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Indiabulls Real Estate

BSE: 532832|NSE: IBREALEST|ISIN: INE069I01010|SECTOR: Construction & Contracting - Real Estate
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Notes to Accounts Year End : Mar '18

Significant management judgements

Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Classification of leases - The Group enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.

Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit losses on outstanding receivables and advances. Provisions - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Group assesses the requirement of provisions against the outstanding contingent liabilities. However the actual future outcome may be different from this judgement.

Significant estimates

The following are significant estimates in applying the accounting policies of the Group that have the most significant effect on the financial statements.

Revenue and inventories - The Group recognises revenue using the percentage of completion method. This requires forecasts to be made of total budgeted cost with the outcomes of underlying construction and service contracts, which further require assessments and judgements to be made on changes in work scopes, claims (compensation, rebates etc.) and other payments to the extent they are probable and they are capable of being reliably measured. For the purpose of making estimates for claims, the Group used the available contractual and historical information.

Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilization of asset.

Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Fair value measurements - Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing

estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.

Valuation of investment property - Investment property is stated at cost. However, as per Ind AS 40 there is a requirement to disclose fair value as at the balance sheet date. The Group engaged independent valuation specialists to determine the fair value of its investment property as at reporting date.

The determination of the fair value of properties requires the use of estimates such as future cash flows from the assets (such as lettings, future revenue streams, capital values of fixtures and fittings, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. In addition, development risks (such as construction and letting risk) are also taken into consideration when determining the fair value of the properties under construction. These estimates are based on local market conditions existing at the balance sheet date.

(i) The Group has unabsorbed business losses and unabsorbed depreciation of '' 117,507.96 lakhs (31 March 2017: '' 123,428.88 lakhs ) on which no deferred tax asset is created as there is no convincing evidence which demonstrates probability of realization of deferred tax asset in the near future.

(ii) The Group did not recognise deferred tax liability '' 62,108.85 lakhs (31 March 2017: '' 2,548.69 lakhs) with respect to unremitted retained earnings of Group subsidiaries and joint ventures wherever it controls the timing of the distribution of profits and it is probable that the subsidiaries and joint ventures will not distribute the profits in the foreseeable future.

Notes :

(i) During the year ended 31 March 2018, the Group has inventorised borrowing cost of '' 19,655.92 lakhs (31 March 2017: '' 35,476.49 lakhs) to cost of real estate project under development. The Group entities has capitalised the interest expense related to specific borrowings obtained for real estate project under development.

(ii) The weighted average rate of interest capitalisation is in the range of 7.45% to 12% basis the underlying borrowings of respective entities.

(iii) Inventories amounting to '' 178,443.29 lakhs (31 March 2017: '' 436,672.31 lakhs) have been pledged/mortgaged as security for liabilities.

(i) Trade receivables amounting to '' 263,516.67 lakhs (31 March 2017: '' 345,233.01 lakhs, ) have been pledged/ mortgaged as security for liabilities.

Notes :

(i) Bank deposits (including bank deposits included under Note 12A and Note 19) of '' 8,438.60 lakhs (31 March 2017: '' 15,286.78 lakhs) have been pledged against bank guarantees, letter of credit and overdraft facility.

(ii) Bank deposits (including bank deposits included under Note 12A and Note 19) of '' 2,415.50 lakhs (31 March 2017: '' 8,365.31 lakhs) have been lien marked as a security for servicing of term loan and debentures interest.

(iii) Bank deposits (including bank deposits included under Note 12A and Note 19) of '' 21.00 lakhs (31 March 2017: '' 5.50 lakhs) have been lien marked as a security for valued added tax registration and for fire no objection certificate.

iv Rights, preferences and restrictions attached to equity and preference shares

The holders of equity shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Holding Company. In the event of liquidation of the Holding Company, all preferential amounts, if any, shall be discharged by the Holding Company. The remaining assets of the Holding Company shall be distributed to the holders of equity shares in proportion to the number of shares held to the total equity shares outstanding as on that date. All shares rank equally with regard to the Company''s residual assets, except that holders of preference shares participate only to the extent of the face value of the shares.

vi Aggregate number of shares issued for consideration other than cash

No shares have been issued for other than cash during the period of five years immediately preceeding 31 March 2018.

vii Aggregate number of shares bought back

a. During the year ended 31 March 2018, 5,796,000 equity shares were bought back at an average price of '' 89.76 per share from the open market through stock exchanges using electronic trading facilities of BSE Limited (''BSE'') and National Stock Exchange of India Limited (''NSE'') in accordance with section 68, 69 and 70 and all other applicable provisions, if any, of the Companies Act, 2013 and SEBI Regulation 1998. b During the year ended 31 March 2017, 28,250,000 equity shares were bought back at an average price of '' 78.01 per share from the open market through stock exchanges using electronic trading facilities of BSE Limited (''BSE'') and National Stock Exchange of India Limited (''NSE'') in accordance with section 68, 69 and 70 and all other applicable provisions, if any, of the Companies Act, 2013 and SEBI Regulation 1998. c During the year ended March 31, 2013, 50,000,000 equity shares were bought back at an average price of '' 54.64 per share from the open market through stock exchanges using electronic trading facilities of BSE Limited (''BSE'') and National Stock Exchange of India Limited (''NSE'') in accordance with section 77A, 77AA and 77B of the Companies Act, 1956 and SEBI Regulation 1998.

viii Shares reserved for issue under options

For details of shares reserved for issue under the Employee Stock Option Plan (ESOP) of the Holding Company, refer note 44.

iv Rights, preferences and restrictions attached to optionally convertible redeemable preference shares (OCRPS)

0.00001% Optionally convertible redeemable preference shares of face value of '' 10 each fully paid up, The payment of dividend shall be on non-cumulative basis. Subject to the provisions of the Company Act 2013, the OCRPS shall be optionally convertible, at sole discretion of the issuer company, at any time in one or more tranches within a period not exceeding 20 years from the date of allotment at the price which shall be the face value of the equity shares of the issuer company.

