential failure to make payments. The Companyâs maximum exposure to credit risk for the components of the statement of financial position at 31 March 2018 and 31 March 2017 is the carrying amounts.

C. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimising its cash return on investments.

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

The table below summarises the maturity profile of the Companyâs financial liabilities based on contractual undiscounted payments:

12 Capital management

For the purpose of the Companyâs 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 Companyâs capital management is to maximise the shareholder value.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2018 and 31 March 2017.

13 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,âStatement of cash flowsâand Ind AS 102, âShare-based payment.âThe Company intends to adopt this standard and amendments when it becomes effective.

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 - Revenue from Contracts with Customer (the new revenue recognition standard) has been notified by Ministry of Corporate Affairs (MCA) on 28 March 2018 and will be effective from 1 April 2018. Hence, from 1 April 2018, revenue recognition of the Group shall be driven by this standard.

Ind AS 115 provides guidance on how the entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This accounting change will bring about significant changes in the way companies recognise, present and disclose their revenue.

The Company is currently evaluating the effect of this standard.

14 Disclosure as per clause 34 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:

15 Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprise during the financial year and expects such records to be in existence latest by the date as required by law. The management is of the opinion that its international transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

16 Prior year comparatives

The previous year financial statements have been audited by a firm other than B S R & Co. LLP.

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

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 (âKMPâ)

Mr. Ravi PNC Menon - Chairman

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

Mr. P. Ramakrishnan - Executive Director

Additional related parties (âKMPâs) 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.

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 Â§ = micro, small or medium enterprises under âThe Micro, Small and Medium Enterprises Development Act, 2006â 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:

20. Interest rate risk

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

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,âStatement of cash flows'' and Ind AS 102, âShare-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 âfair 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 (ÃCompanyÃ or ÃSDLÃ) 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 SDLÃs 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 ÃSegment ReportingÃ. 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 (ÃCompanyÃ or ÃSDLÃ) 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 SDLÃs 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 ÃSegment ReportingÃ. 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 ÃTe Micro, Small and Medium Enterprises Development Act, 2006Ã 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 ÃCost of salesÃ.

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 yearÃs classification.

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