Indiabulls Real Estate
BSE: 532832 | NSE: IBREALEST | ISIN: INE069I01010 | Construction & Contracting - Real Estate
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Notes to Accounts | Year End : Mar '08 |
I. Overview: a) Indiabulls Real Estate Limited (the Company, IBREL) was incorporated on April 04,2006. The Company was incorporated with the main objects of carrying on the business of Real Estate Projects Advisory, Construction and Development of Real Estate Projects. b) A Scheme of Arrangement (Scheme) between Indiabulls Financial Services Limited (Demerged Company, IBFSL) and the Company (IBREL, Resulting Company) and their respective shareholders and creditors under Sections 391 -394 of the Companies Act, 1956, was sanctioned by the Honble High Court of Delhi on November 24,2006. Upon coming into effect of the Scheme on December 20,2006 and with effect from the Appointed Date on May 01,2006, the real estate undertaking stands demerged from IBFSL and transferred to and vested in IBRELon a going concern basis. The Company was incorporated with the Authorized Capital of Rs. 5,000,000 divided into 500,000 Equity Shares of Rs.10 each. The Authorized Capital has been reorganized and increased to Rs.5,140,000,000 divided into 500,000,000 Equity Shares of Rs. 2 each and 30,000,000 Preference Shares of Rs.138 each w.e.f. December 20,2006 pursuant to the Scheme. On August 02,2006, IBFSL had issued and allotted 11,500,000 Cumulative, Redeemable, Fully Convertible Preference Shares of face value Rs. 300 per share to Oberon Limited. Pursuant to the Scheme the face value of Rs.300 had been allocated proportionately, in the ratio of the net worth (as on the Appointed Date i.e. May 01,2006) of IBFSL to the net worth of demerged undertaking such that the face value of Convertible Preference Share stood paid up to Rs. 138 each of the Company; thus the Company issued and allotted 11,500,000 Cumulative, Redeemable, Convertible Preference Shares of face value Rs.138 each to Oberon Limited. The Convertible Preference Shares have been converted into 11,500,000 Equity Shares of face value Rs. 2 each at a conversion price of Rs. 138 per share on July 21,2007. On August 02,2006, IBFSL had issued and allotted 9,966,667 Cumulative, Redeemable, Non Convertible Preference shares of face value Rs. 300 per share to Oberon Limited. Pursuant to the Scheme the face value of Rs 300 had been allocated proportionately, in the ratio of the net worth (as on the Appointed Date i.e. May 01, 2006) of IBFSL to the net worth of demerged undertaking such that the face value of Non Convertible Preference Share stood paid up to Rs. 138 each of the Company; thus the Company issued and allotted 9,966,667 Cumulative, Redeemable, Non Convertible Preference Shares of face value Rs. 138 each to the Oberon Limited. These shares are redeemable in whole or in part at any time, subject to fulfillment of certain terms and conditions and on obtaining requisite approvals on expiry of 60 months from the date of their issuance i.e. August 02,2006. The dividend is payable on a quarterly basis @ 5% p.a. on the face value of the Preference Share. The dividend rate on these Preference Shares has been increased from 5% to 10% with effect from February 02,2008 as per the terms of the issue of the Preference Shares by the Company. II. Change in capital structure during the year. a) On July 10,2007, the Company issued 38,759,688 Global Depository Receipts (GDRs) which were listed at the Luxembourg Stock Exchange, at an offer price of USD 10.32 per GDR equivalent to Rs. 416.76 per share and raised a proceeds of USD 400 Million (equivalent to Rs. 16,153,521,977). Each GDR represents one (1) Equity Share of face value Rs. 2 each fully paid up of the Company. b) During the year, Oberon Limited, sole holder of Convertible Preference Shares exercised their option to convert 11,500,000 Convertible Preference Shares of face value Rs. 138 each into 11,500,000 Equity Shares of face value Rs. 2 each at the premium of Rs. 136 per share. Pursuant to the exercise of option to convert by Oberon Limited, Board of Directors of the Company at their meeting held on July 21,2007 issued and allotted 11,500,000 Equity Shares of face value Rs. 2 each at the conversion price of Rs. 138 per share. c) On November 05,2007, the promoters of the Company exercised their options in respect of the Companys Share Warrants II, allotted to them pursuant to the