Subject to the the provisions of the Company Act 2013, the OCRPS shall be redeemable, at cash, on the expiry of 20 years from the date of allotment, at the lower of either (i) an appropriate discount to the fair value of the equity shares (on the date of such redemption) of the issuer company, assuming conversion, OR (ii) issue price of OCRPS (including securities premium, if any).

vi Aggregate number of preference shares issued for consideration other than cash

No preference shares have been issued for consideration other than cash during the period of five years immediately preceding 31 March 2018.

vii Aggregate number of preference shares bought back

No preference shares have been bought back during the period of five years immediately preceding 31 March 2018.

viii Shares reserved for issue under options

No preference shares have been reserved for issue under options.

Nature and purpose of other reserves General reserve

The Holding Company is required to create a general reserve out of the profits when the Company declares dividend to shareholders.

Capital reserve

The Holding Company has issued share warrants in the earlier years. This reserve is created on account of forfeiture of share application money received on account of issuance of share warrants as share warrants holders did not exercise their rights.

Debenture redemption reserve

The Holding Company and its subsidiaries (wherever debenture balances are outstanding) are required to create a debenture redemption reserve out of the profits which are available for redemption of debentures.

Capital redemption reserve

The same has been created in accordance with provisions of the Companies Act, 2013 for the buy back of equity shares from the market.

Deferred employee compensation reserve

The reserve is used to recognized the expense related to stock options issued to employees under Holding Company''s employee stock option plans.

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with provisions of the Companies Act, 2013.

Capital reserve on consolidation

This is on acquisition and/or disposal/dilution of investment in subsidiaries/associates by the Group at different point in time. It has resulted in a capital reserve on consolidation (after netting off goodwill arising on such acquisitions and/or disposals).

** These non-convertible debentures are listed on Wholesale Debt Market (WDM) segment of National Stock Exchange of India Limited and remaining non-convertible debentures are listed on Wholesale Debt Market (WDM) segment of BSE Limited.

(ii) Repayment terms (including current maturities) and security details for term loan from banks:

a Term loan of Rs, Nil lakhs (31 March 2017 : Rs, 145,502.44 lakhs) are secured against immovable properties both present and future, exclusive and or pari passu mortgage/assignment by way of security of all rights, title, interest, claims, benefits and demands under the project documents of one of the subsidiary company repayable in range of 108 to 120 monthly instalments from the date of disbursement. b Term loan of Rs, Nil Lakhs (31 March 2017 : Rs, 197,435.13 lakhs) are secured against immovable properties both present and future, exclusive and or pari passu mortgage/assignment by way of security of all rights, title, interest, claims, benefits and demands under the project documents of one of the subsidiary companies repayable in range of 108 to 144 monthly installments from the date of disbursement. Loan to extent of Rs, Nil lakhs (31 March 2017 :

Rs, 24,955.98) is further repayable in 13 Quarterly instalments from the date of disbursement.

d During the year ended 31 March 2018, the subsidary company entered into borrowing arrangement to finance the construction and development of the real estate project by signing a construction term loan arrangement with Bank of India Limited (BOI) of Rs, 50,000.00 lakh as per below details. The rate of interest as on 31 March 2018 is 9.10% p.a.

#The Loan are secured by -

i.) exclusive charge on all the present and future movable property, plant and equipment and immovable property of the project in proportion to the unsold area of 13,63,581 sq ft together with the saleable FSI and present/future transerable development right to be constructed on all that pieces and parcels of land.

ii.) exclusive charge by way of hypothecation of all current assets of the projects.

iii.) exclusive charge/assignment of all revenues receivables and escrow account of the project to be maintained with the Bank. Assignment /agreement to assign by way of charge in favour of security trustee, all the rights, titles, benefit and interest of the projects from all contract, insurance, licenses in, to, and under all assets of the project and project documents (including but not limited to the right to use agreement, etc).

#Term Loan of Rs, 30,000.00 Lakh shall be repayable in 12 structured instalments from the last day of the quarter from the disbursement of loan.

e One of the subsidiary company had availed GBP 32.5 million secured term loan from Deutsche Bank Luxembourg

S.A. to part finance the acquisition of 22 and 23 Hanover Square, London. The facility was due on 10 July 2018. The borrowing entity has an option to prepay the whole or any part of the facility within 5 business daysRs, prior notice (but, if in part, being an amount that reduces the amount of the loan by a minimum amount of GBP

1.000.000). The facility is secured by way of pledge over 22-23 Hanover Square. The term loan was prepaid during the year ended 31 March 2018.

f One of the subsidiary company had availed GBP 73.9 million secured term loan from Deutsche Bank Luxembourg

S.A. to part finance the acquisition of 22 and 23 Hanover Square, London. The facility was due on 10 July 2018. The borrowing entity had an option to prepay the whole or any part of the facility within 5 business days'' prior notice (but, if in part, being an amount that reduces the amount of the loan by a minimum amount of GBP

1.000.000). The facility was secured by way of pledge over 22-23 Hanover Square. The term loan was prepaid during the year ended 31 March 2018.

