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Kolte-Patil Developers

BSE: 532924|NSE: KOLTEPATIL|ISIN: INE094I01018|SECTOR: Construction & Contracting - Real Estate
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Notes to Accounts Year End : Mar '18

1. Corporate Information

Kolte-Patil Developers Limited (“the Company”) is a Company registered under the Companies Act, 1956. It was incorporated on 25th November 1991. The Company is primarily engaged in business of construction of residential, commercial; IT Parks along with renting of immovable properties and providing project management services for managing and developing real estate projects.

2A. New Accounting Standards, Amendments to Existing Standards, Annual Improvements and Interpretations Effective Subsequent to March .31, 2018:

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:

On March .28, 2018, Ministry of Corporate Affairs (MCA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is in process of evaluating the impact on the financial statements.

Ind AS 115- Revenue from Contract with Customers:

On March .28, 2018, Ministry of Corporate Affairs (MCA) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach). The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March .31, 2018 will not be retrospectively adjusted. The Company is in process of evaluating the impact on the financial statements.

3A: Terms, rights & restrictions attached to equity shares

The Company has only one class of equity shares having a face value of RS.10 per share. Accordingly, all equity shares rank equally with regards to dividends & share in the Company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to the number of equity shares held by the shareholders.

3B : Information regarding issue of shares in the last five years:

i) The Company has not issued any shares without payment being received in cash.

ii) The Company has not issued any bonus shares.

iii) The Company has not undertaken any buy-back of shares.

3C: The Company declares and pays dividend in Indian Rupees. The shareholders at the Annual General Meeting held on September 28, 2017 approved a dividend of RS.1.60/- per share for the year ended March .31, 2017 which was subsequently paid during the year ended March .31, 2018. The amount was recognised as distributions to equity shareholders during the year ended March .31, 2018 and the total appropriation was RS.1,212 Lakhs.

A final dividend of RS.2/- per share has been recommended by the Board of Directors in their meeting held on May 23, 2018 for the financial year 2017-18 subject to the approval of shareholders in the ensuing Annual General Meeting.

3D : Refer Note 46 for details relating to stock options

Security:

Secured by Mortgage over land and Project Assets, charge on escrow account and all Cash flows and Receivables pertaining to the Project.

(ii) Term Loan from Banks are secured by :

Mortgage of all rights, interest and title of the borrower, mortgage of current & future receivables in respect of selected projects. Loan will be repayable in 10-30 equal monthly/quarterly instalments starting from the end of principal moratorium.

(iii) Term Loan from others :

Secured by:Exclusive charge by way of RMOE on the projects land, hypothecation of scheduled receivable (both sold and unsold) of Projects, all insurance proceeds both present and future.An Exclusive charge by way of hypothecation on Escrow Account, all monies credited / deposited therein and all investments in respect thereof.Repayment Terms : monthly/quarterly instalments.

(iv) Finance Lease Obligation : March .31, 2018 - RS.243 Lakhs ( March .31, 2017 - RS.181 lakhs)

Security : Finance lease obligations are secured by the underlying assets for which loans are obtained Rate of Interest : The Rate of Loans are between 10 % to 18%

*in the opinion of the management the above claims are not sustainable and the Company does not expect any outflow of economic resources in respect of above claims and therefore no provision is made in respect thereof.

**The Company does not expect any outflow of resources in respect of the Guarantees issued.

Note 4 - Employee Benefits

The details of employee benefits as required under Ind AS 19 ‘Employee Benefits’ is given below

(A) Defined Contribution Plan:

The Company contributes to provident fund and employee state insurance scheme which are defined contribution plans.

Amount recognized as an expense in the Statement of Profit and Loss in respect of Defined Contribution Plans to Provident fund is RS.199 lakhs (Previous Year - RS.211 lakhs) and Employee State Insurance Scheme is RS.10 lakhs (Previous Year - RS.5 lakhs).

(B) Defined benefit plan:

Gratuity is a defined benefit plan covering eligible employees. The plan provides for a lump sum payment to vested employees on retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for each completed year of service. Vesting occurs on completion of five years of service.

