a) 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.
 
 b) Use of estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets and
 liabilities and disclosure of contingent liabilities at the date of the
 financial statements and the results of operations during the reporting
 period.  Although these estimates are based upon management’s best
 knowledge of current events and actions, actual results could differ
 from these estimates. Significant estimates used by the management in
 the preparation of these financial statements include computation of
 percentage completion for projects in progress, project cost, revenue
 and saleable area estimates, estimates of the economic useful lives of
 fixed assets, provisions for bad and doubtful debts. Any revision to
 accounting estimates is recognised prospectively.
 
 c) Fixed assets
 
 Fixed assets are stated at cost, less accumulated depreciation and
 impairment losses, if any. Cost comprises the purchase price and any
 attributable cost of bringing the asset to its working condition for
 its intended use.
 
 Borrowing costs relating to acquisition of fixed assets which take
 substantial period of time to get ready for its intended use are also
 included to the extent they relate to the period till such assets are
 ready to be put to use.
 
 d) Depreciation/ amortisation
 
 Depreciation on assets is provided using written down value method at
 the rates prescribed under schedule XIV of the Companies Act, 1956,
 which is also estimated by the management to be the estimated useful
 lives of the assets.
 
 Steel scaffolding items are depreciated using straight line method over
 a period of 6 years, which is estimated to be the useful life of the
 asset.
 
 Assets individually costing less than or equal to Rs. 5,000 are fully
 depreciated in the year of purchase.
 
 Leasehold land where title does not pass to the Company and leasehold
 improvements are amortised over the remaining primary period of lease
 or their estimated useful life, whichever is shorter, on a
 straight-line basis.
 
 Intangible assets – Expenditure incurred on software is amortised using
 straight line method over a period of 3 years, which is estimated to be
 the useful life of the asset.
 
 e) Impairment
 
 The Company assesses at each balance sheet date whether there is any
 indication that an asset may be impaired based on internal/ external
 factors. If any such indication exists, the Company estimates the
 recoverable amount of the asset.  An impairment loss is recognized
 wherever the carrying amount of an asset exceeds its recoverable
 amount. The recoverable amount is the greater of the asset’s net
 selling price and value in use. In assessing value
 
 in use, the estimated future cash flows are discounted to their present
 value at the weighted average cost of capital.
 
 f) Leases
 
 Leases where the lessor effectively retains substantially all the risks
 and benefits of ownership of the leased term, are classified as
 operating leases. Operating lease payments are recognised as an expense
 in the profit and loss account on a straight-line basis over the lease
 term.
 
 Finance leases, which effectively transfer to the Company substantially
 all the risks and benefits incidental to ownership of the leased item,
 are capitalized at the lower of the fair value and present value of the
 minimum lease payments at the inception of the lease term and disclosed
 as leased assets. Lease payments are apportioned between the finance
 charges and reduction of the lease liability based on the implicit rate
 of return. Finance charges are charged directly against income.
 
 g) Investments
 
 Investments that are readily realisable and intended to be held for not
 more than a year are classified as current investments. All other
 investments are classified as long- term investments. Current
 investments are carried at lower of cost and fair value determined on
 an individual investment basis. Long-term investments are carried at
 cost. However, provision for diminution in value is made to recognise a
 decline other than temporary in the value of the investments.
 
 h) Inventories
 
 Related to contractual and real estate activity
 
 Direct expenditure relating to construction activity is inventorised.
 Indirect expenditure (including borrowing costs) during construction
 period is inventorised to the extent the expenditure is related to
 construction or is incidental thereto. Other indirect expenditure
 (including borrowing costs) incurred during the construction period
 which is neither related to the construction activity nor is
 
 incidental thereto is charged to the profit and loss account.  Cost
 incurred/ items purchased specifically for projects are taken as
 consumed as and when incurred/ received.
 
 i. Work-in-progress - Contractual: Cost of work yet to be certified/
 billed, as it pertains to contract costs that relate to future activity
 on the contract, are recognised as contract work-in-progress provided
 it is probable that they will be recovered. Contractual
 work-in-progress is valued at lower of cost and net realisable value.
 
 ii. Work-in-progress - Real estate projects (including land inventory):
 Represents cost incurred in respect of unsold area of the real estate
 development projects or cost incurred on projects where the revenue is
 yet to be recognised. Real estate work-in-progress is valued at lower
 of cost and net realisable value.
 
 iii. Finished goods - Flats: Valued at lower of cost and net realisable
 value.
 
 iv. Finished goods - Plots: Valued at lower of cost and net realisable
 value.
 
 v. Building materials purchased, not identified with any specific
 project are valued at lower of cost and net realisable value. Cost is
 determined based on a weighted average basis.
 
 Related to manufacturing activity
 
 i. Raw materials are valued at lower of cost and net realisable value.
 Cost is determined based on a weighted average basis.
 
 ii. Work-in-progress and finished goods are valued at lower of cost and
 net realisable value. Cost includes direct materials and labour and a
 proportion of manufacturing overheads based on normal operating
 capacity. Cost of finished goods includes excise duty.
 