g During the year ended 31 March 2018, one of the subsidiary company had availed GBP 55 million secured term loan from Deutsche Bank Luxembourg S.A. to refinance existing indebtness in repect of 22 and 23 Hanover Square, London. The facility is due on 19 December 2018. The borrowing entity has an option to prepay the whole or any part of the facility within 5 business days'' prior notice (but, if in part, being an amount that reduces the amount of the loan by a minimum amount of GBP 1,000,000). The facility was secured by way of pledge over 22-23 Hanover Square. The rate of interest as on 31 March 2018 is 7.45% p.a.

h During the year ended 31 March 2017, one of the subsidiary company have availed '' 10,000.00 lakhs term loan from Ratnakar Bank limited secured against immovable properties both present and future, exclusive and/or Pari passu mortgage/assignment by way of security of all rights, title, interest, claims, benefits and demands under the project documents. Loan is repayable in 6 fixed half yearly instalment’s from the date of disbursement. The outstanding balance as at 31 March 2018 is '' 6,642.87 lakhs ( 31 March 2017 '' 9,948.75). The rate of interest as on 31 March 2018 is 9.05% p.a.

i During the year ended 31 March 2015, one of the subsidiary company has availed Rs, 1,300.00 lakhs term loan from Axis Bank Limited, secured against immovable properties owned by the Company and equitable mortgage of immovable property of one of other subsidiary company. The term loan is repayble in 11 fixed quarterly instalments beginning from 31 March 2015. The outstanding balance as at 31 March 2018 is Rs, Nil lakhs (31 March 2017: Rs, 2,357.61 lakhs).

j During the year ended 31 March 2018, the Company has availed term loan of Rs, 10,000.00 lakhs from Ratnakar Bank Limited and interest payable monthly, secured by first pari passu charge by way of equitable mortgage on immovable properties located at Savroli and owned by certain subsidiary companies. The loan is repayable in three installments at 20%, 30% and 50% at the end of one year, two years and three years from the date of disbursement. The rate of interest as on 31 March 2018 is 9.00% p.a. The outstanding balance as at 31 March 2018 is Rs, 9,928.52 lakhs (31 March 2017: Rs, Nil).

k During the year ended 31 March 2018, the Company has availed term loan of Rs, 5,000.00 lakhs from Ratnakar Bank Limited and interest payable monthly, secured by exclusive charge by way of equitable mortgage on immovable properties located at Gurugram and owned by certain subsidiary companies. The loan is repayable in three instalment’s at 20%, 30% and 50% at the end of one year, two years and three years from the date of disbursement. The rate of interest as on 31 March 2018 is 9.00% p.a. The outstanding balance as at 31 March 2018 is Rs, 4,964.17 lakhs (31 March 2017: '' Nil).

l During the earlier years, one of the subsidiary company has entered into borrowing arrangement to finance the construction and development of real estate project by signing a term loan (for construction purposes) arrangement with Yes Bank Limited (''YBL'') of '' 60,000 lakhs.

YBL subsequently novated the loan of '' 30,000.00 lakhs vide deed of novation dated 25 March 2013 in favour of Bank of India, Vijaya Bank, State Bank of Bikaner & Jaipur. Further, YBL novated the loan of Rs, 15,000.00 lakhs vide deed of novation dated 27 June 2013 in favour of Corporation Bank.

Further, the said subsidiary company has entered into borrowing agreement with State Bank of India to re-finance the existing term loan for Rs, 38,764.43 lakhs on dated 29 October 2015 and the existing term loan with YBL, Vijaya Bank, Bank of India and Corporation Bank were pre-paid. The details are as follows:

Term loan were secured against immovable properties both present and future, exclusive and/or pari passu mortgage/assignment by way of security of all rights, title, interest, claims, benefits and demands under the project documents. Loan to the extent of Rs, 38,765.00 lakhs is repayable in 7 fixed quarterly installments from the date of disbursement. The outstanding amount as at 31 March 2017 amounts to Rs, 11,075.55 lakhs (with State Bank of India) and the same has been repaid during the current year.

m During the year ended 31 March 2015, the Company has availed term loan of Rs, 28,000.00 lakhs from Axis Bank Limited and interest payable monthly, primarily secured by mortgage on immovable properties situated at Savroli held and owned by the certain subsidiary companies. The loan is further secured by collateral security on immovable properties of certain subsidiary companies. Additionally, the aforesaid term loan is also secured by way of pari-passu charge on all the project related receivables, if any, of its certain subsidiary companies. The loan is repayable in 16 equal quarterly installments after moratorium period of two years from date of first disbursement. The rate of interest as on 31 March 2018 is 9.65% p.a. (Axis BankRs,s six month MCLR plus spread). The outstanding balance as at 31 March 2018 is Rs, 17,256.61 lakhs (31 March 2017: Rs, 24,052.15 lakhs).

n Term loan was taken from Oriental Bank of Commerce and is secured against first exclusive charge upon (a) movable and immovable properties both present and future, (b) all escrow and common account maintenance (CAM) charges accounts opened in relation to the facility and (c) all receivables (present and future) from tenants / lessees in respect of commercial space at One India bulls Park, Chennai. Loan is repayable in 144 structured monthly instalment’s from the date of disbursement. The loan was repaid during the financial year ended 31 March 2018. The balance outstanding is Rs, Nil (31 March 2017: Rs, 40,241.04 lakhs).