Scheme, and the Company received a sum of Rs. 1,036,200,000 being the balance exercise money due on these share warrants. An amount equal to 10% of the Share Warrants II exercisable amounting to Rs 115,100,000 had been paid upfront at the time of subscription in the previous period being the proportionate amount allocated to the Company under Scheme of Arrangement and the same was adjusted against conversion price paid for the allotment of the Equity Shares on conversion of the said Share Warrants. Consequently, the Board of Directors of the Company at their meeting held on November 05,2007 allotted 10,000,000 Equity Shares of face value Rs.2 each at a price of Rs. 115.13 per share to its promoters on conversion of the said Share Warrants 11. d) During the year, upon exercise of options vested in terms of Indiabulls Real Estate Limited Employees Stock Option Scheme 2006 by eligible employees and receipt of exercise amount in full, the Board of Directors of the Company at its meeting held on January 23,2008, has allotted an aggregate of 900,000 Equity Shares of face value Rs. 2 each to eligible employees of the Company and subsidiary companies at the exercise price of Rs. 60 per share. e) The Board of Directors of the Company at their meeting held on August 09,2007 and as already approved by the shareholders of the Company on May 08, 2007 has allotted 15,000,000 Share Warrants (Series III), convertible into 15,000,000 Equity Shares of face value Rs. 2 each to the promoters of the Company on a preferential allotment basis, pursuant to Section 81 (1 A) of the Companies Act, 1956, at a conversion price of Rs. 300 per Equity Share of the Company, arrived at in accordance with SEBI (Disclosure & Investor Protection) Guidelines, 2000 and 10% application money amounting to Rs. 450,000,000 was received from them. Further, the Board of Directors of the Company at their meeting held on November 05,2007 and as already approved by the shareholders of the Company on October 25,2007 has allotted 43,000,000 Share Warrants (Series IV), convertible into 43,000,000 Equity Shares of face value Rs. 2 each to the Promoters and Joint Managing Directors of the Company on a preferential allotment basis, pursuant to Section 81(1 A) of the Companies Act, 1956, at a conversion price of Rs. 540 per Equity Share of the Company, arrived at in accordance with SEBI (Disclosure & Investor Protection) Guidelines, 2000 and 10% application money amounting to Rs. 2,322,000,000 was received from them. III. Employees Stock Options Schemes: Indiabulls Real Estate Limited Employees Stock Options Scheme - 2006: During the previous period Indiabulls Real Estate Limited (IBREL) established the Indiabulls Real Estate Limited Employees Stock Options Scheme (IBREL ESOS-I or Plan-I). Under the Plan-1, the Company has issued options that entitle the Company to issue and the eligible employees of the Company and its subsidiary companies to subscribe up to 9,000,000 Equity Shares of Rs. 2 each at exercise price of Rs. 60 per equity share. Employees covered by the Plan-1 are granted an option to purchase the shares of the Company subject to the requirements of vesting. These options vest uniformly over a period of 10 years, w.e.f. November 01, 2007, whereby 10% of the options vest on each vesting date as per the vesting schedule. A Compensation Committee constituted by the Board of Directors of the Company administers the Plan-1. The Company follows the Intrinsic Value method of accounting as is prescribed in the Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Employees Share based Payments (the guidelines). As per the Intrinsic Value method adopted, the value of the share as worked out by an independent valuer works out to Rs. 58.20 per share on the date of grant which is less than exercise price and hence there is no Deferred Employee Stock Compensation Cost. Had the Company followed the Fair value method, there would not have also been Deferred Employee Stock Compensation Cost as the fair value as on the date of grant is also less than the exercise price and hence there is no impact on the Profit After Tax of the Company and on the Basic and Dilutive Earnings per Share of the Company. Stock option scheme of Subsidiary Companies: a) Indiabulls Power Services Limited The subsidiary of the Company viz. Indiabulls Power Services Limited (IBPSL) has announced Indiabulls Power Services Limited Employee Stock Option Plan 