 Net realisable value is the estimated selling price in the ordinary
 course of business, less estimated costs of completion and estimated
 costs necessary to make the sale. However, inventory held for use in
 production
 
 of finished goods is not written down below cost if the finished
 products in which they will be incorporated are expected to be sold at
 or above cost.
 
 i) Revenue recognition
 
 Revenue is recognised to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be
 reliably measured. Income from operations (gross) is gross of sales
 tax/ value added tax and net of adjustment on account of cancellation/
 returns.
 
 i.  Recognition of revenue from contractual projects
 
 Revenue from fixed price contractual projects is recognised on the
 basis of completion of a physical proportion of the contract work/
 based upon the contracts/ agreements entered into by the Company with
 its customers.
 
 ii.  Recognition of revenue from real estate projects
 
 Revenue from real estate projects is recognised when it is reasonably
 certain that the ultimate collection will be made and that there is
 buyers’ commitment to make the complete payment.
 
 a. Recognition of revenue from property development
 
 Recognition of revenue from construction activity
 
 Revenue from real estate under development/ sale of developed property
 is recognised upon transfer of all significant risks and rewards of
 ownership of such real estate/ property, as per the terms of the
 contracts entered into with buyers, which generally coincides with the
 firming of the sales contracts/ agreements, except for contracts where
 the Company still has obligations to perform substantial acts even
 after the transfer of all signifi cant risks and rewards. In such
 cases, the revenue is recognised on percentage of completion method,
 when the stage of completion of each project reaches a reasonable level
 of progress. Revenue is recognised in proportion that the contract
 costs incurred for work performed
 
 up to the reporting date bear to the estimated total contract costs.
 Land costs are not included for the purpose of computing the percentage
 of completion.
 
 Recognition of revenue from sale of undivided share of land [group
 housing]
 
 Revenue from sale of undivided share of land [group housing] is
 recognised upon transfer of allsignifi cant risks and rewards of
 ownership of such real estate/ property, as per the terms of the
 contracts entered into with buyers, which generally coincides with the
 firming of the sales contracts/ agreements and/ or minimum level of
 collection of dues from the customer.
 
 Recognition of revenue from sale of villa plots
 
 Revenue from sale of villa plots is recognised upon transfer of all
 significant risks and rewards of ownership of such real estate/
 property, as per the terms of the contracts entered into with buyers,
 which generally coincides with the firming of the sales contracts /
 agreements.
 
 Revenue from real estate projects include charges collected from
 clients are accounted based upon the contracts/ agreements entered into
 by the Company with its customers.
 
 b. Recognition of revenue from sale of land and development rights
 
 Revenue from sale of land and development rights is recognised upon
 transfer of all significant risks and rewards of ownership of such real
 estate/ property, as per the terms of the contracts entered into with
 buyers, which generally coincides with the firming of the sales
 contracts/ agreements.
 
 iii. Recognition of revenue from manufacturing division
 
 Revenue from sale of materials is recognised when the significant risks
 and rewards of ownership of the goods have passed to the buyer which
 coincides with dispatch of goods to the customers. Excise duty deducted
 from
 
 turnover (gross) is the amount that is included in the amount of
 turnover (gross) and not the entire amount of liability arising during
 the year. Service income is recognised on the basis of completion of a
 physical proportion of the contract work/ based upon the contracts/
 agreements entered into by the Company with its customers.
 
 iv. Dividend income
 
 Revenue is recognised when the shareholders’ or unitholders’ right to
 receive payment is established by the balance sheet date.
 
 v. Share in profits of partnership firm investments
 
 The Company’s share in profits from a firm where the Company is a
 partner, is recognised on the basis of such firm’s audited accounts, as
 per terms of the partnership deed.
 
 vi. Interest income
 
 Income is recognised on a time proportion basis taking into account the
 amount outstanding and the rate applicable.
 
 j) Foreign currency translation
 
 Foreign currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate between
 the reporting currency and the foreign currency at the date of the
 transaction.  Foreign currency monetary items are reported using the
 closing rate. Exchange differences arising on the settlement of
 monetary items or on reporting monetary items of company at rates
 different from those at which they were initially recorded during the
 year, or reported in previous financial statements, are recognised as
 income or as expenses in the year in which they arise.
 
 k) Taxes
 
 Tax expense comprises of current and deferred tax.
 
 Current income tax is measured at the amount expected to be paid to the
 tax authorities in accordance with the Indian Income Tax Act. Deferred
 income taxes reflects the impact of current year timing differences
 between taxable
 
 income and accounting income for the year and reversal of timing
 differences of earlier years.
 