o During the current year, on 28 September 2017, one of the subsidiary has taken a new term loan of Rs, 50,000.00 lakhs from Oriental Bank of Commerce agianst (a) exclusive mortgage charge over the project Rs,One India bulls ParkRs, (Immovable properties) and hypothecation charge on all the other movable property, plant and equipment (present and future) of the project, (b) exclusive hypothecation charge upon receivable from tenants/ lessees in respect of commercial space at One India bulls Park, Chennai and (c) exclusive charge on all escrow and common account maintenance (CAM) charges accounts opened in relation to the facility. The loan is repayable in 144 structured monthly instalment’s from the date of disbursement. The balance outstanding is '' 48,996.36 lakhs (31 March 2017: '' Nil). The rate of interest as on 31 March 2018 is 8.44% p.a.

p During the year ended 31 March 2015, one of the subsidiary company had entered into borrowing agreement to finance the construction and development of its real estate project by signing a line of credit term loan agreement with Axis Bank Limited of Rs, 10,000.00 lakhs (overall limit - Rs, 15,000.00 lakhs). The loan was repayable in 16 quarterly structured instalment’s which commenced from the end of third month from the date of first disbursement which commenced in June 2015. The outstanding balance as at 31 March 2018 is Rs, Nil lakhs (31 March 2017: Rs, 7,414.12 lakh).

(iii) Repayment terms (including current maturities) and security details for Guaranteed senior notes:

During the year ended 31 March 2015, one of the overseas subsidiary company has issued 10.25% Guaranteed Senior Notes due 2019 of an aggregate principal amount of US5 million, which are listed and traded on the Singapore Exchange Securities Trading Limited (the Notes). During the current year, the subsidiary company has decided to recall these notes. The outstanding amount of these note as on 31 March 2018 is Rs, 107,874.25 lakh (31 March 2017: Rs, 32,435.22 lakhs). These senior notes are listed on the Singapore Exchange Securities Trading Limited (''SGX-ST''). As at the year-end, the subsidiary company has elected to, and will redeem, on 30 April 2018 (the ''Redemption Date''), all of the outstanding USD 175 million, 10.25% Senior Notes due 2019 (''Securities''), which were issued by Century Limited under an indenture dated November 12, 2014. Upon redemption of the Securities, the Securities will be cancelled and delisted from the SGX-ST. The rate of interest as on 31 March 2018 is 10.25% p.a.

(iv) Repayment terms (including current maturities) and security details for vehicle loans:

During the year ended 31 March 2015, the Holding Company has availed vehicle loan of Rs, 60.00 lakhs from Axis Bank Limited and interest payable monthly, secured by way of hypothecation on vehicle purchased. This loan is repayable in 60 equated monthly instalment’s starting from 15 November 2014. The outstanding balance as at 31 March 2018 is Rs, 22.14 lakhs (31 March 2017: Rs, 34.56 lakhs).

Repayment terms and security details for short-term borrowings:

a During the year ended 31 March 2014, the Company has availed line of credit from Aditya Birla Finance Limited. This facility has been renewed during last year amounting to Rs, 6,000.00 lakhs and interest payable quarterly, which is secured by pledge of units of mutual funds. The outstanding balance as at 31 March 2018 is Rs, Nil (31 March 2017: Rs, 5,800.00 lakhs). The pledge on units of mutual fund is being released during the year post repayment. b Maximum balance outstanding during the year is Rs, 99,500.00 lakhs (31 March 2017: Rs, 65,000.00 lakhs).

* Not due for credit to ''Investor Education and Protection fund

** During the previous year ended 31 March 2017, the Group reassessed and changed the use of land in one of the subsidiary company from residential to commercial due to non receipt of no objection certificate from Airport Authority of India. Hence, the amount due to residential customers account of cancellation of flats in the said project (Sky Suite) had been shown as other financial liabilities (current) during the year ended 31 March 2017. Also, the subsidiary company had provided an interest on the refundable amount.

Note - 1

Earnings per share (EPS)

The Group''s Earnings per Share (''EPS'') is determined based on the net profit attributable to the shareholders'' of the Holding Company. Basic earnings per share is computed using the weighted average number of shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the year including share options, except where the result would be anti-dilutive. Weighted average number of equity shares includes the impact of buy back of equity shares during the year.

Note - 2

Fair value measurement (i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value hierarchy. The three Levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for financial instruments.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: unobservable inputs for the asset or liability.

(iii) Valuation process and technique used to determine fair value

Financial assets -

a) Traded (market) price basis recognised stock exchange for quoted equity instruments.

b) Use of net asset value for mutual funds on the basis of the statement received from investee party.

c) For unquoted equity instruments (except one mentioned in point (d) below) and optionally convertible preference shares, the Group has used adjusted net asset value method which factors fair value of assets and liabilities of investee entity with an adjustment of factors such as lack of liquidity, time elapsed from date of investment etc.

d) One of the unquoted equity instruments is measured using net present value of future cash flow (income approach) discounted at a rate to reflect the risk involved in the business and other critical factors.

a) Credit risk management

i) Credit risk rating

The Group assesses and manages credit risk of financial assets based on following categories arrived on the basis of assumptions, inputs and factors specific to the class of financial assets.

A: Low credit risk B: Moderate credit risk C: High credit risk

In respect of trade receivables, the Group recognises a provision for lifetime expected credit loss.

Based on business environment in which the Group 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. Assets are written off when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or a litigation decided against the Group. The Group continues to engage with parties whose balances are written off and attempts to enforce repayment. Recoveries made are recognised in statement of profit and loss.

Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and financial institutions and diversifying bank deposits and accounts in different banks. Credit risk is considered low because the Company deals with highly rated banks and financial institution. Loans and other financial assets measured at amortized cost includes unbilled revenue, long-term bank deposits, security deposits and other receivables. Credit risk related to these financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits. Credit risk is considered low because the Company is in possession of the underlying asset. Further, the Company creates provision by assessing individual financial asset for expectation of any credit loss basis 12 month expected credit loss model.

Expected credit loss for trade receivables under simplified approach Real estate business receivables

The Group considers provision for lifetime expected credit loss. Given the nature of business operations, the Group''s receivables from real estate business does not have any expected credit loss as transfer of legal title of properties sold is generally passed on to the customer, once the Group receives the entire consideration and hence, these are been considered as low credit risk assets. Further, during the periods presented, the Group has made no write-offs of receivables.

Rental business receivables

The Group considers provision for lifetime expected credit loss. Given the nature of business operations, the receivables from rental business has low credit risk as the Group holds security deposits against the premises given on rentals. Further, historical trends indicate some shortfall between such deposits held by the Group and amounts due from customers. Hence, with the historical loss experience and forward looking information, the Group has provided expected credit loss in relation to receivables from rental business.

(B) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group''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.

Management monitors rolling forecasts of the Group''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Group takes into account the liquidity of the market in which the entity operates.

(C) Market risk

(i) Interest rate risk

The Group fixed rate borrowings are not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The Group variable rate borrowing is subject to interest rate. Below is the overall exposure of the borrowing:

(ii) Foreign exchange risk

The Group has international transactions and is exposed to foreign exchange risk arising from foreign currency transactions (imports and exports). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Group''s functional currency. The Group does not hedge its foreign exchange receivables/payables.

(iii) Price risk

The Group exposure 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 in equity securities, the Group diversifies its portfolio of assets.

Sensitivity

Profit or loss and equity is sensitive to higher/lower prices of instruments on the Group profit for the periods -

Note - 3

Capital management

The Group''s objectives when managing capital are:

- To ensure Group''s ability to continue as a going concern, and

- To provide adequate return to shareholders

Management assesses the capital requirements in order to maintain an efficient overall financing structure. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. The Group manages its capital requirements by overseeing the following ratios-

* Net debt includes non-current borrowings current borrowings current maturity of non-current borrowings - cash and cash equivalents (including fixed deposits and other liquid securities).

The Group has access to the undrawn borrowing facilities of '' 500.00 lakhs (31 March 2017: '' 5,700.00 lakhs) for the year ended 31 March 2018.

Note - 4

Related party transactions

Relationship Name of the related parties

Associates India bulls Infrastructure Limited (formerly India bulls

Infrastructure Private Limited) (till 17 January 2017)

Catherine Builders & Developers Limited (till 17 January 2017)

Bridget Builders & Developers Limited (till 17 January 2017)

Kenneth Builders & Developers Limited (till 17 January 2017)

Joint ventures India bulls Properties Private Limited (from 29 March 2018)

India bulls Real Estate Company Private Limited (from 29 March 2018)

Key management personnel Mr. Vishal Gaurishankar Damani (Joint Managing Director)

Mr. Gurbans Singh (Joint Managing Director)

Note - 41

Contingent liabilities and commitments

A) Summary of contingent liabilities

i. Bank guarantees and letter of credit facilities availed of '' 10,225.08 lakhs (31 March 2017: '' 20,416.39 lakhs).

ii. Corporate guarantee issued by Holding Company on behalf of joint ventures amounting to '' 510,804.26 lakhs (31 March 2017: '' Nil).

iii. Contingent liabilities in respect of income-tax demands for which appeals have been filed '' 7,903.79 lakhs (31 March 2017: '' 4,616.08 lakhs)

iv. Contingent liabilities in respect of property-tax demands for which appeals have been filed Rs, 730.43 lakhs (31 March 2017: Rs, Nil)

v. Contingent liabilities in respect of service tax demands for which appeals have been filed Rs, 2,064.13 lakhs (31 March 2017: Rs, Nil)

vi. The Group has certain litigations pending which involves transaction value of Rs, 254.12 lakhs (31 March 2017: Rs, 201.52 lakhs). However, based on legal advice, the management does not expect any unfavourable outcome resulting in material adverse effect on the financial position of the Group.

vii. The Holding Company had given corporate guarantee in favour of financial institutions/banks which have extended term loan facility to RattanIndia Nasik Power Limited, a subsidiary of RattanIndia Power Limited towards arranging the required equity to meet cost overrun, if any, in relation to the Phase-I of Thermal Project having capacity of 1350 MW in Sinnar Village of Nasik District in Maharashtra, being developed by RattanIndia Nasik Power Limited. Such guarantee was to expire on Phase-I of Thermal Project achieving COD and could have been enforced only in the event of inability of RattanIndia Power Limited and/or its promoters to arrange the equity support that may be required to meet cost overrun, if any. All the five plants of the Phase-I of Thermal Project having capacity of 1350 MW in Sinnar Village of Nasik District in Maharashtra have since been commissioned as on 30 May 2017

viii. The Holding Company had given Sponsors Support Undertaking (SSU) to meet any shortfalls in the funding requirement of project and towards cost overrun to financial institution/banks for term loan sanctioned to RattanIndia Nasik Power Limited, a subsidiary of RattanIndia Power Limited in the event of inability of RattanIndia Nasik Power Limited (RNPL) to arrange required equity support for Nasik Thermal Power Project Phase II. Pursuant to the demerger of the power business from the Holding Company vide order dated 17 October 2011 passed by the Hon''ble Delhi High Court in Holding Company Petition No 295 of 2011, all the liabilities and obligations of the Holding Company in relation to the power business stood transferred and vested into RattanIndia Infrastructure Limited. Furthermore, the promoters of RattanIndia Power Limited (RPL) have given an undertaking to the effect that until the Holding Company is discharged/substituted by the lenders with respect to debt facilities of Nashik Thermal Power Project Phase II, RNPL shall not drawdown any funds from such debt facilities.

