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Housing Development and Infrastructure

BSE: 532873|NSE: HDIL|ISIN: INE191I01012|SECTOR: Construction & Contracting - Real Estate
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Notes to Accounts Year End : Mar '18

Note :1

The fair value of investment property has been determined having reference to the market values as prescribed under the ready recknor published by a competent authority, as the company believes that the current market price of similar properties in the vicinity is the best evidence of the fair value of such investment property. The FV measurement has been categorised as Level

2 based on inputs to valuation technique used.

Terms / rights attached to shares :

The Company has only one class of shares i.e. equity shares of Rs.10/- each. Shareholders are entitled to vote in accordance with their shareholding in the Company and receive dividend as and when declared by the Company.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.

Details of securities and other terms and conditions are as under :-

I) Secured Redeemable Non Convertible Debentures : -

Secured Redeemable Non Convertible Debentures (Non listed) : -

a) Nil (Previous year 2,267) 13.25% Secured Redeemable Non - Convertible Debentures of '' 10.00 lacs each fully paid, interest payable monthly are issued on Private Placement basis to Life Insurance Corporation of India. The Debentures are secured by mortgage of 2,88,940 Sq. mtrs immovable properties situated at Village Doliv and Village Khardi, District Thane and further secured by mortgage of first to nine floors except 3rd, 4th and 6th floors of commercial building admeasuring 17,894.65 Sq. mtrs. situated at HDIL Towers, Survey No. 341(pt) CTS No. 608(pt), Bandra (East), Mumbai. These Secured Non - Convertible Debentures are redeemable in equal monthly instalment of '' 100.00 lacs each commencing from 5th October, 2013.

b) Securities of the Debentures issued to Life Insurance Corporation of India are shared on pari-passu basis for the term loan from Life Insurance Corporation of India. (Also refer note : 20(III)(b))

II) All the above debentures have been personally guaranteed by

i) Executive Chairman of the Company

ii) Vice Chairman and Managing Director of the Company

Details of securities and other terms and conditions are as under :-

I) Loans repayable on demand from Scheduled Bank :-

Punjab and Maharashtra Co-operative Bank Limited :-

Secured by pledge of fixed deposit receipts with the bank, current rate of interest 13% (Previous year 13%).

II) Term Loans from Scheduled Banks :-

a) Central Bank of India :-

Secured by registered mortgage of immovable properties admeasuring 40,468.56 Sq. mtrs. situated at CTS No. 637A, Premier

Road, Village Kurla, Mumbai. Rate of interest base rate 5 % p.a. payable monthly.

b) The Jammu and Kashmir Bank :-

i) Term loan - I - Interest rate is base rate 3.50% p.a. payable monthly.

ii) Term Loan - II - Secured by 1st Charge on the cash flows, receivables and project agreements/ project escrow account and project DSRA of the free sale area, and 1st charge by way of mortgage of development right. Interest rate is base rate 3.00 % p.a. payable monthly.

iii) Term Loan - III - Secured by 1st Charge on the cash flows, receivables, all current assets of the project and project agreements/ project escrow account and project DSRA of the free sale area and 1st charge by way of mortgage of development rights. Interest rate is base rate 3.00 % p.a. payable monthly.

All the above loans are secured by immovable properties admeasuring 2,91,610 Sq. mtrs. situated at Village Kopri, District

Thane, comprising of various survey numbers, owned by Privilege Power and Infrastructure Private Limited, a wholly owned subsidiary of the Company.

c) Allahabad Bank :-

i) Secured by registered mortgage over the total construction area of 1,12,140.10 Sq. mtrs. which includes free sale area admeasuring approximately 67,732.72 Sq. mtrs. at CTS no. 551/27,552(pt), 552/1, 552/5 to 12 of Village Nahur, Mumbai together with the structure standing thereon and further secured by 45,342 Sq. mtrs. of immovable properties situated at Village Chandansar, Dist. Thane, comprising of various survey numbers, owned by Privilege Power and Infrastructure Private Limited, a wholly owned subsidiary of the Company. Rate of Interest base rate 5% p.a. payable monthly.