Disclosure as required under Ind AS 19 on “Employee Benefits” in respect of defined benefit plan is as under:

a. The discount rate is based upon the market yields available on Government bonds at the accounting date with a term that matches that of the liabilities.

b. Expected Rate of Return of Plan Assets: This is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of obligations.

c. Salary Escalation Rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

d. Withdrawal Rate: It is the expected employee turnover rate and should be based on the company’s past attrition experience and future withdrawal expectations.

The sensitivity results above determine their individual impact on Plan’s end of year Defined Benefit Obligation. In reality, the plan is subject to multiple external experience items which may move the defined Benefit Obligation in similar or opposite directions, while the Plan’s sensitivity to such changes can vary over time.

xii. Employee benefit plans

The plans typically expose the company to the actuarial risks such as: investments risk, interest risks, longevity risk and salary risk

No other post-retirement benefits are provided to these employees.

In respect of the plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March .31, 2018 by Ranadey Professional Services, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

Note 5 - Segment Information

The Company is engaged in Real Estate. The operations of the company do not qualify for reporting as business segments as per the criteria set out under Indian Accounting Standard 108 (IND AS-108) on “Operating Segments”. The Company is operating in India hence there is no reportable geographic segment. Accordingly no disclosure is required under IND AS - 108.

Note 6 - Leases

1. Operating leases:

Where the Company is Lessee:

The Company has entered into operating lease arrangements for certain facilities and office premises. The leases range over a period of 2 years to 5 years and may be renewed for a further period based on mutual agreement of the parties.

Expenses for operating leases included in the Statement of Profit and Loss for the year is RS.254 lakhs [Previous Year - RS.385 Lakhs].

The future minimum lease payments under non-cancellable operating lease

Where the Company is Lessor:

The Company has entered into operating lease arrangements for certain surplus facilities. The leases are cancellable.

Rental income from operating leases included in the Statement of Profit and Loss for the year is RS.112 lakhs [Previous Year - RS.116 lakhs].

2. Finance Leases:

The Company has taken vehicles on finance lease. The future lease rent payable on such vehicles taken on finance lease are as follows:

Note 7 - Financial Instruments

I) Capital Management

The company’s capital management objectives are:

- to ensure the company’s ability to continue as a going concern.

- to maximize the return to stakeholders through the optimization of the debt and equity balance.

The company monitors capital on the basis of the carrying amount of equity as presented on the face of the statement of financial position. The company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The company 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.

a) Gearing Ratio:

The Gearing ratio at the end of the reporting period are as follows:

*Debt is defined as long-term and short-term borrowings including interest accrued on borrowings

b) The carrying value of financial instruments by categories as of March .31, 2018 is as follows:

II) Financial risk management objectives

In the course of its business, the Company is exposed primarily to fluctuations in interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

III) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as equity price risk and commodity price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Future specific market movements cannot be normally predicted with reasonable accuracy.

Currency risk: The Company does not have material foreign currency transactions. The company is not exposed to risk of change in foreign currency.

Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to the risk of changes in market interest rates as the Company does not have any long-term debt obligations with floating interest rates.

Other price risk:

The Company is not exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.

IV) Interest risk management

The Company’s interest rate exposure is mainly related to debt obligations. The Company obtains debt to manage the liquidity and fund requirements for its day to day operations. The rate of interest is fixed and thus there is no risk of interest rates fluctuating.

V) Credit risk management

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit.

Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

VI) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest payments as at March .31, 2018:

VII) Fair value disclosures

Level 1 - Quoted prices (Unadjusted) in active markets for identical assets & liabilities.