ix. The Holding Company had given Sponsors Support Undertaking (SSU) to fund the required equity and any shortfall in means of finance by subscription to the shares of RattanIndia Power Limited, a company together promoted by RattanIndia Infrastructure Limited and RR Infra Land Private Limited, for term loan facility sanctioned to RattanIndia Power Limited (RPL) in the event of inability of RPL to arrange the required equity support for Amravati Power Project Phase II. Under the SSU, the Holding Company had also guaranteed to meet RPL''s debt obligations in respect of Amravati Power Project Phase II in the event coal linkage for the project is cancelled/deferred and RPL fails to make any alternate arrangement of required coal six months prior to the scheduled commercial operation date of unit I of Amravati Power Project Phase II. Pursuant to the demerger of the power business from the Holding Company vide order dated 17 October 2011 passed by the Hon''ble Delhi High Court in Holding Company Petition No 295 of 2011, all the liabilities and obligations of the Holding Holding Company in relation to the power business stood transferred and vested into RattanIndia Infrastructure Limited. Furthermore, the promoters of RPL have given an undertaking to the effect that until the Holding Company is discharged/substituted by the lenders with respect to debt facilities of Amravati Power Project Phase II, RPL shall not drawdown any funds from such debt facilities.

B) Commitments

i. Estimated amount of contracts remaining to be executed on capital account (investment property) and not provided for amounting to Rs, Nil lakhs (31 March 2017: Rs, 2,867.88 lakhs).

ii. Letter of credit issued amounting to Rs, 714.93 lakhs (31 March 2017: Rs, 2,722.91 lakhs)

Note - 5

Employee benefits

Defined contribution plan

The Group has made Rs, 70.39 lakhs (31 March 2017 - Rs, 42.11 lakhs) contribution in respect of provident fund and other funds.

Defined Benefit Plan

The Group has the following Defined Benefit Plans:

- Gratuity (Unfunded)

- Compensated absences (Unfunded)

Risks associated with plan provisions

Discount rate risk Reduction in discount rate in subsequent valuations can increase the plan''s liability.

Mortality risk Actual death & liability cases proving lower or higher than assumed in the valuation can impact the liabilities.

Salary risk Actual salary increase will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

Withdrawal risk Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability.

Compensated absences

The leave obligations cover the Group''s liability for permitted leaves. The amount of provision of Rs, 23.93 lakhs (31 March 2017 - Rs, 99.24 lakhs) is presented as current, since the Group does not have an unconditional right to defer settlement for any of these obligations. However based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months, therefore based on the independent actuarial report, only a certain amount of provision has been presented as current and remaining as noncurrent. The weighted average duration of the defined benefit obligation is in the range of 11.9 to 22.14 years (31 March 2017: 12.81 to 22.55 years).

As the Group does not have any plan assets for compensated absences, the movement of present value of defined benefit obligation and fair value of plan assets has not been presented.

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management''s historical experience.

Sensitivities due to mortality and withdrawal are not material and hence impact of change not calculated.

Gratuity

The Group 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. The amount of gratuity payable on retirement/ termination is the employee''s last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. Gratuity plan is a non-funded plan. The weighted average duration of the defined benefit obligation is in the range of 11.96 to 22.14 years (31 March 2017: 12.81 to 22.55 years).

These assumptions were developed by management with the assistance of independent actuarial appraisers. Discount factors are determined close to each year-end by reference to government bonds of relevant economic markets and that have terms to maturity approximating to the terms of the related obligation. Other assumptions are based on management''s historical experience.

Sensitivities due to mortality and withdrawal are not material and hence impact of change not calculated.

Note - 44

Share based payments

India bulls Real Estate Limited Employees Stock Options Scheme - 2006 (I)

During the year ended 31 March 2007, the Holding Company established the India bulls Real Estate Limited Employees Stock Options Scheme (IBREL ESOS-I or Plan-I). Under the Plan- I, the Holding Company issued 9,000,000 equity settled options to its eligible employees and its subsidiary companies which gave them a right to subscribe up to 9,000,000 stock options representing an equal number of equity shares of face value of Rs, 2 each of the Holding Company at an exercise price of Rs, 60 per option, subject to the requirements of vesting. These options vest uniformly over a period of 10 years, commencing one year after from the date of grant. A compensation committee constituted by the Board of Directors of the Holding Company administer the Plan- I. The stock options so granted, shall vest in the eligible employees within 10 years beginning from 1 November 2007, the first vesting date. The stock options granted under each of the slabs are exercisable by the option holders within a period of five years from the relevant vesting date.

Weighted average share exercised price during the year ended 31 March 2018: Rs, 87.38 (31 March 2017: Rs, 56.75)

India bulls Real Estate Limited Employees Stock Options Scheme 2008 (II)

During the year ended 31 March 2009, the Holding Company established the India bulls Real Estate Limited Employees Stock Options Scheme - 2008 (II) (IBREL ESOS-II or Plan-II). Under Plan II, the Holding Company issued equity settled options to its eligible employees and of its Subsidiary Companies to subscribe upto 2,000,000 stock options representing an equal number of equity shares of face value of Rs, 2 each in the Holding Company, at an exercise price of Rs, 110.50 per option, being the closing market price on the National Stock Exchange of India Limited, as at 29 January 2009. The stock options so granted, shall vest in the eligible employees within 10 years beginning from 31 January 2010, the first vesting date. The stock options granted under each of the slabs, are exercisable by the option holders within a period of five years from the relevant vesting date.