ii) Secured by exclusive charge on Escrow account as well as equitable mortgage of immovable properties admeasuring 54,970 Sq.mtrs at Village Maljipada, Dist. - Thane, comprising of various survey numbers. Rate of interest is base rate 5% p.a. payable monthly.

iii) Secured by exclusive charge on all projects assets of the Company at Mulund and Palghar. Rate of interest is base rate 5% p.a. payable monthly.

d) Syndicate Bank :-

Secured by pari passu charge over escrow of Cash flows arising out of the project Whispering Tower and further secured by immovable properties admeasuring 87,220 Sq.mtrs. situated at Village Doliv, Koshimbe, Dist. Thane, comprising of various survey numbers, owned by Privilege Power and Infrastructure Private Limited, a wholly owned subsidiary of the Company. Rate of Interest base rate 3% p.a. payable monthly.

e) Yes Bank Limited:-

Secured by exclusive charge on Projects Metropolis, Galaxy and Majestic Towers on development rights. Repayable 33.33% every year from 36th month of its disbursement

The Company has proposed One time settlement to all it''s lender of its outstanding banking facilities and Company has received sanction for such proposal from some lenders. In accordance with such approval, payments will be made to banks and upon full & final payments, respective securities mortgaged will be released by the banks.

III) Term Loans from Financial Institution :-

a) IL & FS - PMDO:-

i) Rate of interest is 13.50% p.a. payable monthly.

ii) Rate of interest of the Funded interest term loan is 13.50% p.a. payable monthly.

Both the loans are secured by registered mortgage of immovable properties admeasuring 1,21,970 Sq. mtrs. situated at Sasunavghar, comprising of various survey numbers, owned by the Company and 96,750 Sq. mtrs. situated at village Doliv, 1,60,390 Sq. mtrs. situated at village Khardi, 94,710 Sq. mtrs. situated at Dahisar and 66,640 Sq. mtrs. situated at Kasarali, comprising of various survey numbers, owned by Privilege Power and Infrastructure Private Limited, a wholly owned subsidiary of the Company.

The Company has proposed One time settlement to all it''s lender of its outstanding banking facilities and Company has received sanction for such proposal from some lenders. In accordance with such approval, payments will be made to banks and upon full & final payments , respective securities mortgaged will be released by the banks.

b) Life Insurance Corporation of India :-

i) Term loan is secured by registered mortgage of immovable properties situated at Village Doliv and Village Khardi admeasuring 2,88,940 Sq. mtrs. comprising of various survey numbers and further secured by mortgage of first to nine floors except 3rd, 4th and 6th floors of commercial building area admeasuring 18,194.54 Sq. mtrs. situated at HDIL Towers, Bandra (East), Mumbai. Rate of interest is 13% p.a. payable monthly.

ii) Securities of the Term loan from Life Insurance Corporation of India are shared on pari-passu basis along with the security for Non Convertible Debentures issued to Life Insurance Corporation of India. (Also refer to Note No. : 16 (I)).

c) Yes Bank (Suraksha Asset Reconstruction Company Private Limited) :-

Yes bank has assigned its loan to Suraksha Asset Reconstruction Company Private Limited. The terms of the loan remains the same i.e. the loan is secured by exclusive charge on Projects Metropolis, Galaxy and Majestic Towers on development rights.

IV) All the above loans have been personally guaranteed by

i) Executive Chairman of the Company

ii) Vice Chairman and Managing Director of the Company

Micro, Small and Medium Enterprises

Disclosure of payable to vendors as defined under the Micro, Small and Medium Enterprise Development Act, 2006 is based on the information available with the Company regarding the status of registration of such vendors under said act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts/interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

As per IND AS 19 Employee benefits, the disclosures as defined in the Accounting Standard are given below :

The Company has created Employee''s Group Gratuity Fund with Life Insurance Corporation of India, and obtained Group Gratuity Assurance Policy from LIC for the benefit of employees.

A Gratuity Plan :-

Defined Benefit Plan

The employees'' gratuity fund scheme managed by a Trust (Life Insurance Corporation of India) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

2. FINANCIAL INSTRUMENTS

The significant accounting policies, including the criteria of recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class, financial liability and equity instruments are disclosed in note no 1.1 (l) to the financial statements.