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

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (Unobservable inputs). The following table summarizes financial assets and liabilities measured at fair value on a recurring basis

Note 8 - Related Party Transactions:

A. List of Related Parties

Related Parties are classified as:

i. Subsidiaries

1. Kolte-Patil Real Estate Private Limited

2. Tuscan Real Estate Private Limited

3. Bellflower Properties Private Limited

4. Snowflower Properties Private Limited

5. Sylvan Acres Realty Private Limited

6. Regenesis Facility Management Company Private Limited

7. Kolte-Patil Redevelopment Private Limited (Formerly known as PNP Retail Private Limited)

8. PNP Agrotech Private Limited

9. Kolte-Patil I-Ven Townships (Pune) Limited

10. Ankit Enterprises

11. Kolte-Patil Homes

12. KP-Rachana Real Estate LLP

13. Sanjivani Integrated Township LLP (upto December 05tRs.2017)

14. Bouvardia Developers LLP

15. KP-SK Project Management LLP

16. Carnation Landmarks LLP

17. Regenesis Project Management LLP

ii. Key Management Personnel and their relatives

1. Rajesh Patil

2. Naresh Patil

3. Milind Kolte

4. Sunita Kolte

5. Sunita Patil

6. Vandana Patil

7. Gopal Sarda

8. Atul Bohra

9. Vinod Patil

10. Nirmal Kolte

11. Yashvardhan Patil

12. Harshavardhan Patil

13. Sudhir Kolte

14. Ankita Patil

iii. Entities over which Key Management Personnel and their relatives are able to exercise significant influence

1. Anisha Education Society

Note 9 - Details of CSR expenditure

a) Gross amount required to be spend by the Company during the year is RS.127 lakhs (Previous Year RS.76 lakhs).

b) Amount spend during the year RS.32 Lakhs (Previous year RS.109 Lakhs).

Note 10 - Employee stock option scheme Employee stock option scheme (ESOS 2014)

The Company has instituted ‘Employee Stock Option Scheme 2014’ (ESOS 2014) for eligible employees of the Company. The vesting pattern of the schemes has been provided below. The options can be exercised over a period of 1 to 3 years from the date of grant. Each option carries with it the right to purchase one equity share of the Company at the exercise price determined by the Nomination and remuneration Committee at the time of grant.

The vesting period of the above mentioned ESOS Schemes is as follows -

The options under this Scheme vest over a period of 1 to 3 years from the date of the grant. Upon vesting, employees have 3 to 5 years (as per plan) to exercise the options.

The exercise period shall commence from the date of vesting of option and expire not later than 12 (Twelve) months from the vesting date of option. Options not exercised during any particular exercise period, can be carried forward to the subsequent exercise period(s), provided however that all the Options, have to be exercised within a period of 2 years from the date of the vesting period in respect of the final lot, after which any unexercised Options will lapse.

iii. The employee stock option cost for the Employee Stock Option Scheme 2014 has been computed by reference to the fair value of share options granted and amortized over each vesting period. For the year ended March .31, 2018 the Company has accounted for employee stock Option cost (equity settled) amounting to RS.3 lakhs (March .31, 2017: RS.10 lakhs).

iv. The fair value of each option is estimated on the date of grant based on the following assumptions (on weighted average basis):

The amount of the expense is based on the fair value of the employee stock options and is calculated using a Binomial Lattice valuation model. A lattice model produces estimates of fair value based on assumed changes in share prices over successive periods of time. The Binomial Lattice model allows for at least two possible price movements in each subsequent time period.

The Hull-White model (HW-model) is an extension of the Binomial Lattice model. It models the early exercise behavior of employees by assuming that exercise takes place whenever the stock price reaches a certain multiple M of the strike price X when the option has vested. The Black and Scholes valuation model has been used for computing the weighted average fair value.

Note 11 - The Company seized as a partner From Sanjivani Integrated Township LLP with effect from December 5, 2017.

Note 12 - The Board of Directors of the Company in their meeting held on December 27, 2017 has approved the Scheme of Merger by absorption under applicable provisions of the Companies Act, 2013 of Bellflower Properties Limited (wholly owned subsidiaries of the Company) with the Company. The Appointed date of the Scheme is April 1, 2017. Further, both the companies have filed the scheme of merger before the National Company Law Tribunal Mumbai Bench on April 25, 2018 and waiting for their approval.

As the scheme of merger not consummated, effect of the said scheme is not given in these financial statements.

Note 13 - The financial statements for the year ended March .31, 2018 were approved by the Board of Directors and authorized for issue on May 23, 2018.

Source : Dion Global Solutions Limited
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