 Deferred tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted at the balance sheet date. Deferred
 tax assets are recognised only to the extent that there is reasonable
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realised. In situations
 where the company has unabsorbed depreciation or carry forward tax
 losses, all deferred tax assets are recognised only if there is virtual
 certainty supported by convincing evidence that they can be realised
 against future taxable profits. At each balance sheet date the Company
 re-assesses unrecognised deferred tax assets. It recognises
 unrecognised deferred tax assets to the extent that it has become
 reasonably certain or virtually certain, as the case may be, that
 sufficient future taxable income will be available against which such
 deferred tax assets can be realised.
 
 The carrying amount of deferred tax assets are reviewed at each balance
 sheet date. The Company writes-down the carrying amount of a deferred
 tax asset to the extent that it is no longer reasonably certain or
 virtually certain, as the case may be, that sufficient future taxable
 income will be available against which deferred tax asset can be
 realised.
 
 Minimum Alternative tax (MAT) credit is recognised as an asset only
 when and to the extent there is convincing evidence that the company
 will pay normal income tax during the specified period. In the year in
 which the MAT credit becomes eligible to be recognized as an asset in
 accordance with the recommendations contained in guidance Note issued
 by the Institute of Chartered Accountants of India, the said asset is
 created by way of a credit to the profit and loss account and shown as
 MAT Credit Entitlement. The Company reviews the same at each balance
 sheet date and writes down the carrying amount of MAT Credit
 Entitlement to the extent there is no longer convincing evidence to the
 effect that Company will pay normal Income Tax during the specified
 period.
 
 l) Retirement and other employee benefits
 
 Retirement benefits in the form of provident fund is a defined
 contribution scheme and the contributions are charged to the profit and
 loss account of the year when
 
 the contributions to the provident fund are due. There are no other
 obligations other than the contribution payable to the government
 administered provident fund.
 
 The Company makes contributions to Sobha Developers Employees Gratuity
 Trust (‘the trust’) to discharge the gratuity liability to employees.
 Payments to the trust are charged to the profit and loss account in the
 year of payment. Provision towards gratuity, defined benefit plan, is
 made for the difference between actuarial valuation by an independent
 actuary and the fund balance, as at the year-end. The actuarial
 valuation is performed using the projected unit credit method.
 
 Provision in respect of compensated absences is made based on the
 extent of leave credit available to the employees as at the year end.
 Short-term compensated absences are provided for on based on estimates.
 Long- term compensated absences are provided for based on actuarial
 valuation. The actuarial valuation is done as per projected unit credit
 method.
 
 Actuarial gains/ losses are immediately taken to profit and loss
 account and are not deferred.
 
 Expense in respect of other short term benefits is recognised on the
 basis of the amount paid or payable for the period for which the
 services are rendered by the employee.
 
 m) Earnings per share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the year attributable to equity shareholders (after deducting
 preference dividends and attributable taxes) by the weighted average
 number of equity shares outstanding during the year. The weighted
 average number of equity shares outstanding during the year is adjusted
 for events of bonus issue.
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the year attributable to equity shareholders and the
 weighted average number of shares outstanding during the year are
 adjusted for the effects of all dilutive potential equity shares.
 
 n) Provisions
 
 A provision is recognised when an enterprise has a
 
 present obligation as a result of past event; it is probable that an
 outflow of resources will be required to settle the obligation, in
 respect of which a reliable estimate can be made. Provisions are not
 discounted to its present value and are determined based on best
 estimate required to settle the obligation at the balance sheet date.
 These are reviewed at each balance sheet date and adjusted to reflect
 the current best estimates.
 
 o) Cash and cash equivalents
 
 Cash and cash equivalents in the balance sheet comprise cash at bank
 and in hand and short-term, highly liquid investments that are readily
 convertible into known amounts of cash and which are subject to an
 insignificant risk of changes in value.
 
 p) Borrowing costs
 
 Borrowing costs relating to acquisition/ construction of qualifying
 assets are capitalised until the time all substantial activities
 necessary to prepare the qualifying assets for their intended use are
 complete. A qualifying asset is one that necessarily takes substantial
 period of time to get ready for its intended use/ sale. All other
 borrowing costs not eligible for inventorisation/ capitalisation are
 charged to revenue.
 
 q) Land
 
 Advances paid by the Company to the seller/ intermediary toward
 outright purchase of land is recognised as land advance under loans and
 advances during the course of obtaining clear and marketable title,
 free from all encumbrances and transfer of legal title to the Company,
 whereupon it is transferred to work-in-progress.
 
 Deposits paid by the Company to the seller towards right for
 development of land in exchange of constructed area are recognised as
 land advance under loans and advances, unless they are non-refundable,
 wherein they are transferred to work-in-progress on the launch of
 project.
 
 The Company has entered into agreements with land owners/ possessor to
 develop properties on such land in lieu which, the Company has agreed
 to transfer certain percentage of constructed area. The development and
 transfer of constructed area in exchange of such development rights/
 land is being settled on a net basis.