Carrying amount of Investment, Trade Receivables, Cash and Cash Equivalent, Bank balances, Other financial Assets, Trade payables and Other financial liabilities as at 31st March, 2018 and 31st March, 2017 approximate the Fair Value because of their short term nature. Difference between carrying amount and fair values of bank deposits, other financial assets, other financial liabilities and borrowings subsequently measured at amortised cost is not significant each of year presented.

B) Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels :

Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumption that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The Company has fair valued the transaction of financial guarantee (under Other Financial Liabilities) on the basis of internal comparable of a similar transaction with an unrelated party. The fair value so determined will therefore be classified under Level 2. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a wide range of possible fair valued measurements and the cost represents estimate of fair valued within that range.

C) Financial risk management

i) Risk management framework

a) The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework. The Board of Directors have established the risk management committee, which is responsible for developing and monitoring the risk management policies. The Company reports regularly to the Board of Directors on its activities.

b) The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which the employees understand their roles and obligations.

c) The Audit Committee overseas how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

ii) The Company has exposure to the following risks from the financial instruments:

a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, investments in debt securities, loans given to related parties and project deposits.

The carrying amount of financial assets represents the maximum credit exposure.

- Trade Receivables

Customer credit risk is managed by requiring customers to pay advances through progress billings before transfer of ownership, therefore substantially eliminating the Company''s Credit risk in this respect.

The Company''s credit risk with regard to trade receivables has a high degree of risk diversification, due to the large number of projects of vary in sizes and types with numerous different customer categories in a large number of geographical markets.

Based on prior experience and an assessment of the current economic environment, management believes there is no credit risk provision required. Also the Company does not have any significant concentration of credit risk.

- Investment in Debt securities, Loans to Related Parties and Deposits

The Company has investments in non-convertible preference shares, loans to related parties and project deposits. Based on prior experience and assessments performed by the management such financial Assets are not impaired as on the reporting date.

- Cash and Bank Balances

Credit risk from cash and bank balances is managed by the Company''s treasury department in accordance with the Company''s policy.

b) 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.

Management monitors rolling forecasts of the Company''s liquidity position on the basis of expected cash flows. This monitoring includes financial ratios and takes into account the accessibility of cash and cash equivalents.

c) Market risk

Market risk is the risk that changes in market prices such as foreign exchange rate and interest rates will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

- Currency risk

Currency risk is not material, as the Company''s primary business activities are within India and does not have significant exposure in foreign currency.

- Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instruments will fluctuate because of changes in market interest rates. The management is responsible for the monitoring of the Company''s interest rate position. Various variables are considered by the management in structuring the Company''s borrowings to achieve a reasonable, competitive, cost of funding.

Fair value sensitivity analysis for fixed rate instruments

Fixed rate financial assets / liabilities are carried out at amortised cost. Therefore they are not subject to interest rate risk since, neither the carrying amount nor the future cash flows will fluctuate because of changes in market interest rates.

Cash flow sensitivity analysis for variable rate instruments

A reasonably possible change of 100 basis points in interest rate would have resulted in variation in the interest expense for the Company by the amounts indicated in the table below. Given that the Company capitalises interest to the cost of inventory to the extent permissible, the amounts indicated below may have an impact on reported profits over the life cycle of projects to which such interest is capitalised. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposure outstanding as at that date. The year end balances are not necessarily representative of the average debt outstanding during the period.

3. Capital Management

Equity share capital and other equity are considered for the purpose of Company''s capital management.

The Company manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to shareholders. The capital structure of the Company is based on management''s judgement of its strategic and day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

4. POST REPORTING EVENTS:

No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

5. AUTHORISATION OF FINANCIAL STATEMENTS

The financial statements for the year ended 31st March, 2018 were approved by the Board of Directors on 30th May, 2018

6. The management and authorities have the power to amend the Financial Statements in accordance with Section 130 and 131 of The Companies Act, 2013.

7. The IT Department have appealed against the IT Tribunal''s order, advising the IT Department for reassessment of Computation of Income of the block assessment of Income Tax for the Assessment Year 2009-10, 2010-11, 2011-12. The matter is Pending.

8. The figures for the corresponding previous year have been regrouped/reclassified wherever necessary, to make them comparable.

Source : Dion Global Solutions Limited
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