India bulls Real Estate Limited Employees Stock Options Plan 2010 (III)

During the year ended 31 March 2011, the board of directors and shareholders of the Holding Company have given their consent to create, issue, offer and allot to the eligible employees of the Holding Company and its subsidiary companies, stock options not exceeding 30,000,000 in number, representing 30,000,000 equity shares of face value of Rs, 2 each of the Holding Company, accordingly the Employee Stock Option Plan - 2010 (IBREL ESOP 2010 or Plan-III)) has been formed. As per the scheme exercise price will be the market price of the equity shares of the Holding Company, being the latest available closing price, prior to the date of grant or as the case may be decided by the board of directors or compensation committee. During the year ended 31 March 2016, board of directors of the Holding Company at its meeting held on 26 June 2015, re-granted (original grant was of date 14 November 2015) under the India bulls Real Estate Limited Employees Stock Options Plan - 2010, 10,500,000 stock options to eligible employees of the Holding Company and its subsidiary companies representing an equal number of equity shares of face value of Rs, 2 each in the Holding Company, at an exercise price of Rs, 54.50, being the closing market price of previous day on the National Stock Exchange of India Limited. The stock options so granted, shall vest within 5 years beginning from 26 June 2016, the first vesting date. The options vested under each of the slabs, can be exercised within a period of five years from the relevant vesting date.

Weighted average share exercised price during the year ended 31 March 2018: Rs, 95.14 (31 March 2017: Rs, 82.11).

The fair value of the option under Plan III using the black scholes model, based on the following parameters is Rs, 34.30 per option, as certified by an independent valuer.

India bulls Real Estate Limited Employees Stock Options Plan 2011 (IV)

During the year ended 31 March 2012, the board of directors and shareholders of the Holding Company have given their consent to create, issue, offer and allot, to the eligible employees of the Holding Company and its subsidiary companies, stock options not exceeding 15,000,000 in number, representing 15,000,000 equity shares of face value of Rs,2 each, and accordingly the Employee Stock Option Scheme 2011 (IBREL ESOS 2011) has been formed. As per the scheme exercise price will be the market price of the equity shares of the Holding Company, being the latest available closing price, prior to the date of grant or as may be decided by the board or compensation committee. However, compensation committee of the board has not yet granted any options under IBREL ESOP 2011 Scheme.

Note 6

Capital reserve on consolidation

On acquisition and/or disposal/dilution of investments in subsidiaries/associates by the Group at different point in time, it has resulted in (after netting off the goodwill arising on such acquisition and/or disposal) a capital reserve on consolidation of Rs, 104,232.79 lakhs (31 March 2017: Rs, 103,836.65 lakhs) which is shown under reserves and surplus head of other equity. On transition to Ind AS, the Group opted for optional exception under Ind AS 101 and did not restate its previous GAAP business combinations.

Note - 7

Group information Information about subsidiaries

The information about subsidiaries of the Holding Company is as follows. The below table includes the information about step down subsidiaries as well.

Goodwill

The goodwill does not arise on account of mentioned acquisitions. The entire surplus in purchase consideration is absorbed by the related assets and liabilities acquired.

Contribution to the group

Airmid Real Estate Limited has contributed Rs, 528.40 lakhs of revenue and Rs, (30.29) lakhs to profit before tax since 22 April 2016 to 31 March 2017. Had the acquisition taken place at the beginning of year i.e. 01 April 2016, the GroupRs,s revenue for the year ended 31 March 2017 would have been Rs, 284,429.94 lakhs and the profit before tax would have been Rs, 53,708.80 lakhs.

Sepset Real Estate Limited has contributed Rs, 5,250.01 lakhs of revenue and Rs, 965.02 lakhs to profit before tax since 22 April 2016 to 31 March 2017. Had the acquisition taken place at the beginning of year i.e. 01 April 2016, the Group''s revenue for the year ended 31 March 2017 would have been Rs, 284,429.94 lakhs and the profit before tax would have been Rs, 53,708.80 lakhs.

India Land and Properties Limited has contributed Rs, 387.98 lakhs of revenue and Rs, 117.80 lakhs to profit before tax from 17 March 2017 to 31 March 2017. Had the acquisition taken place at the beginning of year i.e. 01 April 2016, the Group''s revenue for the year ended 31 March 2017 would have been Rs, 293,294.44 lakhs and the profit before tax would have been Rs, 54,656.14 lakhs.

B. Acquisition of assets

During the year ended 31 March 2017, pursuant to the judgment passed by the Hon''ble Supreme Court of India, a refund of '' 70,095 lakhs, net of TDS, (being the auction price along with interest) has been received from the Delhi Development Authority (''DDA'') by Kenneth Builders & Developers Private Limited (a 100% subsidiary of India bulls Infrastructure Limited (formerly India bulls Infrastructure Private Limited) (''associate entity'')) in relation to the land situated at Village Tehkhand, Maa Anand Mai Marg, New Delhi (''Tehkhand Land'') which was earlier allotted by DDA for development of residential project. The Holding Company and FIM Limited (managed by Farallon Capital Management LLC and its affiliates), were holding 26% and 74% equity stake respectively in the associate entity. Further, in compliance with the directions of the Hon''ble Supreme Court of India, possession of the Tehkhand Land has been handed over to DDA. The Holding Company has acquired entire stake of FIM Limited in associate entity on 17 January 2017, for a total consideration of approximately '' 38,189 lakhs and with this associate entity has become 100% subsidiary of the Group. The Group recognised gain of '' 8,836.81 lakhs as gain on acquisition of assets (bargain purchase) during the year ended 31 March 2017.