2008 (IPSL ESOP - 2008) for its employees and its subsidiary companies, existing now or in future, and employees of holding company (IBREL) and IBRELs subsidiary company Sophia Power Company Limited (SPCL). The Company has adopted the scheme in respect of its employees. The eligible employees covered under IPSL ESOP - 2008 are granted an option to purchase the shares of IBPSL subject to the requirements of vesting. These options vest uniformly over a period of 10 years, with effect from March 01,2009, whereby 10% of the options vest on each vesting date as per the vesting schedule. A Compensation Committee constituted by the Board of Directors of IBPSL administers the IPSL ESOP-2008. Pursuant to the Scheme for Amalgamation between IBPSL and SPCL as referred to in Note V (b), the SPCL shall, subject to necessary approvals, create an employee stock option scheme for the benefit of such employees, where under the stock options shall be issued to such employees taking into account the share exchange ratio on the terms & conditions not less favorable than those provided under the IPSLESOP - 2008.On the basis of share exchange ratio, for every one (1) option held by the employees of IBPSL including the employees of its holding and subsidiary companies which entitle such employees to one (1) Equity Share in IBPSL, such employee shall be entitled to and conferred one (1) option in SPCL, entitling him to acquire one (1) fully paid up Equity Share in the SPCL on payment of exercise consideration payable which shall be equivalent to the exercise consideration payable by such employee under the IPSL ESOP - 2008, for such options. b) Indiabulls Wholesale Services Limited The subsidiary of the Company viz. Indiabulls Wholesale Services Limited (IBWSL) has announced Indiabulls Wholesale Services Limited Employee Stock Option Plan 2007 (IWSL ESOP 2007) for its employees and its subsidiary companies, existing now or in future and employees of holding company (IBREL). The Company has adopted the scheme in respect of its employees. The eligible employees covered under IWSL ESOP 2007 are granted an option to purchase the shares of IBWSL subject to the requirements of vesting. These options vest uniformly over a period of 10 years, with effect from November 01,2008, whereby 10% of the options vest on each vesting date as per the vesting schedule. A Compensation Committee constituted by the Board of Directors of IBWSL administers the IWSL ESOP 2007. IV. Significant Events after the Balance Sheet date a) The Company proposed to acquire 100% shareholding of Dev Property Development Plc, (DPD) an Isle of Man registered company listed on the London Stock Exchanges AIM by an issuance of Equity Shares of the Company represented by Global Depository Receipts to the Shareholders of Dev Property Development Pic. Accordingly on February 28, 2008, the Board of Directors passed a resolution for issuance of Equity Shares of the Company and / or Global Depository Receipts and / or Equity Shares through Depository Receipts Mechanism or any combination of the Securities for a value up to GBP 150,000,000 to the shareholders of Dev Property Development Plc. On March 29,2008 the Company received the consent of the Shareholders for the same. Subsequent to the year end, the relevant court has sanctioned the Scheme on May 07,2008 and accordingly approved the acquisition of 100% ordinary shares of DPD by the Company. The Scheme has become effective since May 08,2008 and the settlement of all consideration (0.12091 GDR of the Company will be issued for each share of DPD) will occur within 14 days of this date. b) On February 12, 2008, the Company has entered into an agreement namely Shareholders Agreement with Sophia Power Company Limited (SPCL), Indiabulls Power Services Limited (IBPSL), Subsidiary companies, Promoters of the Company and Investors namely FIM Limited (FIM) and LNM India Internet Ventures Limited (LNM) and a Share Subscription Agreement with SPCL, IBPSL and Investors namely FIM and LNM. These agreements were subsequently amended on February 14,2008. Further, pursuant to the above agreements it is contemplated to merge the two Subsidiaries of the Company namely, IBPSL and SPCL. Accordingly the Board of Directors of the IBPSL, at their meeting held on March 27,2008 approved the scheme for amalgamation of IBPSL and SPCL. On the same date members of the Company has given their consent to the scheme