The joint venture companies have certain litigations involving customers other land related matters. Management believes that these claims may be payable as and when the outcome of matters are finally determined and hence not disclosed above. Based on advice of in-house legal team, the management believes that no material liability will devolve on the joint venture companies in respect of these litigations.

Note - 54

A search was conducted by the competent authority under section 132(1) of the Income Tax Act, 1961 (''the Act'') at premises of certain group Companies in the previous year ended 31 March 2017. Pursuant to the search, the Assessing Officer has issued notices under relevant sections of the Act to the subsidiaries including the Holding Company for some of the earlier financial years. Consequently, in order to avoid protracted tax litigation, the Holding Company has filed application under Section 245C (1) of the Act before the Hon''ble Income Tax Settlement Commission (Rs,ITSC'') on 03 October 2017 and accordingly deposited Rs, 5,108.33 lakhs as tax and Rs, 3,217.67 lakhs as interest towards the proposed settlement which has been provided for in the books of accounts. The said application has since been admitted by ITSC vide its Order dated 10 October 2017 passed u/s 245D (1) of the Act and allowed to be proceeded with vide Order dated 4 December 2017 passed u/s 245D (2C) of the Act. The matter is now pending before the Hon''ble ITSC for final determination.

Note - 8

During the year ended 31 March 2018, IBREL-IBL Scheme Trust, of which the Holding Company is the sole beneficiary, has sold 425 lakh shares of the Holding Company for '' 88,215.00 lakhs. Hence, the Holding Company adjusted the related investment in IBREL-IBL Scheme Trust and money received is recognised as share premium.

Note - 9

M Holdco 1 Limied (a wholly owned subsidiary of the Holding Company) has divested its stake in certain step down subsidiaries in favour of entities BREP Asia SBS L&T Holding (NQ) Ltd, BREP VIII SBS L&T Holding (NQ) Ltd and BREP Asia SG L&T Holding (NQ) Pte Ltd, there by indirectly divesting 50% stake in India bulls Properties Private Limited (''IPPL'') and India bulls Real Estate Company Private Limited (''IRECPL'') at an agreed enterprise value of Rs, 950,000 lakhs as taken on record by the Board of Directors. Further to the terms of transaction of the above divestiture, IPPL and IRECPL have been assessed as joint ventures in compliance with Indian Accounting Standards (''Ind AS'') and accordingly, the Group has recognised gain/fair value impact on such divestiture transaction amounting to Rs, 277,712.85 lakhs in these consolidated financial statements.

Note - 10

During the year ended 31 March 2018, the Holding Company has sold its entire stake in two of its wholly owned subsidiaries, namely Selene Estate Limited and Airmid Infrastructure Limited (owned residential assets in Chennai) for an aggregate consideration of '' 28,500.00 lakhs and accordingly, the Group has recognised gain on sale amounting to '' 4,678.51 lakhs in these consolidated financial statements.

Note - 11

During the year ended 31 March 2018, Century Limited, a wholly owned subsidiary of the Holding Company, has elected to and will redeem, on 30 April 2018 (the ''Redemption Date''), all of the outstanding US5,000,000 10.25% Senior Notes due 2019 (''Securities''), which were issued by Century Limited under an indenture dated 12 November 2014 and guaranteed by the Holding Company along with its certain subsidiaries. These Securities are to be redeemed at redemption price i.e. amount equal to 105.125% of US5,000,000. These securities are presently listed on SGX-ST. Upon redemption of the Securities, the Securities will be cancelled and delisted from the SGX-ST.

Note - 12

During the year ended 31 March 2018, Yashita Buildcon Limited, a wholly-owned subsidiary of the Holding Company has entered into a binding and definitive agreement to acquire a prime and newly constructed commercial building, having leasable area of around 2.5 lakhs square feet in Gurugram.

Note - 13

Subsequent to the year ended 31 March 2018, Manjola Infrastructure Limited, a wholly owned subsidiary of the Holding Company, has entered into a binding and definitive agreement to acquire a prime and newly constructed commercial building at Udyog Vihar, Phase IV, Gurugram, having leasable area of approximately 2.5 lakhs square feet. The deal is expected to get completed in coming months when the occupation certificate of this building is expected to be received.

Note - 14

Subsequent to the year ended 31 March 2018, India bulls Infraestate Limited (''IIL''), a wholly owned subsidiary of the Holding Company, has executed a non-binding term sheet with Oricon Enterprises Limited (''OEL'') for execution of definitive agreements for joint development of a commercial building at OEL''s land parcel admeasuring approximately 3,512 square meters plot situated at Dr. E. Moses Road, Worli, Mumbai - 400018. Upon execution of the definitive agreements, IIL will get an exclusive ownership rights of approx. 2.55 lakhs square feet of leasable area.

Note - 15

The Group has not entered into any foreign exchange derivative instruments during the year. The Group did not have any long-term contracts including derivative contracts outstanding at year-end.

Note - 16

In the opinion of the Board of Directors, all current assets and long term loans and advances, appearing in the balance sheet, have a value on realization, in the ordinary course of the Group''s business, at least equal to the amount at which they are stated in the financial statements. In the opinion of the board of directors, no provision is required to be made against the recoverability of these balance

Source : Dion Global Solutions Limited
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