subject to the sanction by the Honble High Court of Delhi. SPCL has issued equity shares at Rs. 66.67 per share to FIM Limited and LNM India Internet Ventures Limited for consideration of Rs. 15,800,000,000, aggregating to 37.50% of its post issue Equity Share Capital of SPCL. It is anticipated that IBREL will hold 71.40% of SPCL, merged entity, with the balance 17.90% held by FIM Limited and 10.70% held by LNM India Internet Ventures Limited Subsequent to the year end, the above scheme has been filed with Honble High Court of Delhi. c) On April 22,2008 the Company established the Indiabulls Real Estate Limited Employees Stock Option Plan -2008 (IBREL ESOS 2008 or Plan-ll). Under the Plan-ll the Company is authorized to issue up to 1,500,000 Equity Shares of face value Rs. 2 each to eligible employees including employees of its subsidiary companies. Employees covered by the Plan-ll are granted an option to purchase shares of the Company subject to the requirements of vesting. A Compensation Committee constituted by the Board of Directors of the Company administers the plan. On April 22, 2008, the Company granted 1,500,000 options at an exercise price of Rs.495.70 per share at the available closing market price of the shares on the grant date under Plan-ll as per the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. These options vest uniformly over a period of 10 years, with effect from April 23, 2009, whereby 10% of the options vest on each vesting date as per the vesting schedule. V. Contingent Liability not provided for in respect of: a) Claims from third parties not acknowledged as debt amounting Rs NIL (Previous Period Rs. NIL) b) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net of advances) of Rs 3,397,270 (Previous Period Rs. 600,760,703). c) Corporate Guarantees outstanding in respect of credit facilities amounting to Rs. 5,250,000,000 (Previous Period Rs. NIL). VI. Employee benefits: Contributions are made to Government Provident Fund and Family Pension Fund, ESIC and other statutory funds which cover all eligible employees. Both the employees and the Company make predetermined contributions to the Provident Fund and ESIC. The contributions are normally based on a certain proportion of the employees salary. Provision for Gratuity and Compensated Absences for all employees is based upon actuarial valuation done at the end of every financial year/period. Major drivers in the actuarial assumptions, typically, are years of service and employee compensation. After the issuance of Accounting Standard 15 (revised) on Employee Benefits, (as notified under the Companies (Accounting Standards) Rules, 2006) commitments are actuarially determined using Project Unit Credit (PUC) actuarial method. Gains and Losses on changes in actuarial assumptions are accounted for in the Profit and Loss Account. VII. Fixed Deposits Includes Rs. 500,000,000 (Previous Period Rs. Nil) pledged against Bank Guarantees issued by bank for business requirements of the subsidiary company and Rs. 300,000,000 (Previous Period Rs. Nil) pledged against the credit facilities available to the Company. VIII. Provision for current tax includes provision for wealth tax of Rs. 158,885 (Previous Period Rs. Nil) IX. During the year 900,000 Equity Shares were issued pursuant to the exercise of stock option by employees under IBREL ESOS-I stock option plan. The liability on account of Fringe Benefit Tax of Rs. 148,874,430 on exercise of stock option has been recovered from the eligible employees of the Company and discharged by the Company. Consequently, there is no impact on the Profit and Loss Account. X. Auditors remuneration for the year is exclusive of Service Tax whereas in Previous Period it was inclusive of Service Tax. XI. Disclosure in respect of Accounting Standard (AS) - 18 Related Party Disclosures as notified under the Companies (Accounting Standards) Rules, 2006: (I) Sale of Investment in Equity Shares of Subsidiary Companies During the year, the Company has transferred its holding in 26 Subsidiary Companies to one of its subsidiary company i.e. Indiabulls Power Services Limited. In the previous period the Company had transferred its holding in one subsidiary company to one of its subsidiary company i.e. Aurora Land Development Private Limited. |
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| Source : Religare Technova | |
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